A Medicaid-led initiative appeared to reduce the health care costs associated with delivering babies in Arkansas in 2014, the second year the program began targeting those costs, a study found.
The program rewards or penalizes doctors and other health care providers financially on the basis of their cost of providing an "episode of care," such as delivering a baby or replacing a hip or knee.
The study, led by researchers at Harvard Medical School, used data from commercial, employer-sponsored health plans to examine results of the program's perinatal episode, which includes care provided 40 weeks prior to a birth, all costs associated with the delivery and 60 days of care provided to the mother after the birth.
The state Medicaid program and Arkansas Blue Cross and Blue Shield implemented the perinatal episode in 2013, and Little Rock-based QualChoice Health Insurance started using it, with participation voluntary for providers, in 2014.
Comparing the growth in the average episode cost in Arkansas to that in Alabama, Kentucky, Louisiana, Mississippi and Oklahoma, the study found that the program reduced the cost in Arkansas in 2014 by 3.8 percent, or $403 per episode.
"Once episode-based payment goes into effect, spending [in Arkansas] starts to slow down, and it eventually sort of flattens out and plateaus in 2014," Caitlin Carroll, one the study's authors, said in a phone interview. "Meanwhile, in the neighboring states, perinatal spending continues to increase basically at the same rate as it was before."
The study found that the change in Arkansas was driven by slower growth in hospital facility fees, suggesting that some doctors began referring women to lower-cost hospitals.
Supporting that theory, the researchers found that the decrease was concentrated in areas, such as Little Rock and Northwest Arkansas, with more than one hospital where physicians can deliver babies.
The prices charged by hospitals vary widely, so even a small change in doctor referrals can have a significant effect on costs, Carroll said.
"It's not like every doctor has to shift all their patients from one hospital to another," Carroll said.
Arkansas Blue Cross and Blue Shield, the dominant commercial insurer in the state, told the researchers it did not lower its hospital reimbursement rates in 2014, indicating that a change in hospital prices wasn't the reason for the cost reduction.
The variation in what hospitals charge led the Legislature in 2015 to pass Act 902, which prohibits insurers from penalizing doctors under the episodes of care program for costs that stem from high hospital prices.
As a result of the law, Arkansas Blue Cross and Blue Shield adjusted how it calculates the episode costs in 2015.
This year, it began holding hospitals accountable for the hospitals' excess costs under the episodes of care program.
The study was published in October as a "working paper" from the National Bureau of Economic Research, a Cambridge, Mass., organization that makes such studies available to economists before they are published in academic journals. It has been submitted to an economics journal for publication, Carroll said.
The study found that the percentage of deliveries performed by cesarean section declined in Arkansas after the episode program went into effect, but the decrease wasn't considered statistically significant in comparison with the other states.
The episodes of care program also didn't appear to have a significant effect on the length of the average hospital stay, but it did appear to cause an increase in screenings for chlamydia, which is linked to an increased risk of premature births and other complications.
To be eligible for bonuses, doctors are required to screen at least 80 percent of their obstetrics patients for that disease as well as for HIV and bacterial infections.
The testing rate for HIV, bacterial infections and other conditions was already high before the start of the episode program and didn't appear to be affected, the researchers wrote.
Despite the researchers' theory, Max Greenwood, a spokesman for Arkansas Blue Cross and Blue Shield, said in an email that the company hasn't seen significant shifts in where doctors deliver babies since the episodes program began.
David Wroten, executive vice president of the Arkansas Medical Society, said most doctors don't know what hospitals charge. Those who practice at multiple hospitals usually leave it to the mother to decide where she wants to give birth, he said.
Greenwood said the episode program has given health care providers "a platform to more actively discuss the coordination of care for their patients" and more information about their patients' care.
"For instance, the [physician] now receives detailed information specific to the entire episode," she said. "In the past, the provider would only have access to information about the specific claims he or she submitted to us."
After adjusting for factors such as changes in reimbursement rates, the company's average cost for the perinatal episode fell 3 percent from 2013 to 2016, she said.
Over the same period, she said, the rate of cesarean section deliveries fell 2 percent, and screenings for chlamydia increased 13 percent.
Although "this program is small in scale compared to all the procedures performed in the state, any outcomes that improve health status and bend the cost curves" mark "a positive step toward the challenge of controlling health care costs" she said.
Curtis Lowery Jr., chairman of the obstetrics and gynecology department at the University of Arkansas for Medical Sciences, Little Rock, said the study was well-executed but "limited in scope" because it didn't examine health outcomes for the mother or baby or the cost of the baby's care after the delivery.
He said he's concerned that pressure on doctors to reduce the costs associated with the mother's care could in some cases lead to worse outcomes for the baby.
"We have to optimize the outcome for the baby as well as the mother," he said.
Joe Thompson, director of the Arkansas Center of Health Improvement, who helped with the study, said the state consulted with providers and included quality measures, such as the required screenings, in designing the program to ensure that providers don't withhold necessary care.
"While it's a concern, I don't believe in any of our episodes have we seen that to have occurred," he said.
Metro on 12/26/2017