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Hospital Charges Still All Over the Map

You can get from New Jersey to Maryland in less than an hour, but despite the proximity, New Jersey hospitals, on average, charge 3-4 times more than Maryland hospitals for both vaginal and cesarean births. This is just one of the notable facts gleaned from Childbirth Connection’s analyses of the latest maternity charges data. Although the data do not show whether higher charges reflect better care, researchers who look at price variation generally find no relation between prices and the quality of care, complexity of patient care needs, or costs of actually delivering care. Such unwarranted price variation amounts to billions in wasted spending across the health care system, according to a February report from Thomson Reuters that looked at various hospital procedures.

New charts compiled by Childbirth Connection (PDF) show the significant price variation across states that report average labor and birth hospital charges to the Healthcare Cost and Utilization Project (HCUP). The chart set also includes average prices charged by birth centers, which fall well below charges for uncomplicated vaginal births in hospitals. State-by-state analyses (PDF) show charges increasing year-to-year, and reveal differences by mode of birth and presence or absence of complications.

What do these figures mean for improving maternity care?

Labor, birth, and newborn care are the most common and costly hospital conditions for both Medicaid programs and private insurers. The data in Childbirth Connection’s Charges Charts reveal four potential strategies for reining in costs:

  1. increase the proportion of vaginal births – Hospital charges for cesareans are about 66% higher than hospital charges for vaginal births (a difference of $5,900- $8,400 depending on complications).
  2. provide safer care – Complications increase charges by about 35% (a difference of $2,800 – $5,400 depending on mode of birth). Some complications are preventable with hospital safety initiatives.
  3. remove barriers to out-of-hospital birth for low-risk women interested in these options - Birth center charges are $6,600 less than charges for uncomplicated vaginal births in hospitals.
  4. reduce charges for births in facilities and states where charges exceed average - Policy makers can work to increase price transparency and align payment with quality.

We can improve the quality and value of maternity care by identifying innovations that safely and fairly achieve these goals and reduce unintended consequences.

Resources from Childbirth Connection

State-by-state Charges Charts

Multi-state Charges Comparisons (PDF)

Quick Facts About Hospital Labor & Birth Charges

Thank you, Amy Romano, for this fascinating guest post on the economic side of birth.  Childbirth is the most common reason for hospital admission in the United States (AHRQ, 2002).  Simple changes that will improve the experience of the families, save significant money and reduce unnecessary interventions, Lamaze’s Healthy Birth Practice #4. have been needed for a long time. Midwifery care for low risk women is one step in that direction. There are many other things that can happen to achieve the goal of healthy mothers, healthy babies while reducing costs. What do you think are some steps that can be taken to reduce the spiraling and often unnecessary medical costs of having a baby?  What should hospitals and health care providers be doing to get these costs under control?  How can consumers play a part in that?  Please share your ideas here, or programs that you are aware of that are working on this very issue!

Sharon Muza

 

Source

Agency for Healthcare Research and Quality, (2005). Hospitalization in the United States, 2002 (AHRQ Publication No. 05-0056). Retrieved from website: http://archive.ahrq.gov/data/hcup/factbk6/


 

Guest Posts, Healthy Birth Practices, Maternal Quality Improvement, Medical Interventions, Midwifery, Uncategorized , , , , , , ,

  1. May 17th, 2012 at 11:41 | #1

    In Washington State, Jeff Thompson, our Chief Medical Officer, for the state has recently said “Midwives have a central focus in our strategic plan. We are hoping Washington State can double out-of-facility births in the next two or three years.”

    In WA, Medicaid payment to licensed midwives for uncomplicated vaginal birth runs $2500. Payment for birth center births is $5000 and doubles again to $10,000 for those performed inside hospitals. The cost doesn’t touch additional savings from reducing the rate of often overused medical interventions such as epidurals and inductions of labor.

    An independently conducted cost-benefit analysis released by the Washington State Department of Health (DOH) in January 2008 indicated that licensed midwifery care results in cost savings to Medicaid of nearly half a million dollars biennially and when private insurance companies are included in the analysis, the savings to the healthcare system in Washington is over $2.7 million.

    http://www.washingtonmidwives.org/documents/Midwifery_Cost_Study_10-31-07.pdf

  2. May 17th, 2012 at 11:44 | #2

    Wow! I should live an a different state! The Birth Centers in Alaska Charge $8000 on average which is still less expensive then a hospital (that’s $8000 for all prenatal care, birth and newborn care, postpartum)

    Our state insurance, Denali Kid Care, pays for Birth Centers and most midwives. Perhaps that is why the cost is higher? Fewer moms are paying out of pocket so the cost can be higher?

  3. May 17th, 2012 at 12:21 | #3

    I believe the above numbers are based solely on costs of the birth and do not include prenatal care or newborn care. So maybe the $8000 isn’t as bad as you think? Definitely a nice thing to have insurance that actually covers a Birth Center though!
    @Roadfamily6now

  4. May 17th, 2012 at 13:20 | #4

    Yes, these are facility fees only, and do not include the professional fees paid to midwives or doctors or assorted other fees in hospitals like anesthesia and newborn care. People without insurance generally must pay the entire fee, while Medicaid or private insurance companies negotiate reduced rates.

    @Sharon, yes, we at Childbirth Connection are watching Washington State closely because of their approach to achieving the so called Triple Aim of better care and better health at lower cost by expanding access to midwifery care, among other important policy innovations.

    FYI, Washington is one of four states that hasn’t gotten their data to HCUP so they will be added to the multi-state charts as soon as we have the current figures.

  5. avatar
    Christine Morton
    May 17th, 2012 at 18:23 | #5

    Thanks for preparing all of this. Would you take a moment and clarify the difference between “CHARGES” (FEES), which I have heard described variously as ‘fantasy; fake; useless for analyzing true costs’ vs. “COSTS” (how much the hospital spends to deliver the service) vs. “REIMBURSEMENTS” or “PAYMENTS” (what payers -whether medicaid or private insurers-actually pay for the service). In the CMQCC White Paper on Cesarean Deliveries (http://www.cmqcc.org/white_paper), we were able to get data on (average) payments for cesarean and vaginal births that breaks down the facility and professional costs. This data shows that most physicians don’t get paid that much more for a cesarean. The White Paper notes that in Washington, the approach by Medicaid has been to blend the DRGs for vaginal birth without complications, vaginal birth with complications, and cesarean delivery without complications into a single payment and leave cesarean delivery with complications as a separate payment for the hospitals. The thinking is that cesareans save physicians TIME and so economic incentives don’t work for them. But by adjusting payments to the hospitals, the facilities gain incentives for reducing those procedures. It will be interesting to see Washington’s results. Thanks again for keeping this issue front and center.

  6. avatar
    Sara r.
    May 17th, 2012 at 22:18 | #6

    Man I wish medicare would have paid for the birth center or home birth with a licenced midwife, but it didn’t pay a dime so I still ended up paying out of pocket. I tried to argue the cost issue, but it got me nowhere.

  7. avatar
    Dawn
    May 18th, 2012 at 00:24 | #7

    One expense I saw charged at a higher rate in my bill was that I am considered high risk for “advanced maternal age.” Now, I have no other high risk factors that I’m aware of. I have uncomplicated vaginal births, this last time I was in the hospital less than 3 hours before the baby was born. I had an IV, but only for part of the time. I had no complications from the birth, none.

  8. May 18th, 2012 at 09:05 | #8

    @Christine Morton
    I would be happy to explain the difference between charges/fees, costs, and reimbursements/payments but you’ve done so beautifully. The truth is that charges bear little relationship to the money hospitals actually receive or the value of the services they provide. We (Childbirth Connection) have another report forthcoming that will drill down to costs and payments. Stay tuned.

  9. May 18th, 2012 at 09:10 | #9

    @Dawn This is a common risk adjustment that reflects that the average woman over age 35 costs providers and hospitals more, because of higher likelihood of complications and more time counseling about things like prenatal testing. The higher costs of complicated pregnancies/births are offset by uncomplicated, straightforward births like yours.

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