Mixed results for Medicaid maternity bundle in Texas

A bundled payment arrangement created in Texas by a non-profit Medicaid health maintenance organization (HMO) didn’t result in consistent savings for the two large physician groups participating, according to research displayed at the American College of Healthcare Executives (ACHE) Congress in Chicago.

Led by Amita Rastogi, MD, MHA, medical director for the Altarum Institute’s Center for Value in Health Care, the study followed Altraum’s design and implementation of a global maternity care bundled payment program with Texas’s Community Health Choice (CHC). CHC contracted with two of the largest physician groups in the Houston/Galveston market on the project: the University of Texas Medical Branch and University of Texas Health.

Included in the bundle were services for prenatal care, delivery, postnatal care and care for the newborn. The delivery portion of the budget was based on a “historical blended rate of C-section and vaginal deliveries,” while the neonatal portion was based on historical utilization of nursery care.

Budgets for the bundle include a shared savings arrangement with physicians taking no downside risk in the first year but being partially on the hook for losses in the second year. Payments would be made on a fee-for-service basis with savings being identified in a year-end analysis, though providers weren’t left flying blind until then.

“Quarterly meetings were held with each physician group to discuss interim results and to evaluate how the physician groups were performing with respect to their target budgets so mid-course corrections could be made before year-end reconciliation,” Rastogi and her coauthors wrote.

The results didn’t identify the groups, but neither achieved savings in both years. In the first year, one physician group achieved savings of $240,000—getting back half of that amount from CHC—by dropping C-section rates by 3 percentage points and lowering neonatal costs “due to the subjective nature of nursery level placement.” While cost savings for the program’s second year were still being finalized when the study was being written, that same provider was over budget by 1.2 percent and had seen its quality score drop slightly by about a third of a percentage point.

In contrast, the second physician group reported losses in the first year, which were blamed on a few “high cost babies with congenital birth defects” requiring more expensive nursery care. In the second year, however, the same group reported being 3.5 percent under budget and raising its quality scores by 3.37 percentage points.

Rastogi and her coauthors said physicians took issue with the quality measures used, both in terms of the burden of collecting them and their reflection on actual quality. But there were also actionable lessons learned to improve quality for maternity patients.

“The few improvements that were recognized during the pilot were better documentation, improvement in preterm birth scores and better postpartum care with improved depression screening rates and closer follow-up leading to lower complications and better outcomes for mothers,” they concluded.

Being a part of a bundled payment program also helped unlock physicians’ competitive nature, the study authors said. That “Hawthorne effect”—how study participants change their behavior when they know they’re being observed—meant better outcomes and more “judicious use” of services and resources.