Episode-Based Payment for Perinatal Care in Medicaid: Implications for Practice and Policy

Medicaid is an important source of health insurance coverage for low-income pregnant women and covers nearly half of all deliveries in the United States. In the face of budgetary pressures, several state Medicaid programs have implemented or are considering implementing episode-based payments for perinatal care. Under the episode-based payment model, Medicaid programs make a single payment for all pregnancy-related medical services provided to women with low- and medium-risk pregnancies from 40 weeks before delivery through 60 days postpartum. The health care provider who delivers a live birth is assigned responsibility for all care and must meet certain quality metrics and stay within delineated cost-per-episode parameters. Implementation of cost- and quality-dependent episode-based payments for perinatal care is notable because there is no published evidence about the effects of such initiatives on pregnancy or birth outcomes. In this article, we highlight challenges and potential adverse consequences related to defining the perinatal episode and assigning a responsible health care provider. We also describe concerns that perinatal care quality metrics may not address the most pressing health care issues that are likely to improve health outcomes and reduce costs. In their current incarnations, Medicaid programs' episode-based payments for perinatal care may not improve perinatal care delivery and subsequent health outcomes. Rigorous evaluation of the new episode-based payment initiatives is critically needed to inform policymakers about the intended and unintended consequences of implementing episode-based payments for perinatal care.