Payment Reform: Problems and System Goals


Poor return on investment

The United States spends far more than all other countries on health care, yet lags behind many on currently available global maternal and newborn indicators. Maternal and newborn hospital charges ($86 billion in 2006) far exceed those of any other hospital condition. When applied to 4.3 million births annually, care that is of poor value especially impacts employers and private insurers, who paid for 50% of births in 2006, and taxpayers and Medicaid programs, who paid for 42%.

Negative and perverse incentives

The current global fee maternity care payment system creates incentives that are poorly aligned with overall quality and value. Perverse financial incentives discourage coordination of services and encourage clinicians and hospitals to overuse some interventions. For example, rather than focusing on the goal of an overall optimal outcome of maternity care across the full episode, the current reimbursement system incents each individual provider caring for a woman to seek opportunities to get paid for discrete, specific services that can be charged outside of global fees. Simultaneously, the system has inadequate incentives for important aspects of maternity care that do not generate significant reimbursement. These include many safe and effective lower cost interventions that address widespread concerns but are reimbursed at lower rates or are not covered at all, such as smoking cessation help for pregnant women and breastfeeding support. Reforming payment systems has the potential to improve practice, reduce morbidity, and save lives of mothers and babies, while simultaneously improving value.

Misalignment of payment system with maternity care goals

Volume-driven reimbursement increases cost without improving health outcomes. Providing more services than are needed does not improve health and increases the risk of harm, while driving up spending. Supportive, preventive care to avoid problems along with early detection and appropriate intervention when they occur promotes wellness and carries least risk of harm. However, there is no alignment between caregivers and institutions to coordinate care and share expenses and revenue for desired outcomes; in fact, legislative hurdles prevent cost sharing among facilities and providers.

These problems also adversely impact health professions education. In current educational settings, new professionals learn to value and provide acute, hospital-based care to a primarily healthy population. Faculty practice plans with productivity formulas incentivize service volume and discourage teaching time.

Many women assume that widely used interventions are in their best interest. Women are generally not aware that they may be exposed to avoidable and potentially harmful interventions at present because of a lack of transparent comparative performance data to guide decisions and limited access to some effective high-value alternatives. Thus, those most affected by systemic misaligned incentives are not well-positioned to advocate for system change.

System Goals

  • All women have comprehensive coverage over the full episode of maternity care.
  • Payment systems are designed to support and not undermine the goals of care.
  • Payment redesign is accompanied by redesign of maternity care delivery systems and standard content of care.
  • Payment reform starts with regional pilots and demonstration projects with national support that are carefully evaluated and refined to ensure they meet intended objectives.


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