Texas Medicaid Payment Reform: Fewer Early Elective Deliveries And Increased Gestational Age And Birthweight

Dahlen HM, McCullough JM, Fertig AR, Dowd BE, Riley WJ
Source: Health Affairs
Publication Year: 2017
Patient Need Addressed: Maternal/perinatal
Population Focus: Medicaid beneficiaries
Demographic Group: Women
Study Design: Pre-post with Comparison Group
Type of Literature: White

Infants born at full term have better health outcomes. However, one in ten babies in the United States are born via a medically unnecessary early elective delivery: induction of labor, a cesarean section, or both before thirty-nine weeks gestation. In 2011 the Texas Medicaid program sought to reduce the rate of early elective deliveries by denying payment to providers for the procedure. We examined the impact of this policy on clinical care practice and perinatal outcomes by comparing the changes in Texas relative to comparison states. We found that early elective delivery rates fell by as much as 14 % in Texas after this payment policy change, which led to gains of almost five days in gestational age and six ounces in birthweight among births affected by the policy. The impact on early elective delivery was larger in magnitude for minority patients. Other states may look to this Medicaid payment reform as a model for reducing early elective deliveries and disparities in infant health.

Insights Results

Overview of article/program

  • This study focused on examining the effect of payment reform on incidence of early elective delivery
  • Texas’ Medicaid program has modified its coding and reimbursement procedures to create incentives and/or disincentives aimed at lowering rates of early elective delivery. Specifically, it added coding modifiers to billing codes related to neonatal delivery that made delivery before 39 weeks gestation that was not medically necessary ineligible for reimbursement

    Methods of article

    • Authors examined the impact of this policy on clinical care practice and perinatal outcomes by comparing the changes in Texas relative to comparison states
    • A difference-in-differences approach was used to best isolate effects of the program. The counterfactual (i.e., what would have happened without the program) represented the comparison group
    • The primary outcome was the incidence of early elective delivery. Incidence of cesarean section was also evaluated


    • The study noticed a decline in rates of early elective deliveries in Texas that began when the Medicaid payment reform was passed, potentially reflecting a change in behavior in preparation for the program’s implementation. The pre-post regression model found a 2.03% decrease in the incidence of early elective deliveries in Texas after the payment reform. Such decline continued post-implementation
    • Overall, the addition of a payment reform appears to have contributed to a greater decline in early elective deliver than collaborative efforts alone
    • The effect of payment reform on reducing early elective deliveries was greatest for Latinos, and smallest for non-Latino whites. Latinos’ early elective delivery rates fell 1.77% (from 9.91%)

    Key takeaways/implications

    • Because collaborative efforts are voluntary and organizations may lack the resources or initiative to participate, mandatory payment reform may lead to greater declines in early elective delivery rates
    • Findings suggest that Medicaid payment policies in combination with voluntary collaborative efforts could be more effective than collaborative efforts alone in reducing the incidence of early elective deliveries, resulting in an improvement in birth outcomes at the population level
    • Reasons behind the differences in effect across racial and ethnic groups are not evident and require further qualitative investigation
    • Limitations to this study include the fact that it was observational, lack of randomization, lack of ability to establish causality, missing information on health conditions that may not have been coded as early elective deliveries, inability to adjust model for factors not captured on birth certificates (e.g., maternal smoking), and the fact that Texas had one of the highest early elective delivery rates in the US before the state’s payment reform