Medicaid Payment Policies: An Examination of Cesarean Section Rates

In 2022, 32.1% of babies born in the United States were delivered via cesarean section, three times the amount the World Health Organization (WHO) deems appropriate. Rising rates of cesarean sections, especially those beyond 15%, not only fail to improve maternal and infant health outcomes, but they also increase unnecessary healthcare spending. In this study, I examine the effects of three payment reform policies on cesarean section rates among Medicaid patients across the United States using 8,471,249 cases from the Vital Stats Natality Files from 2014 through 2019. Using logistic regression with clustered standard errors to account for county-level effects, I find that a bundled payment policy, combined with a reduced- or hard-stop non-payment policy, reduces unnecessary cesarean sections by up to 36.3%. Whereas bundled payment policies and reduced- or hard-stop payment policies alone do not reduce cesarean sections to a statistically significant degree, in some populations a blended payment policy does. Because states that use managed care organizations are assumed to be fee-for-service, but may use some form of payment reform, the design of this study may be underestimating the effects of these reforms. These results highlight the need for additional research and improved data collection on payment methods to fully explore the ability of payment reforms to reduce unnecessary cesarean sections.