By Bipin Mistry, MD, MBA, SFHM, VP, Senior Medical Director 
While traveling on the Acela train from New York City to Boston, I overheard a conversation that made me acutely aware of the skyrocketing cost of healthcare for families across the country. A very vocal gentleman was describing how he recently changed jobs and found himself with a high-deductible, employer-sponsored insurance plan, just as he discovered his wife was pregnant. Concerned about how much he might have to pay out-of-pocket for maternity care, he described his journey of “shopping around” at local hospitals to try and find the best price for services generally associated with pregnancy, delivery and newborn care. To his frustration, it seemed impossible to get a straight answer. He described his exasperation with having numerous face-to-face meetings with the Chief Financial Officers of several hospitals as well as endless phone calls with his insurance company. After all that effort, they still lacked an answer to his question — what is covered by insurance if his wife experienced a complication during delivery? Ultimately, he decided to wait until his baby was born to learn exactly how much of the delivery his insurance company would cover.

I started thinking not only about his situation, but also the predicament of millions of other young families and how we can shift from the current volume-driven healthcare services to value-based plans. It appears our healthcare system is mired in the current fee-for-service plan, with zero cost transparency. Going forward, how can we translate value-based bundled payments in the payer and provider world?

In 2016, there were approximately 4 million babies born in the United States and 32 percent of those births were by Cesarean Section (C Section).

In a 2013 New York Times article, it was estimated that between 2004-2010, out of pocket costs1 had risen four-fold. The average total cost of related care for a vaginal delivery was $30,000 while a C Section was $50,000 and these have only increased since then.2

It is imperative we create value-based care solutions for our expectant mothers, and bundled payments is a very important part of the solution. Medicaid has been exemplary in moving forward with value-based-plans, with promising results. For example, in the Arkansas Episodes of Care Program, there was a 3.8 percent reduction in the cost of care in maternal health with no negative effects on quality, as well as some improvement in prenatal care.3 In the Geisinger Perinatal Proven Care model for perinatal bundle, some of the success factors for that bundle included working with providers on best practices and developing standardized workflows, and having integrated electronic health records and provider dashboards that provide real-time information.

Remedy Partners has developed bundle payments as part of an insurance product that has been designed to engage providers and insured members. Its bundled payment program is rooted in deep analytics, an understanding of provider engagement, and an IT platform called Episode Connect™ that can be integrated with any electronic health record and help track a patient’s journey. Additionally, a provider portal has decision support tools and a real-time provider dashboard to help optimize care and a member portal that will help patients understand their options as they seek high-value care.

It is through bundled payments that cost transparency can evolve. This begins with providers and healthcare systems having a better understanding of the costs of care through data. Providers can actively engage with patient care redesign, provide high-value care and eliminate low-value care, such as excessive, unnecessary testing. As bundled payment plans mature, patients can make better decisions about their own healthcare and select high-value providers with transparent costs of service.

I feel confident the gentleman on the train and his expectant wife would be very happy customers if they were offered the opportunity to select the maternity bundled payment option that was just right for their growing family.

1. http://www.nytimes.com/2013/07/01/health/american-way-of-birth-costliest-in-the-world.html?pagewanted=all
2. The cost of delivery continues to have significant variation across the country.
3.  National bureau of economic research working papers, Effects Of Episode-Based Payment on Health Care Spending And Utilization: Evidence From Perinatal Care in Arkansas by Caitlin Carroll et al, http://www.nber.org/papers/w23926