As maternal mortality and morbidity continue to rise in the United States, especially among Medicaid populations, states are urgently seeking innovative ways to improve pregnancy outcomes while containing healthcare costs. Enter value-based care (VBC): a transformative framework that shifts focus from volume to value in healthcare delivery.
Maternity care, which often includes complex care coordination across multiple providers and services, is an ideal candidate for value-based models. This article explores the most common value-based payment (VBP) strategies used by Medicaid programs for maternity care: Episode-Based Payments, Pay-for-Performance (P4P), and Pregnancy Medical Homes (PMHs). Drawing on findings from NORC and MACPAC, we break down how these models work, their unique incentives, and the goals they aim to achieve.
Episode-Based Payments: Bundling Maternity Care from Start to Finish
What It Is:
Episode-based payment models, sometimes called bundled payments, provide a single payment for all services related to a maternity episode. This includes prenatal care, labor and delivery, and postpartum follow-up, usually spanning about 40 weeks of care. Sometimes, episodes also include newborn care, where NICU utilization can drive significant costs.
Incentives:
- Providers are financially rewarded if they keep costs below a benchmark while maintaining quality.
- Conversely, they may face financial penalties if costs exceed expected amounts.
- These models typically include quality performance thresholds to ensure cost containment doesn’t compromise care.
Goals:
- Reduce unnecessary interventions, like non-medically indicated cesarean deliveries.
- Encourage providers to better coordinate care across the maternity timeline.
- Promote evidence-based practices and standardized care.
Real-World Example:
In states like Arkansas and Tennessee, Medicaid agencies implement retrospective payment models. Providers are paid fee-for-service initially, with payments later adjusted based on overall episode costs and outcomes. This structure gives providers financial reasons to avoid redundancy and unnecessary procedures.
Pay-for-Performance (P4P): Rewarding Results, Not Volume
What It Is:
In P4P models, providers continue to be reimbursed through traditional fee-for-service, but they can earn bonuses or face penalties based on their performance on specific maternity-related quality measures.
Common Metrics Include:
- Postpartum care visits completed within 60 days
- Timely prenatal care initiation (first trimester)
- Depression screening and follow-up
- Cesarean section rates for low-risk pregnancies
Incentives:
- Performance is reviewed, often annually.
- Providers that meet or exceed benchmarks receive financial bonuses.
- Poor performance may result in reduced payments or exclusion from bonus pools.
Goals:
- Enhance clinical accountability.
- Drive improvements in specific quality indicators without overhauling payment structures.
- Encourage broader adoption of best practices in maternal health.
Real-World Insight:
According to NORC, 14 states have adopted P4P initiatives. These programs often serve as entry-level VBP models, especially in states where more complex models like episode-based care aren’t yet feasible.
Pregnancy Medical Homes (PMHs): A Whole-Person Approach to Maternity
What It Is:
PMHs are care delivery models in which pregnant individuals are assigned to a medical home, a primary care or OB/GYN provider who oversees all aspects of care, including referrals, behavioral health, and social services.
Incentives:
- Providers may receive care coordination fees in addition to base payments.
- P4P bonuses are often layered in for meeting quality benchmarks.
- Many PMHs include case management services delivered by nurses, community health workers, or social workers.
Goals:
- Address clinical and non-clinical drivers of health (e.g., transportation, food insecurity, mental health).
- Improve patient engagement, particularly among high-risk populations.
- Decrease avoidable complications through proactive care planning.
Real-World Example:
States like North Carolina and Colorado have implemented PMH models. These programs emphasize holistic care and have been associated with improved postpartum visit rates and higher satisfaction among both patients and providers.
Why These Models Matter: Aligning Payment with Better Outcomes
Medicaid covers nearly 42% of U.S. births, making it a critical touchpoint for improving maternal health outcomes nationwide. Traditional fee-for-service payment models, where providers are paid for each test, visit, or delivery, incentivize quantity over quality. VBP models aim to reverse this by aligning financial incentives with improved outcomes, better coordination, and reduced disparities.
While early results are mixed, some experts believe that the future of maternity care lies in value-based frameworks that reward collaboration, promote data transparency, and integrate social determinants of health into care delivery. According to NORC, successful models are those that build on robust data infrastructure, foster provider engagement, and explicitly incorporate health equity metrics.
Final Thoughts
The movement toward value-based maternity care is gaining traction across the country. Whether through bundled payments, performance incentives, or comprehensive care homes, states are reimagining how we pay for and deliver pregnancy-related services. As these models evolve, the ultimate goal remains the same: healthier mothers, healthier babies, and a more sustainable Medicaid system.