A comparison of capitated and fee-for-service Medicaid reimbursement methods on pregnancy outcomes

Objective. To determine if the payment method influenced the likelihood of selected obstetrical process measures and pregnancy outcome indicators among Medicaid women. Data Source/Study Setting. Data from the live birth certificates computer file for 1993 from the State of California. The computer files contain information about the demographic characteristics of the mother, her medical conditions prior to delivery, medical problems during labor and delivery, delivery method, newborn and maternal outcomes, and expected principal source of payment for prenatal care and for hospital delivery. Study Design. The study sample consisted of singleton live births to women in the California Medi-Cal program residing in one of two counties in which a mixed-model managed care plan was the method of reimbursement or in one of three counties in which fee-for-service was the payment method. The study and control counties were matched in terms of geographic proximity and sociodemographics. Principal Findings. Among Medi-Cal women, the likelihood of low birth weight (LBW) was lower in the capitated payment group than in the fee-for-service payment group even when controlling for maternal and newborn characteristics and adequacy of prenatal care. There was no difference in either the adequacy of prenatal care, the cesarean birth rate, or the likelihood of adverse pregnancy outcomes other than LBW between the two payer groups. Conclusions. Results of this 'natural experiment' suggest that enrollment of pregnant Medi-Cal beneficiaries in capitated healthcare services through a primary care case management system in a county-organized health system/health insuring organization can have a beneficial effect on low birth weight and provide care comparable to a fee-for-service system.