Abstract

Colorado Medicaid Hospital Rate Change: The Importance of the Broader Multi- Provider, Multi-Payer Environment

In July 2011 Colorado Medicaid decreased its hospital reimbursement for
uncomplicated cesarean deliveries to the same level as its payments for
complicated vaginal deliveries to discourage medically unnecessary cesarean
deliveries and reduce expenditures. This study seeks to understand why that fee
change had such a modest impact on Medicaid cesarean rates. Our approach is
novel in that we investigate the fee change in a broader context that includes
the hospital-physician relationship. We find the fee change has a statistically
significant, but modest, effect, on the rate of cesarean delivery. However, hospital
ownership type and the presence of salaried employee physicians, also appear
to have statistically significant and substantive effects on cesarean rates. We
conclude that, if rate changes are to achieve their desired effects, policy makers
must take into account network relationships and how incentives work within
those relationships.


Author(s):

AnaMaria Conley, Kate Davidson



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