Newborn Episode

Submitted by on Friday, January 23, 2015 - 12:39

At the end of a pregnancy and delivery, there's a birth. For most health plans, those are two distinct events – When the baby is born, s/he becomes a new plan member. In most instances the health plan is the same as the mom's, but in others it's not. Either way, the costs related to the care of the baby after the birth are captured under a different plan member ID. As a result, most employers, and most health plans, have had a tendency to view the episode of pregnancy and delivery as distinct from that of the newborn's first days in the hospital and at home. Our recent data analyses of several Medicaid plans across the U.S. show that the average cost of pregnancy is about $2,000 and the average cost of delivery is about $4,000 (which depends largely on the rate of C-Sections, since they're twice as expensive as normal births). So, for most Medicaid plans, a pregnancy and delivery episode is about $6,000 and for employers, you simply double (or more) the price. While $12,000 seems expensive, given today's prices for most anything in healthcare, pregnancies and deliveries have become less of a focus than other episodes of care, such as the management of chronic conditions or the occurrence of most inpatient-based procedures. But if we switch the patient focus from the mom to the baby, and consider the episode as one of gestation, delivery, and initial nursery stay, you get a very different picture, one that we should pay attention to. That's because the baby's initial bill averages the same as the total for the pregnancy and delivery…..$6,000 for Medicaid and $12,000 (or more) for employers.

What this means to you – The baby-as-the-patient focused episode is, today a $12,000 (for Medicaid) to $24,000 (or more for employers) episode, but virtually no one in the U.S. accounts for it that way. The reason for the doubling of the total episode cost lies in the selection of the nursery level when the baby is born. Most babies end up in level 1 nurseries, which is the low acuity, standard nursery, and the costs for that stay are modest. But that changes dramatically when the level goes to 2, 3, and especially 4. The consequences of splitting these events is that we can't draw the right inferences about the relationship between the care the baby gets during the gestational period, the mode in which the baby is delivered, and the level of nursery in which the baby ends up. And when you consider that the average cost for babies in level 2 nurseries is five times, level 1, ten times for level 3 and a whopping 100 times for level 4, we have to change our perspective on this episode — how we view it and how we pay for it. Of course, that would also require plans to formally link the mom's ID with the baby's, which very few do. If you doubt me, then please ask your health plan to report to you the full cost of the gestational, delivery, and nursery episode, and while you're at it, have them add the cost for the 30 days post discharge, because we've found that in some instances, one in four babies have a visit to the ED or are hospitalized during that post discharge period. The truth, as we know, is that from a parent's eyes, and from the baby's, the pregnancy/delivery and the subsequent nursery stay are not two distinct episodes or events, they're the same. It's time that health plans considered it such as well, and that we start asking the right questions about the consequences of the care provided during the gestational and delivery portion of that wonderful event called birth.