Physician financial incentives and cesarean delivery: New conclusions from the healthcare cost and utilization project

Abstract

Abstract:This paper replicates Gruber, Kim, and Mayzlin's (1999) analysis of the effect of physician financial incentives on cesarean delivery rates, using their data, sample selection criteria, and specification. Coincident trends explain much of their estimated positive relation between fees and cesarean utilization, which also falls somewhat upon the inclusion of several childbirth observations that had been inadvertently excluded from their estimation sample. The data ultimately indicate that a $1000 increase, in current dollars, in the reimbursement for a cesarean section increases cesarean delivery rates by about one percentage point, one-quarter of the effect estimated originally. JEL Codes: I11; I18Keywords: cesarean section; financial incentives; HCUPThe cesarean section is one of the most common surgical procedures, and one of those most studied by economists, for good reasons: it absorbs billions of dollars of health care resources annually, is used with widely varying frequency across regions and across providers, and is potentially responsive to a variety of economic forces, including source of payment, malpractice liability, and financial incentives.Yet there are few studies of the last of these, financial incentives. One of the most recent and most expansive, by Gruber, Kim, and Mayzlin (1999, hereafter GKM) The accessible data, simple design, and striking conclusions of this study make it a suitable candidate for replication. Accordingly, we obtained the same data used by GKM originally and attempted to reproduce their results, generously assisted by the original authors, who shared their data assembly programs with us. In addition, as standard empirical practice in panel studies of this type has evolved somewhat since the original study was published, we also explored the effect of some of these changes on the findings-particularly the inclusion of state trends, which are clearly 2observable in the data, in the regression specification. These trends and, to a lesser degree, data assembly issues, are both important. We ultimately conclude that financial incentives may influence cesarean utilization in these data, but, if so, the effect is much smaller than originally advertised. This analysis related the probability of a cesarean delivery to the Medicaid physician cesarean fee premium (cesarean fee -vaginal fee) in that state in that year, FEEDIFF; state and year fixed effects, : and J; and controls for maternal demographics, hospital characteristics, and clinical indicators for cesarean section, X. Estimated using a logit model, the specification is as follows: where i, s, and t index individuals, states, and time; C is a dummy that equals one if individual i's delivery was performed by cesarean section and zero otherwise; 7 is the logistic distribution 3 function; and $ and ( are regression coefficients. We are mostly interested in the value of (. The effect of fee changes was predicted using the marginal effect of a one unit change in FEEDIFF at the mean of the independent variables. The model...

The increasing cesarean rate globally and what we can do about it

“…The U.S. cesarean rate was 31.8%. The three lowest rates were 13.9% in the Netherlands, 16.1% in Iceland and 16.5% in Finland. The remaining countries were clustered in the band between 32.7% and 19.8%.…”

“…The option for a woman with a prior cesarean to have a TOL was used more often in the 1980s through 1996, after which the number of VBACs declined. At the same time the cesarean rate rose from 21 % in 1996 to 33% in 2007 (16).…”

“…This is particularly the case since a sharp increase in cesarean deliveries preceded the steep reversal and also inversely correlated with the changing VBAC practice and statistics (16). For example, from 1996 to 2004 the cesarean rate increased from 14.6% to 20.6% while the VBAC rate declined from 28.3% to 9.2%.…”

“…There was a six year decline from 1990 through 1996, with cesarean delivery rates in the United States then rising from 21% in 1996 to 33% in 2007. It would appear from a review of the comparison of the total cesarean delivery slope with the slope rate of the sharply rising (1989)(1990)(1991)(1992)(1993)(1994)(1995)(1996)(1997) and then sharply falling (1997)(1998)(1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006) VBAC rate that the primary reason for the falling and then rising again cesarean rate was the steep incline and then decline in VBACs during the relevant period (16). In 1993, Stafford et al hypothesized three reasons for the decline in cesarean deliveries between 1988 through 1992, for the first time after two decades of increase, namely: (a) literature critical of high cesarean section rates; (b) increasing public awareness of cesarean section practices; and/or (c) changing reimbursement policies of insurers (17).…”

“…Certain types of morbidity are higher with vaginal birth and there is some evidence that morbidity is higher for VBACs than repeat cesareans, with most studies finding maternal morbidity to be highest for unplanned cesareans, lower for planned cesareans and lowest for vaginal birth (5). Overall VBACs have the lowest morbidity, yet unsuccessful Trial of Labors (TOLs) ending in cesareans have the highest morbidity (16).…”