State-Level Variation in Supplemental Maternity Kick Payments in Medicaid Managed Care

Abstract

This cross-sectional study assesses the prevalence and magnitude of state-level delivery event–triggered kick payments to Medicaid managed care plans and their association with delivery costs.

Medicaid managed care (MMC)—wherein states contract out the provision of Medicaid to private health insurers—provides coverage for 70% of pregnant Medicaid enrollees and finances about 41% of all births in the US.¹ Medicaid managed care plans receive per-member-per-month capitated payments from states to cover a defined benefit package.² This arrangement poses financial risk to MMC plans for covering pregnant people, who are higher-cost than other enrollees and often enrolled for short durations before delivery. To mitigate this risk, states use onetime “kick payments” to MMC plans that are triggered by a delivery event. State kick payment rates may influence whether MMC plans want to attract or avoid enrollees who are pregnant, potentially shaping maternity care access and quality in state Medicaid programs. However, little is known about the prevalence and magnitude of these kick payments, nor how they align with delivery costs.

Methods

In this cross-sectional study, we abstracted data on kick payments from publicly available state documents and MMC contracts published between 2018 and 2020 for all states and the District of Columbia (n = 51). Kick payments were defined as onetime payments to MMC plans—made in addition to the capitated rate—triggered by a delivery event. Two research assistants independently abstracted data on (1) whether a state used kick payments; (2) services the kick payment was designed to offset; and (3) kick payment rates. We resolved any differences in abstracted data by collaborative review of source document(s) to reach consensus (see the eMethods in the Supplement for additional details). We compared MMC kick payment rates with average state Medicaid fee-for-service (FFS) payments for delivery hospitalizations in 2020, obtained from the Health Care Cost Institute.³ We also compared state kick payment rates with the Medicaid-Medicare fee index to assess if rates varied with physician or obstetrician fees, obtained from the Kaiser Family Foundation.⁴ This study was exempt from institutional review board review because it included no data from human participants.

Results

Of the 38 states and the District of Columbia using comprehensive MMC to deliver Medicaid coverage during the study period, 33 (85%) used maternity kick payments to supplement capitated rates (Figure 1). The majority of states (n = 24 and the District of Columbia) that use MMC to deliver coverage set kick payment rates to offset only the cost of delivery services, while a minority (n = 8) set rates to offset both the cost of delivery and perinatal services. For 5 of these states, we were unable to determine the rates. No states varied kick payment rates by mode of delivery (ie, cesarean section vs vaginal delivery). Kick payment rates for delivery services varied 5-fold between states, ranging from $2838 in New Hampshire to $14 493 in Maryland (Figure 2A). Variation in kick payment rates were not explained by the amount of Medicaid payments to physicians or obstetricians (data not shown) nor by variation in Medicaid FFS payments (Figure 2B), suggesting that kick payments may exceed the cost of delivery hospitalizations in some states and be less than the cost in others.⁵

Figure 1. Use of Kick Payments in MMC for Delivery Services and Perinatal Services in 50 States and the District of Columbia, 2018-2020.

Data were drawn from authors’ analysis of publicly available Medicaid managed care (MMC) documents. The 12 states that do not have comprehensive MMC (Alabama, Alaska, Arkansas, Connecticut, Idaho, Maine, Montana, North Carolina, Oklahoma, South Dakota, Vermont, and Wyoming) do not use kick payments, as well as 6 states with comprehensive MMC (Hawaii, Illinois, Minnesota, New Mexico, North Dakota, and Tennessee).

Figure 2. Variation in Maternity Kick Payment Rates in MMC and Differences Between Average Medicaid FFS Payment for Delivery Services and Kick Payment Rates.

Data were drawn from authors’ analysis of publicly available Medicaid managed care (MMC) documents. A, Kick payment rates for the 21 states and the District of Columbia that use payments for delivery services and 5 that use kick payments for delivery and perinatal services. Of the 23 states not shown, 5 have a kick payment of an unknown amount (Kentucky, Michigan, Missouri, and West Virginia for delivery services only and Delaware for delivery and perinatal services), 6 do not use kick payments (Hawaii, Illinois, Minnesota, New Mexico, North Dakota, and Tennessee), and 12 do not use comprehensive MMC to deliver Medicaid coverage. B, The 16 states and the District of Columbia that use kick payments for delivery services only, and had publicly available data on the average Medicaid fee-for-service (FFS) payment for delivery services. The brown-shaded area indicates states where the kick payment is 5% or greater of the average Medicaid FFS payment, and the orange-shaded area indicates states where the kick payment is 5% or less of the average Medicaid FFS payment.

Discussion

In this cross-sectional study using data from 2018 to 2020, we found substantial and potentially unwarranted state variation in delivery kick payment rates within MMC. If kick payment rates are set too low, plans may attempt to avoid pregnant enrollees by limiting coverage of certain services or restricting maternity care clinicians in their networks. The potential consequences of misaligned incentives in MMC may have disparate effects on Black and Indigenous women, who are disproportionately enrolled in Medicaid and are at greater risk of maternal mortality and morbidity.⁶ We did not, however, find evidence that between-state variation in kick payment rates reflected differences in the amounts of Medicaid payments or the cost of delivery hospitalizations. Limitations of the study include the inability to associate kick payment rates with MMC plan behavior or maternal health outcomes. In addition, we compared kick payment rates with delivery costs from Medicaid FFS, not the prices that MMC plans paid for delivery services, which were unavailable. The magnitude of the difference between Medicaid FFS payments and kick payment rates may reflect differences in enrollees or billing practices between MMC and Medicaid FFS. Additional research on the effects of kick payments on maternal care access, quality, and outcomes is needed to improve maternity care and to assist states in designing Medicaid payment policies that support maternal health and health equity.

Supplement.

eMethods.