Our work addressing maternity care finance reform is made possible through a grant from the the Esther A. & Joseph Klingenstein Fund.
Over a decade ago, the U.S. health system began shifting paying Ob/Gyns from fee-for-service (FFS) toward “value-based” payment models. The intent was to realign financial incentives to reward providers for better outcomes, not just more services. Programs like CMS’s Alternative Payment Models (APMs) and Merit-based Incentive Payment Systems (MIPS) were meant to create a pathway toward rewarding quality, efficiency, and prevention. (CMS QPP; AMA).
The Pacific Business Group on Health and Integrated Healthcare Association (IHA) conceived the initial concept of value-based maternity payment in 2012. The aim was to reduce C-sections by having participating hospitals negotiate a blended case rate for deliveries that reimbursed physicians and hospitals, respectively, one flat rate regardless of delivery method (cesarean or vaginal). Their pilot did, in fact, show a reduction of C-sections with a flat rate for C-sections and vaginal births. The idea was to remove the financial incentive for higher-cost procedures by paying the same rate regardless of delivery type.
Horizon Blue Cross and Blue Shield of New Jersey implemented a maternity care bundled rate with “shared savings” in 2016 to reward cesarean section reductions and has maintained the reduced cesarean section rate.
Bundled Maternity Care Payment
Since this initial conception of a value-based payment in maternity care aimed at reducing c-sections, however, more Medicaid and Commercial payors have adopted a “bundled” maternity care payment rate to Ob/Gyns. These bundled rates are also known as a perinatal episode of care rate. This is a single, comprehensive payment that covers all the services related to a pregnancy, from prenatal care through labor and delivery and for a period after birth (typically 30-90 days postpartum).
Humana, Cigna, and United were among the first large insurers to implement a maternity care bundle payment to reduce costs and improve care.
Yet after nearly a decade of experience, it’s increasingly clear that a bundled maternity payment rate is not universally synonymous with value-based care. In fact, in its current form, it falls short on nearly every principle that defines “value-based” payment.
Why Bundled Maternity Care Is Not Value-Based
1. No universal mandatory quality metrics or reporting
Value-based models, by definition, include quality measures to ensure that savings are not achieved at the expense of outcomes. (ModMed)
But bundled maternity rates have mostly rolled out without mandatory reporting or pay-for-performance tiers. Without claims data on prenatal visits, inductions, or postpartum services, payors cannot monitor what care is being delivered. A bundle without quality metrics is cost control, not value-based care.
2. Opacity without claims data
Because all obstetric services are rolled into one global payment, there is little transparency regarding what services are provided. Without claims, we lose visibility into how many visits occur, which screenings are completed, and whether evidence-based practices are followed.
3. Undervaluation of obstetric care
Bundled rates undervalue the complexity of obstetric care. OB/GYNs may be reimbursed less for nine months of care — including 24/7 availability for delivery — than some surgical specialists are for a single pre-op visit, surgery, and one or two follow-ups. The American College of Obstetricians and Gynecologists (ACOG) has recently reaffirmed the need for fair and equitable payment for maternity providers. (ACOG policy)
4. Exclusion of critical services
Global maternity providers often are not reimbursed for mental health or substance use disorder screenings and treatment, or extra coordination for high-risk patients.
Disincentivized support: This payment structure can actively discourage clinicians from providing vital social support services, even when they know these interventions are needed to address social drivers of health (SDoH).
5. Failure to achieve intended outcomes
Evidence from Medicaid and state pilots shows mixed results. Some states, like Iowa, are now exploring unbundling maternity care. (Iowa)
The absence of consistent quality reporting and fair reimbursement has meant that bundled rates have not reliably improved outcomes nor consistently reduced unnecessary C-sections.
What True Value-Based Maternity Care Would Require
If payors want to claim that maternity payment is “value-based,” several reforms are necessary:
- Use of Evalation and Management Codes Payors should reimburse Ob/Gyns and their clinical staff using evaluation and management (E/M) fee-for-service codes. The American College of Obstetricians and Gynecologists (ACOG) recommends that payors utilize the full range of E/M codes (CPT 99202-99499) for prenatal and postpartum visits to reflect the services provided accurately. The codes allow separate billing for maternal mental health screening, care coordination, and enhanced case management — services that are currently invisible and/or not reimbursable in bundled models.
- Equitable reimbursement Align payments with workload and risk. ACOG’s call for fair compensation should be foundational in any reform.
- Tiered, achievable pay-for-performance incentives. Providers should be required to submit discrete claims or encounter data for prenatal, delivery, and postpartum services — including early prenatal engagement, postpartum care through 6 months (or longer if a patient has complications), and maternal mental health screening. They should be provided with pay-for-performance incentives that start with low-bar quality incentives (e.g., reporting depression screening rates) and build toward outcome-based bonuses (e.g., reductions in non-medically indicated C-sections).
Is It Time to Go Back to Fee-for-Service — With Guardrails?
Aligned with ACOG’s clinical guidance, Clinical Consensus No. 8: Tailored Prenatal Care Delivery for Pregnant Individuals, ACOG’s Committee on Health Economics and Coding has urged the American Medical Association to change the way obstetric services are billed through the Current Procedural Terminology (CPT®) codes. New codes are anticipated to go into effect on January 1, 2027.
According to ACOG, “The global obstetric codes no longer reflect the standard of care. Separate billing and payment for ancillary and supportive services, including but not limited to the administration and interpretation of screening (eg, depression, health-related social needs, or social determinants of health), counseling services (eg, genetic, vaccine, nutrition), group prenatal care, education for self-administered monitoring (eg, blood pressure, weight, glucose levels), and other services should be billed separately with the appropriate CPT codes.”
FFS with Pay-for-Performance (P4P) Rewards?
Fee-for-service with pay-for-performance incentives offers a compelling alternative to bundled payments by directly addressing the risk of undertreatment while rewarding quality care. This model ensures that providers are compensated for every necessary service and receive bonuses for achieving key quality metrics.
Unlike bundled payments that might disincentivize additional services, fee-for-service with performance incentives encourages comprehensive care. Providers are paid for each visit, test, and procedure, ensuring patients receive all the care they need. The “pay-for-performance” component then adds a powerful layer of quality control, directly linking financial rewards to patient outcomes and adherence to best practices.
In other words, FFS plus accountability may deliver more “value” than a bundled global fee with no transparency.
For maternity care, this model can be structured to:
- Boost Postpartum Care: Providers receive a fee for each postpartum visit and a bonus if their patient panel achieves a high rate of follow-up visits. This ensures patients get the care they need after delivery, addressing the critical “fourth trimester.”
- Enhance Screening and Prevention: Providers are paid for conducting screenings for conditions like postpartum depression or substance use. If a high percentage of their patients are screened, an additional financial incentive can be provided, leading to earlier diagnosis and treatment.
- Improve Patient Outcomes: Bonuses can be tied to a provider’s overall patient outcomes based on the provider’s patient population. For example, if a provider lives in a county with high rates of preterm birth or gestational diabetes, the provider would be rewarded for lower rates of preterm births or successful management of gestational diabetes for the prior quarter or year’s outcomes. This incentive would encourage a focus on preventative care and patient education throughout the entire pregnancy.
By combining the security of fee-for-service with the strategic incentives of pay-for-performance, this model avoids under-treatment risk while promoting the highest standards of care. It compensates providers for their work and rewards them for achieving the most critical patient results: a healthy mother and baby.
Conclusion
It’s time for maternity care payment reform.
Bundled maternity payments were meant to be a building block for value-based care. Instead, without mandatory reporting, equitable reimbursement, or inclusion of critical services, they have become a cost-cutting tool that constrains care and undervalues women’s healthcare providers.
Update October 24, 2025
As mentioned above, the AMA CPT Editorial Panel was considering retiring the maternity bundle codes. At the September 2025 meeting, the proposed changes for unbundling Maternity Care Services were accepted.
These changes are effective in January 2027. Below is a summary:
New Codes: Addition of placeholder codes 59XX1 through 59X12 for reporting maternity care services, along with new and revised guidelines.
Code Deletions: Deletion of codes 59400, 59409, 59410, 59425, 59426, 59430, and others related to maternity care.
Code Revisions: Revision of codes 59412, 59051, and 59300.
The aim is to replace the current codes with a new structure that supports accurate and comprehensive reporting of modern maternity services.
Learn more here: https://www.ama-assn.org/system/files/sept-2025-summary-of-panel-actions.pdf
