Reduction in Neonatal Intensive Care Unit Admission Rates in a Medicaid Managed Care Program

March 1, 2005
Joseph A. Stankaitis, MD, MPH
Joseph A. Stankaitis, MD, MPH

Howard R. Brill, PhD
Howard R. Brill, PhD

Darlene M. Walker, RN, MS, FNP
Darlene M. Walker, RN, MS, FNP

Volume 11, Issue 3

Background: Neonatal intensive care unit admission rates arean important birth outcome indicator for Medicaid managed careorganizations.

Objectives: To reduce neonatal intensive care unit admissionrates by at least 15% and to maintain that reduction through implementationof a quality improvement program.

Study Design: The organization performed a longitudinalpopulation-based review of its birth outcomes from 1997 through2003, focusing on neonatal intensive care unit admission rates.The return-on-investment evaluation reflected attributable incrementalprogram costs and resultant savings.

Methods: Interventions included enhanced identification andstratification of high-risk women with the use of a health riskassessment form; outreach through nursing care coordination offeringhome visits, transportation, support services, social work services,and connection with other community-based organizations;and implementation of a strong informatics structure.

Results: Neonatal intensive care unit admission rates decreasedfrom 107.6 per 1000 births in 1998 to 56.7 per 1000 births in2003. The return on investment from the incremental programenhancements was just over $2 per $1 expended.

Conclusion: A program that identifies its high-risk pregnantenrollees in a timely fashion, provides outreach using a strongnursing care coordination and social work emphasis, and has anenhanced informatics structure can significantly affect birth outcomesfor a Medicaid managed care population.

(Am J Manag Care. 2005;11:166-172)

Pregnancy is one of the primary events that lead toeligibility for Medicaid, and deliveries account foralmost 50% of Medicaid inpatient discharges.1Women from lower socioeconomic groups experiencepoorer birth outcomes than those from higher socioeconomicgroups.2,3 Consequently, delivery claims andhigh-cost neonatal intensive care unit (NICU) expensesconsume a large portion of Medicaid managed care medicalexpense budgets, despite advances in perinataltechnology in the United States. With the shift of mostMedicaid-eligible individuals to Medicaid managed care,enhancing birth outcomes becomes a major challengefor any Medicaid managed care plan.

Monroe Plan for Medical Care (MP), an independentpractice association with more than 3000 providers inthe Rochester region, partners with Excellus BlueCrossBlueShield, Rochester, to serve as Excellus BlueCrossBlueShield's delivery system for publicly financed programstargeting underserved populations. It providescare for nearly 48 000 Blue Choice Option (Medicaidmanaged care) enrollees in a program that covers thecategories of individuals that include women and children(Temporary Assistance to Needy Families), adultswho are unable to work (Safety Net), and a segment ofthe disabled populations (Supplemental SecurityIncome). Monroe Plan for Medical Care is the dominant(70% of the market share) provider for Medicaid managedcare in this region. It is the exclusive communityprovider for 14 000 enrollees in Family Health Plus, anexpansion of the Medicaid managed care program in NewYork State for working-poor individuals. Finally, MP is theexclusive community provider of care for 11 000 childrenenrolled in Child Health Plus (New York State'schildren's insurance program).

In its relationship with Excellus BlueCross BlueShield,MP is financially responsible for the provision of all coveredmedical care services for enrollees in these publiclyfinanced programs. It also is accountable for care management,disease management, and quality improvementactivities that target the enrollees in these programs.

Before 1998, Medicaid managed care was an optionalprogram for Medicaid recipients. During 1998, themost populous counties in MP's service area requiredmandatory enrollment of individuals covered byMedicaid in the Temporary Assistance to NeedyFamilies and Safety Net categories into Medicaid managedcare programs. Consequently, MP's overall enrollmentincreased from about 28 000 enrollees in 1998 tomore than 73 000 in 2003, with a resultant increase inthe number of births annually from about 600 in 1998to more than 1300 in 2003.

During the late 1990s, the NICU admission rates forMedicaid, including MP, consistently were considerablygreater than 100 per 1000 births. In 1997, there was arudimentary prenatal and perinatal case managementprogram that consisted of a part-time nurse case manager,ad hoc use of community support services (includinghome-based prenatal education), and aninconsistent approach to case finding. It made sense toimplement a more comprehensive approach to prenatalcare, because a reduction in NICU admission rateswould favorably reduce overall costs for deliveries. Thiswould provide an opportune area in which to achieveimprovements in terms of patient care and outcomesand medical expenses.4-6

The medical literature reports that there are manyrisk factors that significantly affect birth outcomes forlow-income and working-poor women, including medicalcomorbidities, mental health and substance abuseissues, smoking, previous preterm birth, and social-relatedproblems such as social isolation, spousal abuse,and homelessness.7-10 The birth outcomes database ofMP (obtained through quarterly facility medical recordreviews) identified social issues as correlating stronglywith poor birth outcomes in comparison with other riskfactors. Because comprehensive care through outreach,coordination, and education of patients seems to havedemonstrated improvements in outcomes,11-13 MPbelieved that early identification of risk factors, withsubsequent coordinated interventions, would hold thegreatest promise in mitigating the effects of risk factorsin terms of birth outcomes.

Although MP's enhanced quality improvement effortsbegan in late 1997, the Center for Health CareStrategies invited MP in 2000 to participate in its BestClinical and Administrative Practices "Toward ImprovingBirth Outcomes"program. This was a nationwidework group of 11 Medicaid managed care entitiescommitted to developing and pilot-testing best-practicemodels. Best Clinical and Administrative Practices providedMP a framework in which to implement qualityinitiatives, using its typology of identification, stratification,outreach, and intervention. Furthermore, the collaborationwith Best Clinical and AdministrativePractices allowed MP to network and to identify bestpractices (and failed efforts) from other Medicaid managedcare entities.


During the literature review and ongoing interactionswith other Medicaid managed care organizations, it wasevident that there was no one magic bullet for improvingbirth outcomes. Consequently, MP decided that sustainedimprovement requires change in the care deliverysystem14 to assist practitioners in doing the right thing atthe right time. Monroe Plan for Medical Care thus adopteda quality improvement approach for its prenatal careimprovement activities that calls for the use of learningcycles to plan and test changes in systems and processes.15 Such cycles have been referred to as Plan-Do-Study-Act cycles, which will guide improvement teamsthrough a systematic analysis and improvement process.As part of this process, MP solicited the professionalinput of its Obstetrics/Gynecology Advisory Committeein the development of its prenatal care program"Healthy Beginnings."The objectives of the programwere to reduce NICU admission rates from baseline in1998 by at least 15% during the subsequent 3 years andto maintain that reduction in the following years.

This program is part of MP's quality improvementprogram to enhance healthcare outcomes for all of itsenrollees. The focus for any such quality improvementprogram is to institute organizational system changes toensure adherence to appropriate practice guidelinesthrough the coordination of care. This approach emphasizesorganizational and care delivery improvementsusing existing standards of care. Consequently, therewas no randomization of enrollees into intervention orcontrol groups, and the services provided were availableto all eligible enrollees, who at all times were able torefuse or terminate any services offered. Because theseactivities are essentially organizational system changes,institutional review board approval and participants'informed consent were not sought or required.

Identification of High-risk Individuals

Before 1997, practitioners rarely notified MP aboutthe pregnancy of enrollees (notification would occur foralmost 3% of pregnant women). In late 1997, MP developedits prenatal registration form (PRF) to serve as ameans for practitioners to notify the program when anenrollee was pregnant and to provide the program witha health risk assessment for each woman. The PRFassesses risk categories of social risk factors, maternalmedical history, psychoneurological history, maternalobstetrical history, and previous infant findings. Duringthe rollout for the PRF, MP began to reimburse practices$30 for the submission of the PRF; alternatively, if thePRF was not submitted, the practitioner could potentiallylose the prenatal care reimbursement. This actionresulted in PRF submission rates of 85% in 1998 andsubsequent annual rates in the 88% to 98% range.

Although the submission of PRFs reached 90% andhigher, challenges remained regarding the timeliness oftheir submission. Often, practitioners would submitPRFs during the late third trimester, when the ability tomitigate any significant risks would be at a minimum. InApril 2001, Healthy Beginnings implemented a tieredpayment system for the submission of the PRF in whichthe program would pay practitioners $50 for submissionin the first trimester, $30 in the second trimester, and$20 in the third trimester. In addition, program staff visitedpractitioner offices to educate personnel regardingthe submission of the PRF and its importance in assistingthe practitioners in managing high-risk pregnantwomen. This intervention resulted in submission ratesof the PRF within the first trimester that were consistentlyin the 60% and higher range.

Stratification of Risk

The PRF serves as an invaluable tool to stratify therisk for pregnant enrollees. Staff members input the PRFinto the care management database, which then scoresthe reported findings to reflect the risk for each patientand to engage members in needed medical, behavioralhealth, and social and support services as identified. Acommittee of obstetrical practitioners and the local perinatalnetwork developed the scoring system to stratifypatients at risk throughout the community. This scoringsystem serves as an adjunct for care coordination decisionsand is not used as admission criteria for the NICU.

During 2000, staff discovered that there was no consistentreview process in place for addressing behavioralhealth issues identified through the PRF. In November2000, the program instituted an integrated reviewprocess between the behavioral health and clinical medicalmanagement staff that now ensures that behavioralhealth staff address all mental health and substanceabuse issues reported on the PRF and work to engagepatients in necessary care.


Through the quality improvement process, HealthyBeginnings has evolved its approach to outreach, fromusing generalized community outreach services (thelocal county community healthcare worker programand contracted home health agencies), to instituting atrial of using its own prenatal outreach workers, tofinally engaging outreach services through the localBabyLove Program in early 2002. Whenever theHealthy Beginnings perinatal nurse coordinator identifiesmembers at moderate-to-high risk through thePRF, the coordinator manages these individualsthrough communications with the practitioners, outreachprograms (such as the county's MedicaidCommunity Health Worker program), and referral toMP's internal social work program as needed. Individualswith medical complications of pregnancyreceive complex case management, home care services,or skilled nursing services as required.

The perinatal nurse coordinator refers all pregnantenrollees identified as high risk because of psychosocialproblems to the BabyLove Program. This community-basedprogram has a strong history of working effectivelywith high-risk pregnant women, with the addedfeature of social work supervision that is necessary toeffectively provide outreach. The BabyLove Programoffers home visits, arranges transportation, provideslinks to support services and social work services, andconnects high-risk pregnant women with other criticallyneeded services.

In early 2003, MP engaged the services of an additionalBabyLove Program outreach worker to addressthe needs of depression in pregnancy. Later in 2003, MPadded its own social worker to support the HealthyBeginnings clinical staff in addressing social problems.

Informatics Structure

With enhanced outreach, MP has been able to moreeffectively connect its pregnant women with medical,mental health, chemical dependency, community-based,governmental, and social services. Before 2001,MP stored PRF data in an internally developed MicrosoftAccess (Redmond, Wash) database; however, thisapproach to information systems did not support caremanagement activities. In 2001, MP installed a commerciallyavailable care management software system(CaseTrakker; IMA Technologies, Sacramento, Calif) tosupport prenatal and perinatal care activities. The systemidentifies risk factors and scores the PRF, providesmember demographics, identifies related practitioners,provides progress notes, creates reminders and ticklersfor care management activities, stores birth outcomedata, creates reports, and provides an interface forcomorbidity issues. The system supports care managersand social workers by linking care management activities,risk factors, and outcomes associated with patients.As now implemented, it is not accessible to providersand does not provide a general electronic medicalrecord; rather, it focuses on structuring the contacts thatthe care managers have with patients, practitioners, andcommunity agencies, based on identified risk factors.


Admission Rates

The measurement for program effectiveness is theNICU admission rate for all pregnant women in MP.Because any significant programmatic changes firstoccurred in late 1997 and early 1998, and given thatpregnancy is usually a 9-month phenomenon, the baselineyear for NICU admissions is 1998. In terms of programmatic costs, 1997 serves as the baseline year, withincremental new program costs reflected in the followingyears.

As the Figure demonstrates, the NICU admissionrates have progressively decreased relative to the 1998baseline rate of 107.6 per 1000 births as MP implementedand improved the prenatal care program.Concomitantly, the NICU admission rates for Medicaidrecipients in upstate New York have remained essentiallythe same during the same period (M. Whitbeck,Finger Lakes Health Systems Agency, Rochester,unpublished data, 2004). The NICU admissions andtheir associated costs in this analysis also include thoseinfants weighing less than 1200 g. The costs for theseinfants were shifted out ("carved out") of Medicaid managedcare to New York State Medicaid fee for servicebeginning in 1999; however, these children and theircosts were included in the results and analysis. Theseprogram results have exceeded the original projectobjective of achieving a 15% reduction in the NICUadmission rate.




Based on the 1998 NICU admission rate of 10.8%, arate of 9.1% would have to be obtained to achieve thecorporate objective of a 15% reduction in rates.However, to obtain a statistically credible reduction ofat least 15% requires rates to fall below 6.8% to accountfor the potential effect of random variation. This is therate calculated to show at least a 15% reduction statisticallysignificant at <.05 (&#945;= .05, 80% power) for abinomial test. Although there were reductions in NICUadmission rates during 1999 and 2000, the rates inthose years exceeded 9.1%. From 2001 through 2003,the rates were 8.8%, 8.9%, and 5.7%, respectively. A1-sided exact binomial test was used to verify whetherNICU admission rates were 15% belowthe 1998 rate. The rate during 2003was statistically significant (< .01).Arguably, this is conservative becausethis requires a one-third reduction inNICU admission rates. Using theweaker criterion of simply showing astatistically significant reductioncompared with 1998, the rates from2001 through 2003 were statisticallysignificant at < .05.

In support of the observeddecrease in NICU admissions, 2 otherbirth outcome measures (gestationalage < 32 weeks and birthweight <1900 g) demonstrated trends in thesame direction. The rate of birthswith a gestational age younger than32 weeks decreased from 2.9% in2001 to 0.9% in 2003, and the rate of births with abirthweight less than 1900 g decreased from 6.1% in2001 to 1.6% in 2003. Birthweights less than 2500 galso decreased but less dramatically, from 10.2% to7.6%. The mean birthweight and gestational ageremained essentially flat during this period; however, areduction in the tails of these distributions wasobserved. Although the mean birthweight and gestationalage did not change, the reduction in extremebirthweights and gestational ages is consistent withreduced NICU admissions.

From 1998 through 2003, criteria for NICU admissionremained unchanged. Therefore, within the communitythere was no reduction in the number ofindications for NICU admissions, nor was there anyredirection of children who would be candidates forNICU admission to other units. Analysis of New York'sStatewide Planning and Research Cooperative Systemdatabase, which captures all payer hospital data,demonstrated no concurrent changes in NICU admissionrates in upstate New York for Medicaid patients (feefor service or managed care) through 2002 (M.Whitbeck, Finger Lakes Health Systems Agency,Rochester, unpublished data, 2004). Therefore, itappears that there were no external effects on NICUadmission rates to explain the observed change in ratesfor MP.

Return on Investment

Implementation of a comprehensive care managementprogram for prenatal care is not a trivial financialmatter, particularly given that there has not been anyone approach documented in the medical literature thatis deemed the magic bullet. A health plan must demonstrate that whatever care or disease management programit implements will improve health outcomes andyield an economic return. Resources are scarce for mostMedicaid managed care programs, and it is imperativefor them to measure the effectiveness of their effortsrather than to simply continue them because they seemright. This is where measuring and analyzing the returnon investment for a program are important.

For the purposes of this analysis, MP used the return-on-investment methods developed by AmericanHealthways Inc and Johns Hopkins University.16 Thisapproach examines the ratio of the realized savings tothe incremental program (prgm) costs, as shown in thefollowing formula:

In this case, medical costs (Med Costs) are the NICUcosts, with the MP NICU costs in 1998 serving as thebaseline for expected future years'NICU costs. The differencebetween actual costs and the projected costsbased on the baseline year provides the value for thenumerator of the ratio. Program costs for the denominatorinclude reimbursement costs for submissionof the PRF, Medicaid Obstetrical and Maternal Servicesprogram and Community Health Worker programexpenses (primarily home-based prenatal educationservices), care management software expenses, externaloutreach services, internal personnel costs (full-timeemployees), and allocated organizational overhead.

Using the aggregate NICU cost savings (1999 through2003) of $1 875 463 (Table 1) and the incremental prenatalprogram costs (1998 through 2003) of $924 300(Table 2) in the return-on-investment ratio yields aratio of 2.03, where for each $1 spent the enhancedprenatal care program provided a cost savings to theorganization of just over $2. The ongoing rise in administrativecosts per birth for the Healthy Beginnings programreflects the growth in the pregnant population, whichrequired an increased investment in program infrastructureand the shift to a "high-touch"approach to outreachand to interventions that would require the addition ofmore personnel (a high-cost expense) to the program.

Despite the rising administrative costs for the program,the substantial savings realized by the program(with a demonstrated savings-to-cost ratio of 2.03)makes a strong business case for the Healthy Beginningsprogram. One could hypothesize that fewer NICUadmissions potentially indicate overall healthier infantsat birth for this high-risk population, resulting in animproved quality of life for these children and their parentsand an overall societal benefit. The observedreduction in the rates of infants with gestational agesyounger than 32 weeks and infants with birthweightsless than 1900 g would support this. More in-depth testingof this hypothesis could be the subject of anotherstudy looking at child developmental metrics.


Program Outcomes

Monroe Plan for Medical Care contends that theimplementation of its enhanced prenatal care program,Healthy Beginnings, in late 1997 and early 1998 hasresulted in a marked decrease in its NICU admissionrates. Other than this program, there were no knownexternal forces that would have caused a drop in theNICU admission rates, such as a change in NICU admissioncriteria or coding changes or evidence that theoverall population experienced a drop in rates. In 1998,the larger counties that MP serves (with most of itsenrollees) converted to mandatory enrollment intoMedicaid managed care for their Medicaid beneficiaries.This would mitigate any argument that the pregnantwomen enrolled within Medicaid managed care wouldbe healthier than those in fee-for-service Medicaid.

There does not appearto be a consistent changein case-mix indicatorsthat would cause theobserved changes inNICU admission rates.Use of a diagnostic costgroup case-mix adjuster(DxCG, Inc, Boston,Mass) showed essentiallyno change in the relativerisk for women eachyear, and the mother'smean age at deliveryremained the same atabout 25 years. Trendsfor other risk factorswere mixed, with incrementaldecreases innumbers of individualswith social risk factors,while there wereincreases of similarmagnitude in the percentageof women withprevious low birthweightpregnancies orpreterm labor.Interestingly, the rate ofwomen entering prenatalcare during theirthird trimester decreased from 13.0% in 2001 to 7.7% in2003. Late entrance into prenatal care is a risk factorthat the program has sought to minimize throughprovider incentives and patient education.

It is difficult to ascertain if any one interventionaffected these outcomes. Review of the medical literatureand discussion with other Medicaid managed careprograms appear to indicate that, if there is anyimprovement in birth outcomes for an overall population,it is usually attributable to a combination of severalinterventions. In this case, activities enhancing earlyidentification, stratification, and outreach probably provideda synergistic effect on improving the outcomes. Asnoted in the Figure, the timing of the first substantialdrop in NICU admission rates occurred during 1999,more than 1 year after the implementation of therequirement for the submission of the PRF. We believethat requiring practitioners to complete and submit thePRF, reimbursing them for submitting the PRF, andoffering a program that would address identified problemsencouraged them to ask about and assess importantrisk factors of prenatal care (eg, mental health,substance abuse, and social isolation) that might nothave been readily explored and pursued in the past. Thedownward trend in NICU admissions (from 1998 to2001), with the associated cost savings (especially in2001), is reflective of the widespread provider adherenceto the completion and submission of the PRF,allowing MP to intervene with patients having identifiedrisks. The slight increase in the NICU admission rate in2002 caused the dip in noted savings for that year. Thisreflects an increase of only 4 NICU admissions for theprogram and can be viewed as a part of normal variationin performance.

Analysis of MP birth outcomes data indicated thatpsychosocial or social isolation problems strongly correlatewith poor birth outcomes. These include such factorsas abuse by a spouse or partner, absence of a telephone,and lack of stable housing. These findings, alongwith care management experiences of MP and outreachstaff, led to an increased emphasis of the program onoutreach and social work interventions in a culturallycompetent manner. We contend that the engagement ofthe BabyLove Program (which includes a strong socialwork emphasis and is a high-touch program) in 2002probably contributed significantly to the large fall in theNICU admission rate during 2003. Monroe Plan forMedical Care believes that these efforts contributed toand will maintain these decreases in NICU admissions.

Recent Interventions

Smoking is a recognized major risk factor for poorbirth outcomes, and the rate of self-reported smokingamong MP pregnant women has been consistently wellabove 20%. Previous attempts to mitigate this risk factoramong pregnant women in MP had been less thansuccessful because of a combination of practitionerunfamiliarity with evidence-based approaches forsmoking cessation and a lack of appreciation of theimportance of providing culturally competent counseling.In October 2003, MP, in partnership with theMonroe County Department of Public Health,launched the Greater Rochester Area SmokingPrevention program, targeting minorities for smokingcessation opportunities. For 4 community health centers,2 community centers, and a large inner-cityobstetrical practice, the project deploys culturally competentpeer counselors on site who have been trainedin the use of smoking cessation strategies endorsed bythe Agency for Healthcare Research and Quality,Rockville, Md. The potential exists for this new initiativeto remedy this problem.

Because the spacing of pregnancies tends to decreasepoor birth outcomes and decrease potential stresseswithin a family, the postpartum visit can play a key rolein enhancing a woman's coping skills and offer a venuefor addressing family planning. In late 2002, MP instituteda "rewards"program, in which women who havekept their postpartum visit appointment receive a $25gift certificate to a department store.


Monroe Plan for Medical Care believes that itsHealthy Beginnings program has had a significant positiveeffect among the enrollees in its governmental programs.As a result of the reduction in NICU admissions,the program implementation and operations have producedsubstantive cost savings of more than $1.8 million,relative to an investment of $924 300 through2003. The demonstration of a savings-to-cost ratio of2.03 makes a strong financial business case for the continuationof the prenatal care program. In addition,children admitted to the NICU generally have a higherincidence of medical and developmental problemscompared with other infants. One could infer that, withthe reduction in NICU admissions, there are healthierinfants at birth among the population served by MP,resulting in an improved quality of life for infants andtheir families and an overall societal benefit of havingfewer children requiring early intervention services forbirth-related developmental delays.

Other plans that serve Medicaid enrollees can developand implement similarly effective prenatal care programs.The Center for Health Care Strategies offers apublicly available tool kit to assist plans in implementingthe Plan-Do-Study-Act quality improvement processand in embracing the Best Clinical and AdministrativePractices typology.17 Success requires a motivated staff,appropriate tools for identification and stratification ofhigh-risk individuals, education of practitioners regardingprogram benefits, infrastructure for data and outcomesmeasurement, and an organizational belief thatincremental interventions will lead to positive outcomesfor this vulnerable population.


We acknowledge the contributions of the MP staff (especially MaureenSullivan, Meg Ranaletta, and Susan Maxwell, MS), without whose dedicatedefforts and support the success of the Healthy Beginnings programwould not have been possible; Deborah Peartree, BSN, MS, for her assistancein the development of the manuscript; and Mardy Sandler, MSW,and the BabyLove Program staff, who provided intensive outreach tohigh-risk women.

From the Monroe Plan for Medical Care, Rochester, NY.

This project was funded entirely by Monroe Plan for Medical Care as part of its qualityimprovement activities. Monroe Plan for Medical Care has been a participating Medicaidmanaged care organization in the "Toward Improving Birth Outcomes" work group of theBest Clinical and Administrative Practices, Center for Health Care Strategies, Princeton, NJ,funded through The Robert Wood Johnson Foundation, Princeton.

Address correspondence to: Joseph A. Stankaitis, MD, MPH, Monroe Plan for MedicalCare, 2700 Elmwood Avenue, Rochester, NY 14618. E-mail:

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