Why pay extra for cesarean-section deliveries?

Third-party insurers typically pay at least 50% more for cesarean sections than for vaginal deliveries, suggesting that a reduced national cesarean-section rate could save payers more than $1 billion annually. This paper discusses the payment implications of a cost-effectiveness study, based on the experience within one health maintenance organization, in which cesarean-section rates were unrelated either to direct costs or to perinatal outcomes. Given these results, insurers should consider paying a flat fee for obstetric services unless differing risk levels or risk-adjusted outcomes justify different amounts.