Covered California is threatening to exclude from its approved provider networks those hospitals and doctors that have Cesarean section rates greater than that of the national average.
Too many women are undergoing C-sections that are not medically warranted, according to Covered California, the state's health insurance exchange.
"Not only would reducing the rate of first-birth C-sections reduce the risk of complications, it also reduces the likelihood of a second or more C-section," according to a letter from Covered California to providers.
It would also reduce the cost of births.
There are approximately 500,000 births annually in California and payments average $5,000 or more per C-section versus a vaginal birth. If the state C-section rate was decreased by 1 percent, 5,000 C-sections could be avoided annually, Covered California said.
California hospitals currently have a wide variation of 12 to 70 percent, with a statewide average of 26.2 percent in low-risk C-section births, according to Covered California. The state insurance exchange wants to bring that figure in line with the national 2020 target of 23.9 percent.
Officials are initiating a quality improvement initiative with hospitals. Of the 251 hospitals in California with maternity services, 166 submit data, said Covered California. They are urging the rest to get onboard.
Covered California, along with the Department of Health Care Services and the California Public Employees' Retirement System, are among the three largest purchasers of health insurance in the state, providing coverage to approximately 17 million residents and over half of the births.
Beginning in 2019, insurance companies that contract with the exchanges must either exclude from their networks any hospital that doesn't meet the federal government's 2020 target C-section rate or explain why they aren't, according to the new contract approved by the Covered California board.
Any insurer that wants to keep an underperforming hospital in its network will have to provide Covered California with the rationale for continued contracting and document how the hospital is improving its performance, the contract states.