Equalizing physician fees had little effect on cesarean rates

Higher physician fees for cesarean delivery have been hypothesized to increase cesarean rates, but there are few published estimates of their effect. We studied the impact of an insurance reform that equalized fees for vaginal and cesarean delivery, a relative price shift of 21%. After adjusting for case-mix cesarean rates were calculated from data on the 11,767 deliveries in the 12 months before and after the reform. Overall, there was a 0.7% nonsignificant drop after the reform. The drop was apparently due to the departure of physicians with few deliveries paid by the plan, but high cesarean rates. Despite the limited impact on cesarean rates, equalizing fees may be beneficial because physician costs are similar for the two procedures.