Recent analyses suggest financial exposure facing health plans and other payers is significant and growing. Overall, children admitted into the neonatal intensive care unit (NICU) incur an average of $77,992 in healthcare costs, compared to $14,268 in total healthcare costs if they were not admitted to a NICU as newborns.[2] These stays can range from weeks to months and cost from tens to hundreds of thousands of dollars, with some even going into the millions. The degree of magnitude and volatility of these events can help dictate the level of importance in both managing and understanding maternal risk. Payers and actuaries are constantly working to measure the impact of different intervention strategies. However, analytics may often be isolated to process metrics (e.g., pharmacy adherence) or utilization (e.g., number of emergency room visits) rather than a holistic view of the entire maternal-newborn member journey. Analyzing maternal health claims when using only a mother’s claims data without their baby’s (and vice versa) may provide an incomplete picture of claims related to a maternity event. This article illustrates a potential benefit of using a more robust, episode-of-care approach. Once a rigorous “perinatal episode of care” definition is established, the framework could potentially contribute to more insightful trend analytics and holistic measurement of care management programs, as well as provide a foundation for value-based incentives.
NICU events are highly monitored due to their high cost prevalence in maternity care, which ranks sixth among all healthcare condition categories in total paid spend by $100,000+ high-dollar claimants.[3] While preterm birth (PTB) and low birth weight (LBW) may both contribute to NICU admissions, full-term infants with congenital anomalies or other birth events can also result in significant cost. Evaluating a complete episode of care encompassing costs for prenatal, delivery and postpartum for both mom and baby may provide better insight into the associated costs compared to the traditional per member per month (PMPM) approach. In general, management programs and traditional analytics will report utilization metrics. If a program effectively reduces emergency room visits, can we be sure that the total cost was reduced, or did this lead to unmanaged, underlying comorbidities surfacing in other areas? What was the overall cost impact of better managing diabetes or hypertension during pregnancy?
A Comprehensive Maternal-Newborn Episode of Care
One foundation for potential improvement in measurement and analysis is to consolidate associated claims into an episode of care. Existing models, such as the TennCare Perinatal Episode of Care model and the Ohio Medicaid Neonatal Episodes of Care model, can be leveraged as a starting point. It is worth noting that combining mom and baby claims into an episode of care can be a common challenge for health plans. This approach addresses that challenge early on: even when immediate newborn claims are initially processed under the mother’s member ID, those initial costs would be captured. However, to maintain this holistic view once the infant transitions to their own unique member ID, a formal mom-baby link across the entire episode could help. Here is a list of elements to consider in a maternal-newborn episode of care:
- Prenatal period: Establishing the episode start date as the first prenatal claim.
- Delivery event: Incorporating a healthcare facility birth-related claim for the mom. For example, look for members with
- Mom’s postpartum period: Using a look-forward period of at least three to six months, and potentially up to 12 months, after delivery can help. The period length can vary depending on state regulations (e.g., Medicaid eligibility). A longer window can more accurately capture impacts from postpartum depression, cardiac events, readmissions and severe maternal morbidity (SMM).
- Baby’s “newborn” period: Matching postpartum period length with a goal of 12 months.
- Further considerations: Incorporating detailed claims-based logic, such as (a) excluding claims for comorbid conditions not related to pregnancy (e.g., HIV); (b) including only prenatal and postpartum spend with specific pregnancy-related procedure and diagnosis codes; (c) excluding members with multi-insurance coverage (coordination of benefits); (d) excluding pregnancies that do not reach delivery; and (e) considering inclusion/exclusion criteria for outliers within the episode of care.
- Inclusion criteria: As a starting point, the TennCare and Ohio Episode of Care models can provide helpful guidance for considering which claims to include in the maternal-newborn episode of care.[4] Generally, this would imply including all prenatal care with pregnancy-related or gestational age ICD-10 codes (e.g., Z32.01, Z34., Z3A.); all inpatient claims for delivery; and all postpartum or complication-related encounters with postpartum-specific or obstetric ICD-10 codes (e.g., Z39.* for routine follow-ups, or O85–O92 for postpartum complications).
While the establishment of episodes of care can potentially assist in payment and reimbursement methodologies, they also can provide a framework for deeper analytics and comparisons over time and between groups. Observing historical trends can help contribute to the choice of shifting from a PMPM evaluation approach to an “average episode cost” approach over time. This may also help to provide additional stability for forecasting and pricing. Program measurement may also be aided by comparing population-level average episode costs in the baseline and measurement period to help quantify the impacts of interventions on total spend. Other robust methods (e.g., matched analyses, inverse probability of treatment weighting) may also be used when incorporating the average episode cost to compare groups (like treatment/control). When assessing maternal health programs, payers may estimate a return on investment by utilizing the episode-of-care framework. Since such a model would directly measure all related claim costs, the change in episode cost between baseline and measurement period can be used to help quantify savings.
As this article has shown, maternal health can be complex, and the magnitude of financial spend and volatility can create a significant actuarial challenge. Managing and measuring the healthcare spend in the maternal space may be assisted by moving beyond traditional utilization metrics and PMPM summaries to a more thorough episode-of-care framework. By considering this approach, actuaries may be better equipped to provide the critical insights that can contribute to clinical and financial improvements.
This article is provided for informational and educational purposes only. Neither the Society of Actuaries nor the respective authors’ employers make any endorsement, representation or guarantee with regard to any content, and disclaim any liability in connection with the use or misuse of any information provided herein. This article should not be construed as professional or financial advice. Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries or the respective authors’ employers.
Adam Kubsh, FSA, MAAA, CERA, is the head of Health Economics at Pomelo Care. He can be reached at adam.kubsh@pomelocare.com.
Keith Passwater, FSA, MAAA, FCA, is CEO of Havarti Risk. He can be reached at KPasswater@Havarti-Risk.com.
Endnotes
[1] Donna L. Hoyert, “Maternal Mortality Rates in the United States, 2024,” CDC National Center for Health Statistics, March 2026, https://www.cdc.gov/nchs/data/hestat/hestat113.htm.
[2] Aubrey Winger, Matthew Rae and Cynthia Fox, “Health Costs Associated with Pregnancy, Childbirth, and Infant Care,” Petersen-KFF Health System Tracker, September 9, 2025, https://www.healthsystemtracker.org/brief/health-costs-associated-with-pregnancy-childbirth-and-postpartum-care/#Out-of-pocket%20health%20spend%20for%20infants%20covered%20by%20employer%20plans%20in%20the%20first%20two%20years%20of%20life,%20by%20NICU%20level,%202021-2023.
[3] “High-Cost Claimant 2025 Report: Where Health Claims Are Accelerating for Employer Plans,” Lockton, December 16, 2025, https://lockbox.lockton.com/m/384b2007ed4bb5a0/original/High-Cost-Claimant-2025-Report.pdf.
[4] “Technical Documents,” TennCare, n.d., https://www.tn.gov/tenncare/health-care-innovation/episodes-of-care/technical-documents.html; “Comprehensive Maternal Care,” Ohio Department of Medicaid, n.d., https://medicaid.ohio.gov/resources-for-providers/special-programs-and-initiatives/payment-innovation/cmc/cmc.