tests that were collected between 1973 (just a year after the inception
of the WIC program) and 1976 for then-current WIC participants were
compared with data on similar measures collected for new WIC
enrollees at the time of their enrollment. The authors reported that
WIC participation led to increased birthweights.

Kennedy et al. (1982) compared medical and nutritional records
collected between 1973 and 1978 on the births of 897 WIC participants
with those of 400 pregnant women who were either on WIC waiting
lists or were receiving health services at non-WIC facilities at nine sites
in Massachusetts. The authors reported an increase in overall mean
birthweight (from 3,136 grams to 3,273 grams) for WIC participants,
which increased with the degree of WIC participation (namely, the
number of WIC food instruments).

Kotelchuck et al. (1984) examined 4,126 matched pairs of births for
WIC participants and nonparticipants. Data for the sample were
obtained from 1978 birth and death certificates and WIC program
records in Massachusetts. The WIC participant and nonparticipant
samples were matched on age, race, birth parity, education, and marital
status. A small, insignificant increase in birthweight (from 3,260 to
3,281 grams) was estimated, as was a statistically significant reduction
in the percentage of low-birthweight babies (from 8.7 to 6.9 percent),
a reduction in infant mortality, and an increase in the use of prenatal
care. The authors noted an increase in the size of the estimated WIC
impacts as the length of WIC participation increased.

Metcoff et al. (1985) examined a sample of 824 WIC-eligible pregnant
women who were attending prenatal clinics in Oklahoma; half of the
sample was assigned randomly to a WIC treatment group and half to
a control group. This study was the first to use random assignment
procedures to support a major evaluation of the WIC program,
although the universe of prenatal clinic enrollees was intrinsically
restricted to women with a demonstrated commitment to using prenatal
care. The authors reported an increase in birthweight for WIC
participants (from 3,163 to 3,254 grams), based on regression
techniques which controlled for selected characteristics of the mother
and her pregnancy. However, the increase disappeared when they
controlled for mid-pregnancy weight.

Schramm (1985, 1986, and 1989) examined the effect of prenatal WIC
participation on Medicaid costs after birth in Missouri at three points
in time--1980, 1982, and 1985-86. For 1980 Medicaid births, Schramm
estimated a savings of $.83 in Medicaid reimbursements for services
received by the newborn within 30 days after birth for each dollar spent



BRB me me we Hee FF Fe we ee

between services that were and were not strictly pregnancy or birth-related
would have been too time-consuming, very expensive, and frequently
impossible.

Ideally, separate cost variables would have been constructed for the
prenatal period and the birth to 60-day postpartum period. An
unambiguous demarcation between the end of the prenatal period and the
start of the postpartum period would have enabled the study to address
the explicit objective of estimating Medicaid costs in the 60-day
postpartum period. However, distinguishing these two periods was not
possible because all five study states allowed global billing procedures by
physicians. Under global billing, a physician may submit to Medicaid a
single claim covering prenatal care, labor and delivery services, and
routine postpartum checkups. These claims include services that occur
both in the prenatal and 60-day postpartum periods, without an accurate
allocation of parts of the total reimbursement to each period. Thus, for
this study, physician claims for prenatal care and labor and delivery,
whether submitted individually or with a global bill, were allocated to the
prenatal period. More specifically, all physician claims that occurred
between seven and a half months prior to the birth of the newborn and
up to and including the date of birth were allocated to the prenatal
period. Seven and a half months prior to birth was chosen as the start
date of the prenatal period under the assumption that a woman would not
begin prenatal care before she was at least six weeks pregnant (assuming
that the pregnancy terminated in a full-term birth). The date of birth was
chosen for the end of the prenatal period for physician services because
global bills tend to be submitted with the date of birth as the service date.
By contrast, hospital claims and claims from all other providers were
allocated to the prenatal period if they occurred between seven and a half
months prior to birth and up to but not including the start date of the
birth claim.> In this way, hospital reimbursement for labor and delivery
could be allocated appropriately to the postpartum period.

5The birth claim was defined as the claim that identified the woman for
the study sample: a hospital claim with a diagnosis, revenue center, or
DRG code related to labor and delivery; or, failing that, a claim from a
physician, nurse midwife, or birthing center for labor and delivery. Most
of the birth claims for the study were hospital claims. In the minority of
cases with other types of birth claims, the day before the date of birth,
rather than the start date of the birth claim, was used as the end of the
prenatal period.

29


mBeRe em ese He eee ee ee ee eel

Infant and fetal death records were also added to the database, although
using them posed complicated analytic problems. While the effect of
prenatal WIC participation on infant death rates is important, infant
deaths are relatively rare events, and have thus been included in the
analysis only for descriptive purposes. State fetal death files, providing
information on the deaths of fetuses of at least 20 weeks gestation, were
also available for all states but Texas. However, the registration of fetal
deaths is believed to be incomplete (see, for example, Greb et al., 1987),
and the reliability of fetal death files varies by state. However, as with
infant deaths, fetal deaths are important outcomes and also explain why
some women with Medicaid-covered birth-related claims do not link to
Medicaid-covered newborns.

C. THE DATABASE CONSTRUCTION PROCESS

Constructing the database for the five states in the WIC/Medicaid study
entailed linking data extracts from the three state data systems into an
analysis file that contained a single record for each Medicaid-covered
birth. Conceptually, for each Medicaid birth in the study period, the
linked database from the Medicaid, Vital Records, and WIC data extracts
consisted of single multi-segment records with the following general
structure:

1 2 3 4 5
! ! ! ! ! !
Newborn Mother Newborn Mother Mother
Medicaid Medicaid _ Birth Demographic/ Prenatal WIC
Costs Costs Data Prenatal Participation
Care Data

As discussed earlier, Medicaid costs, segments 1 and 2, came from the
Medicaid claims files. Segment 3, which includes such factors as
birthweight and the gestational age of the newborn, came from the
newborn’s birth certificate. Segment 4 contains demographic data and
information on the extent of prenatal care and previous pregnancies for
the mother, and also came from the newborn’s birth certificate.
Information on prenatal participation in the WIC program, segment 5,
came from the WIC data files.

The process of creating a database of multi-segment birth-event records

from Medicaid, WIC, and Vital Records files entailed four basic linkage
steps:

25





© In all five study states, prenatal WIC participation by Medicaid
beneficiaries is associated with increased birthweight, longer gestational
age, a lower incidence of low birthweight, and a lower incidence of
preterm birth.

B. OBJECTIVES OF THIS REPORT

The study findings reported in Volume 1 and discussed briefly above
are based on the model specification judged to be the most preferable
after all the methodological issues had been assessed fully. This volume
presents the results from analytic models that were rejected, for a number
of reasons, in favor of a relatively straightforward model underlying the
basic study findings. Many complex analytic issues were considered during
the course of the analysis, and the objective of this volume is to discuss
these analytic issues and how they interact with the basic study findings as
presented in Volume 1. Specifically, important analytic issues considered
in this volume include the definition of Medicaid costs, dose-response
effects of prenatal WIC participation, the timing of WIC enrollment, and
selection bias. However, the data available for this study, while including
information on a very large number of Medicaid newborns and mothers,
provide only limited information on maternal characteristics and perinatal
risk factors and are, thus, not able to support an in-depth analysis of these
analytic issues. Thus, the basic study findings represent a compromise
between an exhaustive evaluation of the effects of prenatal WIC
participation and the types of analysis that could be supported by the
database used in this study.

C. OVERVIEW OF THE STUDY DESIGN

The analysis included the following three key components, each of which
entailed complex methodological problems:

1. Combining information on Medicaid costs, WIC participation and costs,
and birth outcomes for each of the study states

2. Assessing the savings in Medicaid costs by comparing Medicaid costs
for WIC participants with the Medicaid costs for nonparticipants, based
on statistical analysis to adjust for differences in costs attributable to
other factors



(1979), he noted three primary limitations: (1) it was performed too early
in the life of the WIC program to develop a strong judgment about its
effectiveness, (2) the comparison group used was not valid because it
assumed comparability among those participating at different times in
pregnancy or in the life cycle, as well as between those arriving early in
the program and those arriving later; and (3) the authors failed to note in
their claim of a "dose-response" effect for WIC participation that the
duration of WIC benefits was confounded by the duration of gestation
(Rush 1982).

In his review of the Kotelchuck et al. study, Rush (1984) commented on
both the study design and the analysis. He noted that the Kotelchuck
study excluded 353 women who were terminated from the WIC program
for any reason, possibly including those whose deliveries were premature;
thus, the results of the study may have been biased because the WIC
group may not have included some women who had low-birthweight
newborns or whose newborns had died from prematurity. In addition,
Rush noted that, although the WIC and non-WIC samples were matched
along the age, race, parity, education, and marital status of the woman (as
recorded on birth certificates), they were not matched according to the
income and additional health and nutritional risk factors that serve as the
eligibility criteria for the WIC program. Thus, the WIC group may have
been at greater risk of poor perinatal outcomes than the comparison
group, biasing the results in a direction opposite from the one due to the
exclusion of the 353 terminees. Rush also discussed the limitations of
Kotelchuck’s estimates of the dose-response effect of WIC participation
due to the confounding effects of the duration of pregnancy and the
number of months of WIC participation.

Rush (1982, 1985) concluded that Schramm’s 1985 investigation of the
effect of prenatal WIC participation on Medicaid costs for newborns was
an important contribution to WIC program evaluation literature.
However, he had several comments on Schramm’s findings. First,
Schramm’s 1989 estimate of an $.83 savings in Medicaid costs for new-
borns for every dollar spent on prenatal WIC participation may have been
too high, since the only control variable used to compare WIC participants
and nonparticipants was whether the mother lived in an urban or
nonurban area. Rush suggested that in the nonurban areas in which many
of the WIC participants lived hospitals were likely to be less expensive
(and infants less likely to be admitted to neonatal intensive care units),
and that these differences required further investigation. Second, only 21
percent of the Medicaid births that formed the base for Schramm’s 1980
analysis were linked with WIC records. Given the fact that most pregnant
women on Medicaid are likely also to be eligible for the WIC program,
one would expect that the WIC participation rate would be higher. Rush

12



The postpartum period began the day after the end of the prenatal
period. By definition, all newborn claims were allocated to the
postpartum period. Two types of postpartum cost variables were
constructed. For "Type 1" postpartum Medicaid costs, claims whose
service dates spanned the beginning or end of an analysis period were
prorated according to the proportion of the service period that occurred
within the 60-day postpartum period. For example, if the dates of service
on a claim started three days before the end of the 60-day postpartum
period and ended three days after, one-half of the Medicaid
reimbursements were included in the Medicaid cost variable. “Type 2"
postpartum Medicaid cost variables included reimbursements for any claim
in its entirety if its start date was in the postpartum period regardless of
the end date of service. This second set of postpartum variables was
meant to capture the full cost of ongoing services for serious medical
problems that began in the postpartum period but continued past 60 days
after birth.

North Carolina and Texas were the only two study states in which
newborns automatically received their own Medicaid identifier, and in
which claims for all newborns appeared under their own number. In the
other states, claims for normal healthy newborns often appeared under the
claims for the mother, and it was not possible to distinguish the newborn’s
Medicaid costs from the mother’s Medicaid costs. Thus, in North
Carolina and Texas, Medicaid cost variables were constructed for both
newborns only and newborns and mothers combined, while the Medicaid
cost variables in the other states were for mothers and newborns
combined. In addition, in South Carolina, it was not possible to separate
physician claims for the prenatal period from claims for the 60-day
postpartum period. Thus, only hospital costs from birth through 60 days
were included in the Medicaid cost variable for South Carolina.

WIC Participation and Costs. Women were deemed to be prenatal WIC
participants if they met two conditions: (1) they were issued or had
redeemed at least one food instrument during the nine months prior to
birth, or (2) for Texas, which did not provide any food instrument data,
if the WIC certification dates were sometime during the nine months prior
to birth.

®The results presented in Volume 1 are based on the Type 1 postpartum
cost variables, and the results for both sets of variables are presented in
the following chapter of this volume.

30



Chapter

Il

Il

CONTENTS
Page
EXECUTIVE SUMMARY  ....... eee eee eect eet e eens vii
INTRODUCTION 2.0... ccc eet ete neers 1
A. A REVIEW OF THE MAJOR STUDY FINDINGS ............+--- 1
B. OBJECTIVES OF THIS REPORT ............. s 2
C. OVERVIEW OF THE STUDY DESIGN . 2
D. ORGANIZATION OF THE REPORT ....... 0... 0c cece eee eee 4
PREVIOUS LITERATURE ON THE EFFECTS OF PRE-
NATAL WIC PARTICIPATION ...... 2.00 cece eect eee eens 5
A. MAJOR EVALUATIONS .... 0... cece cette e ence e eens 5
B. EVALUATION REVIEWS ....... 000 c cece cece e nents 10
C. METHODOLOGICAL ISSUES RAISED BY PREVIOUS
EVALUATIONS 2.0... 60 ccc e eee enee 13
Choosing a Comparison Sample .......... 0.00 c cece cece eee eens 13
Estimating a Dose-Response Effect ............-... 0s cess eee eee 14
D. THE CURRENT WIC/MEDICAID STUDY .......... 200s cere eens 15
THE CONCEPTUAL MODEL AND A DESCRIPTION OF THE
WIC/MEDICAID DATABASE ...... 2.6.00 cece eee cece nents 17
A. THE CONCEPTUAL MODEL OF WIC BENEFITS AND
COSTS 00. ccc ccc ccc eee eee ete eee eee eee eee 17
B. OVERVIEW OF THE WIC/MEDICAID DATABASE .............. 20
Medicaid Data 20
WIC Data 24
Vital Records 24
C. THE DATABASE CONSTRUCTION PROCESS ............-22005 25
Constructing Analytical Variables 2.0.0... 0.0... e cece eee eee 28
D. THE RESULTS OF THE FILE LINKAGE PROCESS .............. 32
iii



Women and newborns who participated in health maintenance
organizations (HMOs) were not included in the analysis sample. Medicaid
pays a flat monthly capitation fee to HMOs that covers all acute-care
services for enrollees, rather than a fee based on individual services
rendered. Thus, WIC participation--while possibly influencing the cost of
providing birth-related care to an HMO enrollee--will not have any short-
term effect on the cost of such care to Medicaid. Furthermore, data on
individual visits or services received are not consistently available for
HMO enrollees.

The choice of 1987 as the study period represents a balance between (1)
selecting the most recent year possible in order to observe a period when
at least some of the recently enacted Medicaid expansions were in effect,
and (2) selecting a period of time for which all Medicaid claims for the
study subjects were fully processed and finalized. Given that the database
construction was started in early to mid-1989, 1987 was selected as the
most recent year for which finalized Medicaid cost data would be available
on the state files. A decision was made to allow a year between the last
date of service of interest to the study (60 days following the end of 1987,
or February 29, 1988) and the timing of the data extraction from state
files (early 1989), because the maximum expected lag time for virtually all
claims is one year between the date of service for a Medicaid claim and
its appearance as a paid claim on a state’s Medicaid Management
Information System (MMIS).?

Texas is the sole exception to adopting calendar year 1987 as the analysis
period. In Texas, the study was based on Medicaid births that occurred
from January 1988 through June 1988, since the data necessary to identify
WIC prenatal participants were not available for earlier births. The risk
of missing Medicaid claims that were not finalized by early 1989, the date
the Medicaid extract was created, increases somewhat with this choice.
However, Texas Medicaid appeared to process most claims relatively
promptly and paid for just 30 days of inpatient services per year. Thus,
the risk of missing long-term hospitalizations (a major component of
Medicaid costs) by using the later analysis period is much lower in Texas
than it would be in states without such a limit on inpatient services.

5One year was also thought to be sufficient for a death certificate to
appear in the Vital Records system and for birth and infant death records
to be linked for states that link birth and death data on an ongoing basis.

23



= =

mime

on WIC; in 1982 and 1985-86, the estimated Medicaid savings for
services received within 45 days after birth were $.49 and $.79,
respectively. Mean birthweight was 6 grams greater for WIC
participants than for nonparticipants in 1980, compared with
differences of 31 grams and 25 grams in 1982 and 1985-86, respectively.

Stockbauer (1986 and 1987) compared 1980 and 1982 Missouri birth
records for WIC participants with those of women not participating in
WIC. In the first study, 6,732 WIC births were compared with three
non-WIC comparison samples: (1) a random sample from the
remainder of the 1980 Missouri live-born singletons, with analysis of
covariance used to control for differences between the WIC and non-
WIC groups; (2) 1980 Missouri live births minus the WIC births, with
the WIC group serving as a standard population and smoking,
education, prepregnancy weight, and race used in a standardization
analysis; and (3) a sample of 1980 Missouri non-WIC births matched
to the WIC births on the basis of number born this pregnancy, race,
education, smoking during pregnancy, and prepregnancy weight. In the
second study, 9,411 pairs of WIC and non-WIC births were compared
along key maternal characteristics. The 1980 study found that the
overall effects on birthweight varied according to the comparison
sample used, but that consistently favorable outcomes were experienced
by black WIC participants in all three samples. The 1982 study found
that the incidence of low birthweight and the incidence of inadequate
prenatal care were lower for prenatal WIC participants than for
comparison women. Both studies concluded that at least 7 months of
WIC participation were required to observe improved birthweight
outcomes.

Rush (1987) compared longitudinal data on 5,205 prenatal WIC
participants and 1,358 non-WIC registrants at prenatal clinics selected
from 174 WIC sites and 55 clinics across the country. The primary
findings concerning the effects of prenatal WIC participation are: no
statistically significant effect on newborn birthweight; increased infant
head circumference; increased birthweight and head circumference with
better WIC program quality; no statistically significant effect on
gestational age; lower incidences of fetal death and low birthweight of
appreciable but not significant magnitude; higher weight gain in later
pregnancy that offset lower weight gain in early pregnancy; and
increased intake of protein, iron, calcium, and vitamin C (4 of the 5
targeted WIC nutrients) and of food energy, magnesium, phosphorus,
thiamin, riboflavin, niacin, vitamin B-6, and vitamin B-12. The final
sample used in the Rush analysis of perinatal outcomes was
considerably smaller than anticipated, and the power of the study to



D. THE CURRENT WIC/MEDICAID STUDY

The current WIC/Medicaid study has built upon the experiences and goals
of earlier evaluations in a number of ways:

© The study restricts both its sample to Medicaid beneficiaries and its
primary outcome of interest to Medicaid costs for mothers and
newborns during the first 60 days after birth. Outcomes such as
birthweight and gestational age are examined for their ability to explain
Medicaid costs and to shed light on the effects of WIC participation on
birth outcomes. By restricting the study sample to Medicaid
beneficiaries, the comparison sample of Medicaid-covered women who
did not participate in the WIC program is known to be essentially
income-eligible for the WIC program, and thus more likely to have
been similar to WIC participants than would be, for example, a
comparison group of prenatal clinic enrollees.

© The study sample includes all Medicaid-covered births in five states,
rather than a subsample taken within several states or the full sample
of all births in a single state. It will thus build on the work of
Schramm whose study of the effect of prenatal WIC participation on
Medicaid costs was restricted to a single state (Missouri). Examining
five state programs will enhance the generalizability of the findings to
the national WIC program. However, the peculiarities of these
particular states (for example, four of the five are in the South)
necessitates using extreme caution in generalizing the effects of the
WIC program for the entire country.

® Data collection and file matching procedures were developed to
minimize the exclusion of cases from the analysis sample.

© Statistical analysis techniques were used to isolate the effects of

prenatal WIC participation from other factors on birth outcomes and
Medicaid costs.

15



evaluations have come under unusually careful scrutiny. In 1984, in
Tesponse to a request from the Chairman of the Senate Committee on
Agriculture, Nutrition and Forestry, the General Accounting Office
(GAO) produced a review of existing evaluations of the WIC program.
The GAO investigation focused on three basic claims of earlier studies:

1. That WIC participation reduces the rate of miscarriage, stillbirths, and
neonatal deaths and improves maternal nutrition

2. That WIC participation is related to positive pregnancy outcomes
for "high-risk" mothers, and that positive outcomes are directly
associated with the length of participation in the WIC program

3. That WIC participation increases birthweight and reduces the
probability of anemia and mental retardation among infants and
children

GAO reviewed both the findings of the evaluations and the quality of
their evaluation methodologies. GAO summarized the findings by saying,
“The information is insufficient for making any general or conclusive
judgments about whether the WIC program is effective or ineffective
overall. However, in a limited way, the information indicates the
likelihood that WIC has modestly positive effects in some areas."

In particular, GAO concluded that a sufficient number of studies had
examined the effect of WIC participation on birthweight and that several
of those studies were of high or medium quality. The studies gave
support for, but not conclusive evidence of, the ability of prenatal WIC
participation to increase birthweight. The studies cited a reduction in the
rate of low birthweights from 9.5 percent for nonparticipants to 7.9
percent for WIC participants and an increase of mean birthweights of 30
to 50 grams (around an average of 3,200 grams for both groups). Claims
of more favorable effects on birthweight among teenagers, blacks, and
those with several health- and nutrition-related risks were upheld.
However, the GAO also found only inconclusive evidence to support the
claim that longer WIC participation increased its effectiveness for
birthweight, and substantially less data to support claims that WIC
participation during pregnancy reduced fetal and neonatal deaths
(although the relative infrequency of those outcomes makes studying them
difficult).

David Rush has critiqued many of the WIC evaluations for their
methodological limitations. In his review of the study by Edozien et al.

11



WIC Data

Vital Records

Analyzing the effects of prenatal participation in the WIC program on
Medicaid costs requires constructing a variable that indicates WIC
participation status. Data from the states’ WIC data systems were used
to determine whether a mother identified by the Medicaid data was
receiving WIC benefits while she was pregnant and, if so, the cost to
WIC of her redeemed food instruments. Because most states do not
maintain historical data on the nutritional risk factors on their
participant files, data on the medical and dietary risk factors for the
prenatal WIC participants could not be used in the analysis.

Most states have two related WIC data systems that are relevant to this
study: (1) a participant file, which includes certification information for
WIC participants, and (2) a reconciliation file, which is a log of redeemed
food instruments. The ability to match redeemed food instruments from
the reconciliation file to prenatal WIC participants varied considerably
across states and affected how individual-level WIC costs were estimated.
Specifically, Florida, Minnesota, and North Carolina were able to match
redemption data to individual participants, while South Carolina could
match only issued food instruments to participants, and Texas had data
only on the certification date for the WIC program. Measuring the total
costs of WIC for an individual participant required using a state-level ratio
of administrative and nutrition education costs to food costs to inflate
individual-level food instrument redemption estimates.

Vital Records furnished the bulk of the explanatory variables used in
the empirical application of the WIC/Medicaid conceptual model, and
served as a linkage hub for Medicaid and WIC data. Vital Records
data are maintained at the state level by Bureaus of Vital Statistics.
Several Vital Records data files were used in this study. Most
importantly, the birth files provided information on all births occurring
within the state for each calendar year. In general, data available from
birth records included the following:

@ Newborn data on name, sex, hospital of birth, gestational age, and
birthweight

© Maternal data on maiden name, age, race, education, and marital status

© Obstetrical history data on the number of previous live births, the
number of previous pregnancies, and use of prenatal care

24



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© Prenatal participation in the WIC program is associated with substantial
savings in Medicaid costs for newborns and their mothers during the
first 60 days after birth. Estimated savings in newborn and maternal
Medicaid costs due to prenatal WIC participation ranged from $277 in
Minnesota to $598 in North Carolina, with intermediate values of $347,
$493, and $565 for Florida, Texas, and South Carolina (hospital costs
only), respectively.

@ When newborn and maternal Medicaid costs were able to be separated,
the estimated savings in newborn Medicaid costs associated with
prenatal WIC participation were even greater than the estimated
savings when newborn and maternal costs are combined; these
estimates were $744 in North Carolina and $573 in Texas.

@ In all five study states, the benefits of prenatal WIC participation, as
measured by the estimated savings in Medicaid costs, exceeded the
costs of providing prenatal WIC benefits. For newborns and mothers,
the estimated benefit-cost ratios ranged from 1.77 in Florida to 3.13 in
North Carolina, with values of 1.83 for Minnesota and 2.44 for both
South Carolina and Texas. For newborns only, the benefit-cost
estimates were 3.90 in North Carolina and 2.84 in Texas. Thus, for
every dollar spent on the prenatal component of the WIC program, the
associated savings in Medicaid costs during the first 60 days after birth
ranged from $1.77 to $3.13 for newborns and mothers and from $2.84
to $3.90 for newborns only.

e In all five study states, prenatal WIC participation by Medicaid
beneficiaries is associated with increased birthweight, longer gestational
age, a lower incidence of low birthweight, and a lower incidence of
preterm birth.

© In all five study states, receiving inadequate levels of prenatal care is
associated with increased Medicaid expenditures during the first 60
days after birth. As with the findings on the effects of prenatal WIC
participation, the estimated cost savings associated with receiving
adequate versus inadequate levels of prenatal care for newborns alone
exceeded the cost savings for newborns and mothers combined.

viti



21

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Figure IIL.1 illustrates a general conceptual framework for assessing the
costs and benefits of prenatal participation in the WIC program. In this
figure, W1 denotes prenatal WIC costs; M1, M2, and M3 are Medicaid
costs for WIC participants before birth, birth to 60 days, and after the 60-
day postpartum period, respectively, and M4, M5, and M6 are the
Medicaid costs for the same time intervals in the absence of the WIC
program.”

A comprehensive evaluation of the cost-effectiveness of prenatal
participation in the WIC program would determine whether the total
savings in Medicaid costs are greater or less than the costs of the WIC
program. That is, if--

2
(M4 - M1) + (M5 - M2) + (M6 - M3) > Wi.
<

A priori, we might expect that the prenatal savings in Medicaid costs (M4
- M1) would be negative if prenatal participation in the WIC program
leads to improved prenatal care, which involves costs over and above the
WIC costs. On the other hand, the cost savings after the 60-day
postpartum period may be considerable (that is, M6 - M3 may be positive
and potentially large) if prenatal WIC participation reduces the incidence
of negative pregnancy outcomes that would otherwise require intensive
medical services during the first year of life and thereafter.

Although Figure III.1 illustrates a conceptual framework in which the full
range of costs and benefits of prenatal participation in the WIC program
can be assessed, the Congressional mandate for this study focuses more
narrowly on a comparison of the prenatal WIC costs with the savings in
Medicaid costs from birth to 60 days after birth. That is, this study
examines whether--

9

? 2
(M5 - M2) > W1 or if (M5-M2) > 1.
< Wi <

2This figure is a conceptual benefit/cost model of the prenatal component
of the WIC program, and thus does not include WIC costs after birth.

18



Table
1
WA
m2
Iv.

IV.2

IV.4

Iv.5

V.1

V2

V3

V4

TABLES

Page
SUMMARY OF MAJOR WIC EVALUATIONS ...........2+-0055 6
REQUIRED DATA ITEMS AND THEIR SOURCES ........------ 21
LINKAGE RESULTS BY LINKAGE TYPE AND STATE .......... 33
INDEPENDENT VARIABLES BY STATE .........--- 00sec eee 39
ESTIMATED REGRESSION COEFFICIENTS FOR A
MODEL OF THE EFFECT OF PRENATAL WIC PARTICI-
PATION ON MEDICAID COSTS, BIRTH TO 60 DAYS
AFTER BIRTH: NEWBORNS AND MOTHERS ........-.-+++0-+ 41
ESTIMATED REGRESSION COEFFICIENTS FOR A
MODEL OF THE EFFECT OF PRENATAL WIC PARTICI-
PATION ON MEDICAID COSTS, BIRTH TO 60 DAYS
AFTER BIRTH: NEWBORNS ....... 2000s cece cence eee e ee eeee 43
ESTIMATED BENEFIT-COST RATIOS ........---: sees eeeeeeee 45
RESULTS FOR ALTERNATIVE DEFINITIONS OF MEDI-
CAID COSTS FROM BIRTH TO 60 DAYS AFTER BIRTH ......... 51
ESTIMATED COEFFICIENTS OF PRENATAL WIC PARTIC-
IPATION, FIRST TRIMESTER WIC ENROLLMENT, AND
GESTATIONAL AGE: MEDICAID COST MODELS ............. 54
ESTIMATED REGRESSION COEFFICIENTS FOR A
MODEL OF THE EFFECT OF PRENATAL WIC PARTICI-
PATION ON BIRTHWEIGHT: TOTAL SAMPLE .............-+5 63
ESTIMATED REGRESSION COEFFICIENTS FOR A
MODEL OF THE EFFECT OF PRENATAL WIC PARTICI-
PATION ON BIRTHWEIGHT: GESTATIONAL AGE < 37
WEEKS 2.2... eect eee nent n ene eee 65
ESTIMATED REGRESSION COEFFICIENTS FOR A
MODEL OF THE EFFECT OF PRENATAL WIC PARTICI-
PATION ON BIRTHWEIGHT: GESTATIONAL AGE 2 37
WEEKS 2.0... ccc ce cee eee nett eee cent enee 67
ESTIMATED REGRESSION COEFFICIENTS FOR A
MODEL OF THE EFFECT OF PRENATAL WIC PARTICI-
PATION ON GESTATIONAL AGE 0.0.00. e cece eee eee eee eee 70


CONTENTS (continued)

Chapter
IV

Page
THE EFFECT OF PRENATAL WIC PARTICIPATION ON
MEDICAID COSTS 2.2... 6.0 cece eee cece ee eee eee e eee eee 35
A. THE MODEL OF MEDICAID COSTS .............0..0000200-55 35
Medicaid Cost Model ....... 2.6... c cece eee eee ee 36
Dependent Variables ........... 00.0 c eee e eee ee -. 37
Indicator of WIC Participation . .. 38
Independent Variables ........... cece cece cece eee eee e eee 38
B. ANALYSIS OF MEDICAID COSTS FROM BIRTH TO 60
DAYS AFTER BIRTH ........ 060. c cece cece e ec eee eee eee ee 40
C. KEY ANALYTIC ISSUES .... 62... ccc cece eee eeeee eee 48
Prorating Medicaid Costs ......... 00.0 e cece eee ence eens 49
Timing of Enrollment in the WIC Program sees 5O
Selection Bias 2.2... ccc cee cece eee ee eens s7
D. SUMMARY AND CONCLUSIONS ...........00 cece cece eens 59
THE EFFECT OF PRENATAL WIC PARTICIPATION ON
BIRTH OUTCOMES ........ 0.0 c cece teen eee eens 61
A. MODEL OF NEWBORN BIRTHWEIGHT AND GESTA-
TIONAL AGE ..... 6. cece eee een e ee eees 61
B. EMPIRICAL RESULTS . +. 62
C. ANALYTIC ISSUES ...... 0... cece eect eee een eeee 72
REFERENCES .... 6.0.0 e cece eee eee enna 81



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STUDY DESIGN

REVIEW OF
MAJOR STUDY
FINDINGS

THE SAVINGS IN MEDICAID COSTS FOR NEWBORNS AND
THEIR MOTHERS RESULTING FROM PRENATAL
PARTICIPATION IN THE WIC PROGRAM

VOLUME 2

EXECUTIVE SUMMARY

This report is Volume 2 of a study mandated by the Commodity
Distribution Reform Act and WIC Amendments of 1987 (Public Law 100-
237) and the Joint Resolution Continuing Appropriation for Fiscal Year
1988 (Public Law 100-202). The primary objective of this study is to
determine the savings in Medicaid costs for newborns and their mothers
during the first 60 days after birth resulting from participating in the
Special Supplemental Food Program for Women, Infants, and Children
(WIC) during pregnancy. Volume 1 of this report presents the basic
results of the study, and Volume 2 explores the methodological issues and
analytical results in more detail.

The WIC/Medicaid study entailed analyzing the effects of prenatal WIC
participation on Medicaid costs and birth outcomes in five states:
Florida, Minnesota, North Carolina, South Carolina, and Texas. The
study period was 1987 for Florida, Minnesota, North Carolina, and
South Carolina and January through June 1988 for Texas. In each of
the five study states, the analysis database was constructed from
multiple program data files: (1) Medicaid files, which provided
Medicaid cost and eligibility data on newborns and their mothers; (2)
Vital Records birth files, which provided data on maternal
characteristics, birthweight and other newborn characteristics, prenatal
care, and infant deaths; and (3) WIC program files, from which the
Medicaid mothers were identified as either WIC prenatal participants
or nonparticipants and which provided WIC cost data on the
participants. These data files were linked to create a database of 1987
Medicaid births (1988 in Texas) that included data on Medicaid costs,
WIC participation status and costs, birthweight and other pregnancy
outcomes, and some information on maternal characteristics, including
age, race, previous live births, education, marital status, and the use of
prenatal care. Thus, the WIC/Medicaid database, while including
information on a very large number of Medicaid newborns and
mothers, provides only limited information on maternal characteristics
and perinatal risk factors and is, thus, constrained in its ability to
support an in-depth analysis of complex statistical issues.

The basic study results indicate that prenatal participation in the WIC
program improves birth outcomes and generates savings in Medicaid
costs for mothers and newborns. The following specific findings are
reported in Volume 1:

vii



Choosing a
Comparison
Sample

was concerned that this low match rate was due to a flaw in the process
used to construct the analysis files. However, the low match rate may also
reflect shortcomings in WIC outreach efforts to Medicaid beneficiaries,
other problems associated with access to WIC clinics, or perhaps the
attitudes of Missouri Medicaid beneficiaries about the WIC program.
Prenatal WIC participation rates among Medicaid beneficiaries in
Missouri were 36 percent in 1982 and 54.5 percent in 1985-86.

C. METHODOLOGICAL ISSUES RAISED BY PREVIOUS
EVALUATIONS

As discussed in Section B, the reviewers of WIC program evaluations have
pointed out a variety of issues associated with the design of the studies
and their methodological techniques that have limited their ability to
determine unambiguously whether prenatal participation in the WIC
program improves birth outcomes and saves money in the long run. Both
the evaluations and their critiques have underscored a number of key
issues for future WIC program evaluation efforts. Two of the most
important issues are (1) choosing an appropriate comparison group and
(2) estimating a "dose-response" effect.

Each of the studies discussed in Section A relied on a comparison
sample. However, selecting or constructing an appropriate comparison
sample for an ongoing program like WIC is extremely difficult. Most
researchers would agree that the ideal comparison group is one whose
members are identical to WIC participants in all ways except for their
WIC participation. One way to develop such a group is to screen
women for WIC eligibility and then assign half of them randomly to a
WIC treatment group and half to a control group that does not receive
WIC services. Random assignment minimizes the chances that
differences in the propensity of women to enroll in the WIC program
are correlated with such outcome measures as birthweight or Medicaid
costs. However, random assignment is not usually feasible for an
ongoing initiative like the WIC program, due to the ethical problems
involved in purposefully withholding an established benefit from an
otherwise qualified recipient.

In contrast, selecting a comparison group from a universe of non-WIC
births (Kennedy et al.), WIC nonparticipants in prenatal clinics
(Kotelchuck et al.), or women on WIC waiting lists (who are likely to be
at lower risk than WIC participants) raises questions about the actual
similarity between the comparison group women and women who must
meet income and health and nutritional-risk criteria to be eligible for the
WIC program and then choose to participate. In general, do WIC

13


jutrition

The Savings in
Medicaid Costs
for Newborns and
Their Mothers
From Prenatal
Participation in
the WIC Program

Volume 2


WIC enrollment in the Medicaid cost regression equations are not
statistically significant at conventional two-tailed levels, in contrast to
the highly significant coefficients in the birthweight regression
equations. (For Florida and Texas, the estimated coefficients of first
trimester WIC enrollment in the Medicaid cost regressions are of
considerable magnitude and are significant at conventional one-tailed
significance levels.)



ANALYTIC
ISSUES

The primary results of this study and their interpretation are based on
straightforward analytic models in which Medicaid costs and newborn
birthweight depend on prenatal WIC participation, newborn
characteristics, and maternal characteristics. This model specification
was judged to be the most appropriate after several methodological
problems and issues were assessed and examined. The most important
of these issues are (1) whether to prorate Medicaid claims that span
the 60-day postpartum period, (2) the confounding of the timing of
enrollment in the WIC program and gestational age, and (3) selection
bias. The principal findings from an analysis of these issues are:

© Including the full reimbursements for Medicaid claims that span the 60-
day postpartum period increased the estimated Medicaid cost savings
from prenatal WIC participation and the associated benefit-cost ratios
relative to prorating Medicaid reimbursements for claims that span the
60-day postpartum period.

@ Including a control variable for gestational age in the Medicaid cost
regressions reduced the estimated savings in Medicaid costs due to
prenatal WIC participation, although the results also indicate that
Medicaid costs from birth to 60 days after birth were significantly lower
for prenatal WIC participants than nonparticipants at each level of
gestational age. (The exception to this is Minnesota.)

e@ Average newborn birthweight was higher for first trimester WIC
enrollees. Relative to later WIC enrollees, the estimated increase in
newborn birthweight for first trimester WIC enrollees ranged from 29
grams to 73 grams in Florida, with intermediate values of 35 grams in
Minnesota, 63 grams in North Carolina, and 71 grams in Texas.
Relative to nonparticipants, the estimated increase in newborn
birthweight for first trimester WIC enrollees is appreciable in
magnitude, even after controlling for gestational age, ranging from 30
grams in Minnesota to 76 grams in South Carolina to 95 grams, 97
grams, and 98 grams in North Carolina, Texas, and Florida,
respectively.

© The estimated effects of first trimester WIC enrollment on newborn
birthweight were generally consistent with the findings from the
analysis of Medicaid costs. That is, first trimester WIC enrollees
generally had lower newborn and maternal Medicaid costs during the
first sixty days after birth than did later WIC enrollees, which is
consistent with higher average newborn birthweight for first trimester
WIC enrollees. However, the estimated coefficients of first trimester

ix


to the birth-based file, because multiple sets of birth outcome data for
individual births would not have been useful.’ Rather, the newborn-
based file was retained as the source of analysis files for drawing statistical
estimates of the effect of prenatal WIC participation on birth outcomes.

D. THE RESULTS OF THE FILE LINKAGE PROCESS

The database for the WIC/Medicaid study contained 111,958 Medicaid-
covered births, ranging from just over 12,000 from Minnesota to just
under 38,000 from Florida (see Table III.2). As noted previously, because
the analysis relied heavily on Vital Records data, only those Medicaid
births that were linked to the Vital Records birth certificates were
included in the final analysis sample. With the exception of South
Carolina, over 93 percent of all Medicaid births identified in each state
were linked with Vital Records and were thus retained for analysis. In
South Carolina, 86 percent of Medicaid-covered births were linked with
Vital Records. The percentage in South Carolina was lower than in other
states for two reasons: (1) birth certificates for South Carolina residents
who gave birth in other states were not available, so that Medicaid births
to residents giving birth in other states could not be matched to a birth
record; and (2) less identifying information from the Medicaid files was
available in South Carolina than in the other four states. In all states,
descriptive analyses of the cases deleted from the study database indicated
that deleted cases did not differ systematically from cases that were
retained.

THowever, when a multiple birth occurred, the sex of the newborn on the
birth-based file indicated whether any of the newborns were male, since
male newborns tend to have more medical complications and higher
medical costs.

32



Medicaid Data

B. OVERVIEW OF THE WIC/MEDICAID DATABASE

The empirical application of the conceptual model entails estimating the
savings in Medicaid costs from birth to 60 days after birth that are
attributable to prenatal WIC participation. This section summarizes the
construction of the database used in the empirical estimation of the
savings in Medicaid costs due to prenatal participation in the WIC
program. Two additional reports from this study--a data feasibility report
(Burghardt et al., 1989) and a file linkage handbook (Schore et al., 1991)--
contain more detailed descriptions of the design and construction of the
database.

The database for this study served four major purposes: (1) to identify
newborns born to mothers who were Medicaid recipients and mothers
who had Medicaid claims for labor and delivery in a specified year, (2) to
provide information on Medicaid costs at birth through 60 days after birth,
(3) to determine whether the mother participated in the WIC program
while she was pregnant, and the cost of her WIC benefits, and (4) to
provide explanatory variables for the empirical application of the
conceptual model.

Table III.1 presents an overview of the specific data items used as input
to the database, by source. The data sources include Medicaid paid claims
and eligibility files, WIC participant and reconciliation files, and Vital
Records files. The discussion that follows summarizes the Medicaid, WIC,
and Vital Records data used to construct the analysis database for this
study.

Medicaid eligibility and paid claims files served two purposes: (1) to
identify the sample of Medicaid-covered births, and (2) to provide data
on Medicaid costs for use as outcome variables in the analysis. The
analysis sample included all Medicaid-covered births in 1987 in Florida,
Minnesota, North Carolina, and South Carolina, and all Medicaid-
covered births in the first six months of 1988 in Texas. Mothers for the
sample were identified from an inpatient, birthing center, or
practitioner claim for labor and delivery (as designated by codes for
diagnoses, procedures, revenue centers, or other similar fields).
Newborns were identified from any type of claim with a date of birth in
1987 (January through June 1988 in Texas) and a start date of service
within the 60-day postpartum period. In addition, the sample included
all newborns and mothers with Medicaid claims, not just those for
whom Medicaid was the first payor.

20



FIGURE IIL1

CONCEPTUAL MODEL OF WIC BENEFITS AND COSTS

Conception

Birth

60 Days After Birth

Medicaid Costs

WIC Program With WIC Without WIC
Costs Program Program
wi M1 M4
M2 MS
M3 M6

NOTE: This figure is a conceptual cost/benefit model of the prenatal component of the WIC
program, which is why WIC costs after birth are not applicable.

19



TABLES (continued)

Table

VS

V.6

V7

V8

Figure

ESTIMATED PROBIT COEFFICIENTS FOR A MODEL OF
THE EFFECT OF PRENATAL WIC PARTICIPATION ON

THE INCIDENCE OF LOW BIRTHWEIGHT ..............--

ESTIMATED PROBIT COEFFICIENTS FOR A MODEL OF
THE EFFECT OF PRENATAL WIC PARTICIPATION ON

THE INCIDENCE OF PRETERM BIRTH .............00000

ESTIMATED EFFECTS OF PRENATAL WIC PARTICIPA-
TION ON THE PROBABILITY OF LOW BIRTHWEIGHT

AND THE PROBABILITY OF PRETERM BIRTH ...........-

ESTIMATED COEFFICIENTS OF PRENATAL WIC PARTIC-
IPATION, FIRST TRIMESTER WIC ENROLLMENT, AND

AND GESTATIONAL AGE: BIRTHWEIGHT MODELS.......

FIGURE

CONCEPTUAL MODEL OF WIC BENEFITS AND COSTS .....



detect statistically significant WIC effects of the magnitude reported in
previous studies was fairly low (Rush et al., 1988).

These seven evaluations shared two methodological features. First, each
examined whether prenatal WIC participation increased birthweight.
Birthweight is an important outcome measure, both because it is known
to predict subsequent short- and long-term health problems in newborns,
such as respiratory and developmental disabilities (Institute of Medicine,
1985), and because it is a relatively reliable quantitative measure routinely
available on birth certificates, a major data source for these studies.

The second feature common to these evaluations is that each identified
comparison groups whose outcomes, such as birthweight, could be
compared with those for WIC prenatal participants. Ideally, the goal in
selecting a comparison group is to identify a sample of women who are
identical to WIC prenatal participants except for their participation, in
order to determine what would have happened to the WIC participants
in the absence of the WIC program. However, as discussed in more detail
in Section IB, identifying such a group is difficult; thus, researchers must
attempt to resolve how differences in outcomes between WIC participants
and comparison group members are to be interpreted in light of the
measured and unmeasured differences that may exist between the two
groups. For example, most of the evaluations reported finding favorable
effects for prenatal WIC participants on birthweights. However, a critical
question, and one that dominated critiques of these evaluations, is the
extent to which a significant increase in birthweight (or, conversely, the
lack of an increase) is an artifact of the comparison group chosen for the
evaluation.

B. EVALUATION REVIEWS

Due to both the importance and magnitude of the WIC program and its
potential for affecting expenditures on health care and support services
for women with nutritional or medical risks during pregnancy, WIC

ln addition to the longitudinal study of pregnant women, the Rush
analysis included a historical study of pregnancy outcomes using county-
level data for 945 counties over 9 years, 1972 through 1980. The results
of this historical study show a statistically significant reduction in fetal
mortality associated with WIC participation, an appreciable but not
significant decrease in the neonatal death rate for prenatal WIC
recipients, and no significant change in the postneonatal death rate for
WIC participants.

10



been linked with a Medicaid mother record was also difficult because birth
certificates frequently did not include the first name of the newborn;
rather, on the birth certificate the first name was blank, "baby," "boy," or
“girl.”

The result of the Medicaid-to-Medicaid and Medicaid-to-Vital Records
links was a base file that contained all Medicaid records. This file
included Medicaid mothers linked with Medicaid newborns, unlinked
Medicaid mothers, and unlinked Medicaid newborns. Each of these
records contained Vital Records information if it had been linked
successfully with the Vital Records file.

The internal WIC linkage entailed matching WIC data for pregnant
women to WIC data for their newborns, if the newborns were WIC
participants. The primary purpose of the internal WIC link was to add
the newborn’s name and date of birth to the mother’s record of prenatal
WIC participation in order to improve the Medicaid/Vital Records to
WIC link. Naturally, if the newborn was not a WIC participant, this
match could not be performed, and the mother’s estimated date of
delivery was used to approximate the date of birth in subsequent linking
programs.

In the Medicaid/Vital Records to WIC linkage, matched Medicaid-Vital

Records births were linked with the WIC file. The output file from this
linkage consisted of matched Medicaid-Vital Records-WIC births (WIC
participants) and Medicaid-Vital Records births that were not matched to
a WIC record (nonparticipants).

This linkage is an interesting one, in that the a priori expectation is that
WIC nonparticipants on the Medicaid/Vital Records file will not match
the WIC file. Consequently, any Medicaid births that could not be linked
with the WIC files were assumed to be nonparticipants, as opposed to
nonmatches. In reality, it is likely that some Medicaid-identified births
could not be linked with WIC files because either the data or linking
algorithms were inadequate, and some WIC participants may have
erroneously been called nonparticipants.

Because the exact percentage of Medicaid beneficiaries enrolled in WIC
is unknown, assessing the quality of the Medicaid/Vital Records to WIC
linkage is difficult. Thus, a subsample of all WIC participants was drawn
and compared with the Vital Records files, regardless of whether or not
the WIC enrollees were eligible for Medicaid. Because all pregnant WIC
participants should match to the birth or fetal death files (except for those
whose pregnancy terminated less than 20 weeks after conception), the
percentage of WIC records that did not match the Vital Records files

27



Constructing
Analytical

Variables

provided some indication of the success of the Medicaid/Vital Records to
WIC link. A high percentage of WIC participants who could not be
linked to the Vital Records file would have suggested that some of the
WIC nonparticipants from the file linkage process might in fact have been
WIC participants. Fewer than 10 percent of WIC records for women
certified as pregnant in the first three months of 1987 failed to match
Vital Records. Since some of the prenatal WIC participants may have
experienced fetal deaths that were not recorded, out-of-state births, or
births outside the study period, the 90 percent match rate was judged to
be adequate. Thus, the designation of WIC participant status based on
file linkage results was reasonably reliable.

Even with the addition of Vital Records as a linking hub for the Medicaid
and WIC files, the data available to match records were not fully
consistent across data sources for each birth included in the study. In
particular, files did not share unambiguous numeric identifiers, such as
Social Security numbers or Medicaid identifiers. Thus, multiple matching
criteria were used for each link step. The first criterion to be
implemented was the most stringent, with successive criteria weakened
slightly in order to make as many correct matches as possible. For
example, the most stringent criterion for matching Medicaid-covered
newborn data with birth certificates was an exact match on county of
residence, hospital of birth, date of birth, sex, and newborn first and last
name. The next criterion included all of these variables with the
exception of sex; and so on.

After the file linkage process was completed, variables were
constructed for estimating the conceptual model described in Section A
of this chapter. This section describes the important features of the
variables used to describe Medicaid costs for mothers and newborns
during the 60 days after birth and WIC prenatal participation and
costs. The variables constructed for each state are described further
in Chapter IV.

Medicaid Cost Variables. Medicaid cost variables were defined in terms
of Medicaid reimbursement for all types of services. While Medicaid
reimbursement does not necessarily reflect the cost to the provider of
providing a service, it does reflect the cost of the service to Medicaid. All
services were included in the cost variables, because distinguishing

“The construction of variables from Vital Records files was relatively more
straightforward and is described in Schore et al. (1991).

28







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3. Interpreting the study findings and assessing their implications for the
states not included in the study and for recent changes in the WIC and
Medicaid programs and target populations

The first component pertains to the data used in the analysis. In each of
the five study states, the database for the analysis was constructed from
multiple program data files: (1) Medicaid files, which provided Medicaid
cost and eligibility data on newborns and their mothers; (2) Vital Records
files on births, deaths, and fetal deaths, which provided data on maternal
characteristics, birthweight and other newborn characteristics, prenatal
care, and infant and fetal deaths; and (3) WIC program files, from which
the Medicaid mothers were identified as either WIC prenatal participants
or nonparticipants and which provided WIC cost data on the participants.
These data files were linked to create a database of 1987 Medicaid births
that included data on Medicaid costs, WIC participation status and costs,
birthweight and other pregnancy outcomes, and maternal characteristics,
such as age, race, birth parity, education, marital status, prenatal care, and
previous obstetrical history. Constructing this database entailed (1)
specifying the data extracts required from the WIC, Medicaid, and Vital
Records programs in each state, taking into account differences in the
programs and databases among the states, (2) linking the program files,
without the benefit of unique identifiers, to create a single database for
each state, and (3) constructing the variables to be used in the analysis,
which, again, had to take into account the important differences in
programs and databases across states. These database development issues
are discussed in Chapter III and in extensive detail in two separate reports
(Burghardt et al., 1989; Schore et al., 1991).

The second analytic component involved developing an accurate measure
of the Medicaid costs that WIC participants would have incurred had they
not participated in the WIC program. This process was complex for two
reasons. First, several different definitions of Medicaid costs and prenatal
WIC participation are possible, leading to different analytical results.
Second, the characteristics of WIC participants and nonparticipants differ
in terms of demographic characteristics and prenatal care utilization, and
such differences need to be accounted for when estimating the effects of
prenatal WIC participation on Medicaid costs and birth outcomes.
Different formulations of the Medicaid cost and birthweight models which
incorporate alternative strategies for addressing these issues are described
in Chapters IV and V of this report.

ln Texas, the time period used was the first six months of 1988.


mmm a Se ele

IL PREVIOUS LITERATURE ON THE EFFECTS OF PRENATAL
WIC PARTICIPATION

The WIC program has grown from a $750 million program serving 2
million women and children in 1980 to a $2.1 billion program serving an
estimated 4.5 million women and children per month in 1990. Since its
inception in 1972 the program has prospered under four separate
administrations, in part because, at least on an intuitive level, the
provision of food supplements to low-income, at-risk pregnant women,
infants, and children seems like it should improve pregnancy and health
outcomes. However, as noted by Kennedy et al. (1982), while the benefit
of nutritional supplementation for poor pregnant women has been
demonstrated in underdeveloped countries its efficacy in industrialized
countries--where poor pregnant women are relatively better off--continues
to come under scrutiny. In addition, both the size and growth of the WIC
program have prompted policy- and lawmakers, as well as the scientific
community, to call for efforts to quantify its benefits, in order to
determine whether, as a publicly funded intervention, the WIC program
indeed provides a measurable net benefit to society.

Thus, as the WIC program has grown in the 1970s and 1980s, it has been
subjected to numerous and varied evaluations. Many evaluations have
been carried out at the state and local level, but only a few at the national
level. The outcomes that have been examined include birthweight, fetal
and neonatal mortality, medical conditions and nutritional status in the
mother and infant, and, less frequently, Medicaid and indigent care cost
savings at and around birth for prenatal WIC participants and their
newborns. Furthermore, due to the size and importance of the WIC
program, each evaluation has been subjected to detailed scrutiny and
criticism by subsequent evaluators. The objective of this chapter is to
summarize the existing literature on the effects of prenatal WIC
participation and to show how the current study builds on these efforts
and adds to their body of findings. The chapter first reviews the relevant
studies and then discusses the methodological issues raised by previous
evaluations.

A. MAJOR EVALUATIONS

This section discusses the methodologies and findings of seven major
evaluations of the WIC program published between 1979 and 1989. The
key features of the evaluations of direct relevance to the current
WIC/Medicaid study are summarized in Table II.1 and discussed in turn.

© The earliest evaluation, Edozien et al. (1979), was a national study of
over 50,000 women, infants, and children at 19 WIC projects in 14
states. Data on the outcomes of clinical examinations and laboratory

5


THE SAVINGS IN MEDICAID COSTS FOR
NEWBORNS AND THEIR MOTHERS FROM
PRENATAL PARTICIPATION IN THE WIC PROGRAM

VOLUME 2

April 1991

Authors:

Barbara Devaney
Linda Bilheimer
Jennifer Schore

Submitted to:

U.S. Department of Agriculture
Food and Nutrition Service

Office of Analysis and Evaluation
3101 Park Center Drive, 2nd Floor
Alexandria, VA 22302

Submitted by:

Mathematica Policy Research, Inc.
P.O. Box 2393

Princeton, N.J. 08543-2393

(609) 799-3535

Project Director: Barbara Devaney
Co-Principal Investigators:

Linda Bilheimer
Barbara Devaney



1. Internal Medicaid Linkage. Mothers with delivery-related Medicaid
claims were matched to their respective newborns with Medicaid claims
during the first 60 days after birth.

2. Medicaid to Vital Records Linkage. Medicaid-covered birth events
were matched to the birth certificate of the newborn in order to
capture demographic and prenatal care data, birth history, and birth
outcome data.

3. Internal WIC Linkage. Pregnant WIC participants were matched to
newborns participating in the WIC program in order to obtain
additional identifying information for merging WIC data with a
combined Medicaid/Vital Records file.

4. Medicaid/Vital Records to WIC Linkage. Medicaid-covered birth

events were matched to data on the mother’s prenatal WIC
participation, if such participation occurred.

The internal Medicaid linkage matches mothers and their respective
newborns both previously identified from Medicaid claims files as having
been part of a Medicaid-covered birth in 1987. This link is crucial, since
costs incurred both for mothers and their newborns were identified, and
for some states combined, for the primary outcome measure of the study.
The ability to link these costs was important because for some types of
claims (such as Medicaid inpatient claims for labor and delivery that
include newborn care) the costs for the two were not separable. Thus, it
was not possible to consider only the costs incurred by the mother or only
the costs incurred for newborns as dependent variables for the models to
be estimated in the study, and data for both were made available to
combine costs for mothers and newborns when necessary.

In the Medicaid to Vital Records linkage, Medicaid records were linked
with the Vital Records birth file. The input to this link was either
matched mother/newborn Medicaid records or separate Medicaid mother
and newborn files. This linkage was based primarily on the county of
residence, hospital of birth, and the newborn’s last name, date of birth,
and sex. Given that the Vital Records files contained all births in the
state for the study period (not just births to women with Medicaid
coverage), the match criteria had to be very strict in order to avoid false
matching. Linking the Medicaid mothers with Vital Records who were
not already matched to Medicaid newborns was difficult, since the
mothers’ Medicaid records contained only an approximation of the birth
date of the newborn--the service dates from the mother’s claim for labor
and delivery. Matching Medicaid newborn records that had not already

26



Estimating a
Dose-Response
Effect

nonparticipants have (1) a lower risk of a poor perinatal outcome because
they are healthier and better off financially and thus do not qualify for the
WIC program or (2) a higher risk of a poor perinatal outcome because
they do not believe sufficiently in the efficacy of prenatal care to apply for
WIC benefits or because they lack access to the WIC program?

The difficulty of accounting statistically for individual decisions by eligible
women to participate in the WIC program is that a wide range of both
measurable and unmeasurable factors-- personal preferences, attitudes,
habits, and biases, as well as accessibility to and a knowledge of WIC
services--influence a woman’s decision to participate in the WIC program.
These factors are also likely to affect her willingness to engage in other
health-promoting activities during pregnancy. That is, relative to
nonparticipating WIC-eligible individuals, women who choose to
participate in the WIC program may also be more likely to engage in
other activities beneficial to their pregnancies, such as reducing or
eliminating alcohol, drug consumption, or nicotine intake or by receiving
adequate prenatal care. Conversely, WIC programs that aggressively
target the highest-risk pregnant women in their communities may have a
sample of participants who are less likely to engage in other beneficial
activities. Measuring these risk factors, such as the intake of alcohol,
drug, or nicotine, is difficult at best and frequently impossible. It is even
more difficult to determine whether improved (or diminished) perinatal
outcomes are due to the receipt of WIC benefits or to the use (or
nonuse) of other types of prenatal care for women who use both. Thus,
research efforts must use various statistical means and rigorous data
collection methods to address the problems associated with interpreting
estimates based on nonrandomly assigned comparison groups.

Determining whether WIC participation has a dose-response effect, and
if so, whether WIC participation has some critical threshold of use
below which it is usually ineffective, is important for improving
targeting and outreach efforts in light of the limited resources available
to serve eligible women. For example, some studies have presented
evidence that fewer than three months of WIC participation can be
expected to have no effect on birth outcomes. If this evidence could
be proven conclusively, focusing outreach efforts on newly pregnant
women and reducing the priority given to women who are more than
six months pregnant might be an effective way to allocate services when
resources are limited. However, as pointed out by Rush and others,
isolating a dose-response effect is difficult because the intensity of WIC
participation is so highly correlated with the length of gestation. That
is, women with fewer months of WIC participation may also consist of
those who have had premature births.

14





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For this study, Florida, Minnesota, and North Carolina provided data on
the value of food instruments redeemed during pregnancy for each of the
prenatal WIC participants. South Carolina provided data only on the
number of months WIC food instruments were issued during pregnancy,
and, as noted, Texas had data only on the month of enrollment in the
WIC program. Thus, estimates of the cost of the WIC program in
Florida, Minnesota, and North Carolina were based on the actual amount
of redeemed food instruments during the nine months prior to birth;
estimates of the amount of redeemed food instruments in South Carolina
and Texas were derived from instruments issued and the number of
months enrolled in the WIC program, respectively.

Estimating the total WIC costs per prenatal WIC participant entailed
adding an adjustment for administrative expenses and the costs of the
nutrition education component of WIC to the costs of the WIC food
supplements. This adjustment, which was based on state data on total
WIC food costs and total administrative and nutrition education costs, was
calculated by multiplying the ratio of administrative and nutrition
education expenses to total WIC food costs by the average food
supplement cost per prenatal participant. The total WIC costs per
prenatal WIC participant were the sum of the food package costs and
administrative and nutrition education expenses.

Creating the Birth-Based Analysis File. After the analytical variables were
constructed, the records for individuals with duplicate Medicaid identifiers
were eliminated and consolidated. It was particularly important that data
which appeared under multiple Medicaid identifiers for the same person
be maintained on the file throughout the variable construction process.
In this way, complete cost variables could be constructed for each
individual in the sample even if that individual changed Medicaid
identifiers over time.

At the conclusion of the variable construction process, the WIC/Medicaid
study database contained raw data from state extracts, state data that had
been recoded to a uniform coding scheme for the study, and the more
complicated constructed variables described in the previous sections. The
unit of observation on the database at this point was the newborn.
However, the unit of observation for the analysis of the effect of prenatal
WIC participation on Medicaid costs was the Medicaid-covered birth. For
singleton births, these units were identical. For multiple births, cost data
for all newborns involved in the birth had to be aggregated. Thus, a
second, birth-based file was created by summing costs for all newborns in
a birth, from which analysis files for statistical cost estimates were
subsequently extracted. In general, birth outcomes were not transferred

31



=

Ml. THE CONCEPTUAL MODEL AND A DESCRIPTION OF THE
WIC/MEDICAID DATABASE

The primary goal of this study is to estimate the effect of prenatal
participation in the WIC program on Medicaid costs for mothers and
newborns during the first 60 days after birth. This chapter describes both
a conceptual model that compares the costs of the Medicaid and WIC
programs and the process of constructing the database for each of the five
study states to estimate the effects of prenatal WIC participation. The
first section presents the conceptual model used in the study to examine
the costs and benefits of participation in the WIC program by pregnant
women. The second and third sections describe the database used for the
empirical application of the conceptual model. The fourth section
presents the results of the database construction process.

A. THE CONCEPTUAL MODEL OF WIC BENEFITS AND COSTS

The underlying premise that motivates this study is that, to some extent,
participation in the WIC program during pregnancy by Medicaid recipients
is an investment whereby improved pregnancy outcomes may lead to
reduced Medicaid costs for newborns at birth and over some period after
birth. Associated with this investment--the provision of WIC benefits--are
its costs. They include the cost of the WIC benefits (food instruments
and nutrition education) and the costs of administering the program. In
addition, WIC participation may increase health care costs insofar as WIC
participation leads to earlier and more adequate prenatal care for women,
which also may increase Medicaid costs.!

The benefits of prenatal participation in the WIC program may be seen
as occurring over the lifetime of newborns and their mothers. That is, the
enormous social and economic costs of the developmental abnormalities,
congenital malformations, and neurologic disorders that can be associated
with prematurity and low birthweight suggest that any WIC-induced
reduction in the incidence of negative pregnancy outcomes is likely to
have benefits that extend over the entire lifetime of the newborn and its
family.

1Not all the benefits of prenatal participation in WIC lead to reduced
Medicaid costs. One potential benefit of the WIC program that may drive
up health care costs is a reduction in infant mortality. That is, very low
birthweight babies who survive the neonatal period because their mothers
received WIC benefits, while arguably the paramount benefit of the WIC
program, will incur higher medical costs than had they died in childbirth.

17



I. INTRODUCTION

The Commodity Distribution Reform Act and WIC Amendments of 1987
(Public Law 100-237) and the Joint Resolution Continuing Appropriation
for Fiscal Year 1988 (Public Law 100-202) mandated a study to examine
the relationship between prenatal participation in the Special Supplemen-
tal Food Program for Women, Infants, and Children (WIC) and Medicaid
costs for mothers and newborns from birth to 60 days after birth. The
first volume of this report presented the basic results of this study, which
indicated that prenatal participation in the WIC program improves birth
outcomes and lowers Medicaid costs for mothers and their newborns in
the first 60 days of life. This second volume explores the methodological
issues and analytical results of the study in more detail.

A. A REVIEW OF THE MAJOR STUDY FINDINGS

The WIC/Medicaid study entailed analyzing the effects of prenatal WIC
participation on Medicaid costs and birth outcomes in five states: Florida,
Minnesota, North Carolina, South Carolina, and Texas. The results of the
study indicate that prenatal participation in the WIC program improves
birth outcomes and generates savings in Medicaid costs for mothers and
newborns. The following specific findings are reported in Volume 1:

© Prenatal participation in the WIC program is associated with substantial
savings in Medicaid costs for newborns and their mothers during the
first 60 days after birth. Estimated savings in newborn and maternal
Medicaid costs due to prenatal WIC participation ranged from $277 in
Minnesota to $598 in North Carolina, with intermediate values of $347,
$493, and $565 for Florida, Texas, and South Carolina (hospital costs
only), respectively.

@ When newborn and maternal Medicaid costs were able to be separated,
the estimated savings in newborn Medicaid costs associated with
prenatal WIC participation were even greater than the estimated
savings when newborn and maternal costs were combined; these
estimates were $744 in North Carolina and $573 in Texas.

e Inall five study states, the benefit-cost estimates were greater than one
when the estimated savings in Medicaid costs were combined with data
on the costs of the WIC program. Thus, as measured by the estimated
Medicaid savings, the benefits of prenatal WIC participation exceeded
the costs of providing prenatal WIC benefits. For newborns and
mothers, the estimated benefit-cost ratios ranged from 1.77 in Florida
to 3.13 in North Carolina, with values of 1.83 for Minnesota and 2.44
for both South Carolina and Texas. For newborns only, the benefit-
cost estimates were 3.90 in North Carolina and 2.84 in Texas.


The third analytical component entailed drawing inferences about the
WIC and the Medicaid programs nationwide from the results of the
analysis. The analysis yielded findings on the cost-effectiveness of prenatal
WIC participation in four states during 1987 and during the first six
months of 1988 for Texas. The findings differed among the study states
because of variations in the Medicaid and WIC programs across states and
because of the different socioeconomic and demographic composition of
the target populations. Even greater variation exists on a nationwide basis
than among the five states in the study. Furthermore, significant changes
in both the WIC and the Medicaid programs have occurred since the
study period. Consequently, generalizing the study results for the nation
as a whole in the 1990s is extremely difficult. These issues are discussed
in Volume 1 of the report and are not addressed in detail in this volume.

D. ORGANIZATION OF THE REPORT

This volume contains five chapters. Chapter II includes a review of the
literature on the effects of prenatal participation in the WIC program.
Chapter III introduces the conceptual model of WIC benefits and costs
and provides an overview of the WIC/Medicaid database. The empirical
analyses of the effects of prenatal WIC participation on Medicaid costs
and birth outcomes are presented in Chapters IV and V, respectively.