COLUMBIA — It already costs about $6 billion to run the Medicaid agency in South Carolina — more than any other department in state government — and early estimates show the program may need nearly half a billion dollars more next year.

South Carolina Medicaid Director Tony Keck said most of that $462 million increase will probably come from reserve funds, but the agency is also looking for ways to save money. That includes reducing the number of cesarean section deliveries that Medicaid pays for.

“With our C-section rate maybe twice what is the expected best practice and huge variation between doctors and hospitals, like sometimes three or four times variation, it just has to be the next place we go,” Keck said.

He’s turning to the Birth Outcomes Initiative for help. This collaboration of health care providers, insurers, nonprofits and state leaders has already helped the government achieve some costs savings by reducing the number of early elective deliveries, both vaginal and C-sections. In January, both the Medicaid agency and BlueCross Blue Shield of South Carolina stopped reimbursing doctors and hospitals for delivering babies before 39 weeks gestation without a good medical reason.

Evidence shows carrying babies full-term reduces the chance that they end up in the more-expensive neo-natal intensive care nursery. The 39-week initiative is intended to improve infant health and cut the cost of the hospital bills that insurers pay for.

But Keck acknowledged that reducing C-sections will be a more difficult problem for the Birth Outcomes Initiative to tackle.

“Typically you’re, in theory, doing a C-section because you believe the mother or the baby is in distress. You’re not cutting someone open just because,” he said. “Somebody is getting nervous about someone and says we’ve got to do a C-section and so it’s a whole different set of decision making about how do you actually get people to stop making those decisions that are not evidence-based, but when they’re scared or uncertain?”

About 35 percent of pregnant Medicaid patients deliver their babies by C-section, compared with 39 percent of privately insured patients in South Carolina, according to new case study published by the nonprofit Catalyst for Payment Reform. The federal government has set a stretch goal of 23.9 percent for everyone to achieve by 2020.

“What happened was when we pushed the 39 week (initiative), a lot of people waited 39 weeks, but then they had the C-section for convenience anyway — convenience, not medically necessary,” said Medicaid Deputy Director BZ Giese. “A lot of women believe a C-section is safer than a vaginal delivery, but clinical evidence shows that it’s not.”

Giese, who will spearhead the Birth Outcomes Initiative full-time this year, said the Medicaid agency will start educating hospitals and doctors about hospital-specific C-section rates and why vaginal deliveries are best for babies. The agency will try this for at least six months before considering changes to its reimbursement policy.

The Birth Outcomes Initiative hosted its second annual symposium in Columbia on Thursday

Reach Lauren Sausser at 937-5598.