Last week, the Massachusetts Health Policy Commission (HPC) hosted its 5th Annual Health Care Cost Trends Hearing . These hearings bring transparency to a whole new level: Massachusetts is one of the few states in the country to be systematically gathering data and shining a spotlight on all healthcare spending in the state. This year’s headline is that overall healthcare spending growth stayed below the benchmark of 3.6% growth: healthcare spending growth was only 2.8% from 2015 to 2016. That said, there is still cause for concern, as described in our insights below.
Day Health Insights:
We attended the hearing, and in spite of the “good news,” there are some worrisome signs in the data. The state is right to keep the pressure on to lower costs.
- HIGH COSTS OVERALL: Massachusetts was the second highest cost state in terms of healthcare spending in 2016. Even when accounting for income levels, Massachusetts is still one of the highest spending states for healthcare. For example, Maryland has higher levels of income compared to Massachusetts but significantly lower levels of health care spending. Maryland has taken some aggressive steps to curb healthcare costs and perhaps Massachusetts could learn from Maryland’s bold efforts.
- HOSPITAL READMISSIONS INCREASES:
Hospital readmissions rates had been decreasing but saw an uptick in the past 2 years, which is a worrisome sign for cost containment. However, many good ideas about how to handle complex patients came out of the hearing.
- MERGER COSTS: The data presented at the hearing demonstrated that when a community based hospital is acquired by an academic medical center, community based care decreases, while care in academic medical centers increases. Moving inappropriate care into higher cost settings has a significant impact on healthcare spending. Provider systems need to be incentivized to deliver care in the lowest cost settings.
Key Themes of the Hearing
During the hearing, the HPC and Center for Health Information and Analysis (CHIA) presented data on cost growth, healthcare spending and various healthcare related metrics. Public officials also shared their thoughts on healthcare in the state, and stakeholder panels answered questions from the commissioners. These were the hearing’s reoccurring themes of solutions to address the high cost of healthcare (for more details click here):
There were two areas that were NOT addressed during the hearing in a significant way:
- PROVIDER PRICE VARIATION: Discussing solutions for the challenges associated with provider price variation was not part the hearing. However, earlier this year a special commission on provider price variation released a report with data on price variation, factors driving price variation, and policy recommendations.
- PHARMACEUTICAL COST GROWTH: Pharmaceuticals continue to be a major cost driver and accounted for the largest share of spending growth from 2015 to 2016. Disappointingly, the hearing neglected to address this cost driver in any robust way. We need to take a page from last year’s hearing where curbing pharmaceutical spending was a major theme. Ideas included having transparency around actual prices and clear methodology and justification for how drug prices are set, and increasing value based contracting for pharmaceuticals.
- Given these worrisome signs and missing pieces, we will all need to focus on the legislative package announced by Senate President Stanley Rosenberg that will be released this fall. The package is intended to address many of these cost drivers in a comprehensive way.
 Each year, the hearing brings together a variety of interest groups to discuss strategies to reduce cost growth in the Commonwealth while maintaining access to high quality care.