March 10, 2017 | Ross Weiler

Massachusetts Health Policy Commission Continues Efforts to Reduce Health Care Cost Growth

On March 8th, the Massachusetts Health Policy Commission (HPC) held a public hearing regarding potential modification of the benchmark for the average targeted growth in total health care expenditures for calendar year 2018.

We applaud the HPC’s continued efforts to positively impact health care spending for the Commonwealth’s citizens and employers, and believe that the HPC’s comprehensive analysis provides useful guidance for anyone interested in managing health care costs.

Following are some highlights about and from the session.

Background:

  • The HPC was established by Massachusetts Chapter 224, which was signed into law in 2012.
  • Among other things, the HPC is tasked with setting health care cost growth goals (annual benchmarks) and overseeing the implementation of performance improvement plans for health providers and health plans that do not meet the benchmarks.  As part of this process, the HPC is required to hold annual cost trend hearings.
  • Chapter 224 set the annual benchmark for 2013 – 2017 at 3.6%.  Cost increases exceeded the benchmark in 2014 and 2015.

rwSource:  Massachusetts Health Policy Commission

Note: Total Health Care Expenditures are defined at the end of this summary.

  • Chapter 224 sets the benchmark for 2018 at 3.1% but allows the HPC to modify it (only within a range of 3.1% up to 3.6%).
  • The purpose of the March 8th hearing was to gather data and input relative to establishing the 2018 benchmark.  A decision will be made at the HPC’s March 29th meeting.

Massachusetts residents continue to pay among the highest health insurance premiums in the U.S.

rw2Source:  Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey, Insurance Component

According to data from the HPC’s 2016 Cost Trends Report reviewed during the hearing, there are a number of opportunities for improvement including:

  • Shifting services that could safely and effectively be provided in community hospitals from teaching hospitals/academic medical centers (in 2015, 53% of community appropriate inpatient care services were provided in the appropriate setting)
  • Reducing readmission rates (in 2015, the readmission rate in Massachusetts was 15.8% and ranked among the highest in the U.S.)
  • Shifting services from high-cost settings of care (e.g. reducing avoidable emergency department visits – especially for behavioral health, and institutional post-acute care); the HPC projects that over 40% of emergency department visits are avoidable, and Massachusetts’ rate of discharges to institutional post-acute care settings is roughly 30% higher than the national average
  • Redirecting care from high cost primary care groups (in 2015, there was a roughly 17% difference in per member per month blended health status adjusted total medical expenses between the lowest and highest cost primary care groups in the Commonwealth)
  • Increasing the prevalence of alternative payment contracts (in 2015, 36% of Massachusetts commercial, Medicare and Medicaid member months were covered under an alternative payment contract)
  • Reducing Rx spending growth, which was 10.5% for Massachusetts overall and 8.8% per capital (before rebates) for commercial business (medical and prescription drug spending comprised over 20% of 2015 Massachusetts commercial health spending)

The HPC projects that the total savings potential associated with the above opportunities combined ranges from $279M (low estimate) to $794M (high estimate), or between approximately .5% – 1.3% of total health care expenditures.

Links to the March 8th hearing materials, as well as the full 2016 Cost Trends Report, are below:

http://www.mass.gov/anf/budget-taxes-and-procurement/oversight-agencies/health-policy-commission/public-meetings/board-meetings/20170307-march-8-2017-hearing-presentation.pdf

http://www.mass.gov/anf/budget-taxes-and-procurement/oversight-agencies/health-policy-commission/publications/2016-cost-trends-report.pdf

rw3Source:  The Center for Health Information and Analysis (CHIA)