HPC Releases Annual Report Evaluating State’s Ability To Meet Cost Containment, Care Delivery Goals

HPC Targets Legislative and Market Recommendations

BOSTON — The Massachusetts Health Policy Commission (HPC) today released its Annual Health Care Cost Trends Report, examining health care spending in Massachusetts in 2016 and the state’s performance against the health care cost growth benchmark. The report makes strong policy recommendations to address the rising cost of health care in the Commonwealth to the Legislature, other state agencies, the health policy community, and the HPC itself.

“The biggest concern for Massachusetts is the high cost of our health care system and the persistent affordability concerns for individuals, families, businesses, and government. Our low and middle income families are particularly bearing the brunt for the rising cost of health care,” said Dr. Stuart H. Altman, HPC Board Chair and health economist. “The recommendations we make in the report – especially around health care equity and affordability, reducing increases in drug spending, and reducing unnecessary utilization of institutional care, are critical to curbing this trend.”

The HPC set the 2015 target growth rate (or “benchmark”) in per-capita Massachusetts health care spending at 3.6 percent. Overall growth in 2015 was 4.1 percent – 0.5 percentage points above the benchmark. In the report, the HPC finds that the main contributors to exceeding the benchmark in Massachusetts were: (1) prescription drug costs, (2) hospital spending, (3) health insurance enrollment changes, and (4) spending on long-term services and supports.

For the second year in a row, prescription drug spending remains the largest single contributor to increases in health care cost, accounting for roughly one-third of per-capita growth. The HPC found that, when combined, medical and prescription drugs comprised more than 20 percent of commercial spending in Massachusetts. In the report, the HPC recommends enhancing the transparency of drug prices and spending to help reduce increases.

The HPC also found that all-cause, all-payer 30-day hospital readmissions increased for the first time in four years. This is an area with which Massachusetts has struggled compared to most other states. The HPC has highlighted this area for potential cost-savings by issuing a target of lowering all-payer readmissions to 13 percent by 2019.

ANNUAL Health Care Cost Trends Report: POLICY Recommendations for 2017

In the report, the HPC makes thirteen recommendations and commitments to advance Massachusetts’ health care reforms and improve health care in the Commonwealth. These recommendations require action by health insurers, providers, employers, policymakers, and other state agencies, and lay the foundation for continued development of an integrated, patient-centered health care system that promotes value. The recommendations focus on four areas: fostering a value-based market; promoting an efficient, high-quality, health care delivery system;  advancing aligned and effective incentives; and enhancing data and measurement for transparency and accountability.

Recommendations to foster a value-based market

1. Health Care Equity and Affordability: The Com­monwealth should examine how health care costs are differentially allocated to individuals, families, and businesses across Massachusetts, and should further consider opportunities to promote equity and afford­ability, including tracking and monitoring differences in health care spending, insurance costs, and mem­ber cost-sharing across a range of characteristics (e.g., socio-economic profile, employer size and industry, health status, etc.).
2. Pharmaceutical Drug Spending: The Commonwealth should take action to reduce increases in drug spend­ing including by enhancing the transparency of drug prices and spending, and payers and providers should consider further opportunities to maximize value.
3. Out-of-Network Billing: Efforts to address out-of-network billing issues continue to gain momentum across the nation. Massachusetts has not taken com­prehensive action on this issue. The Commonwealth should implement safeguards for consumers and im­prove market functioning related to out-of-network billing by enhancing out-of-network billing protec­tions and establishing reasonable reimbursement for services.
4. Provider Price Variation: Extensive variation in prices paid to health care providers for the same sets of services is a persistent issue in the Common­wealth, driving increased health care spending and perpetuating inequities in health care resources. The Commonwealth should take action to reduce un­warranted variation in provider prices by continuing to monitor and analyze price variation, including by factors identified as “warranted” and “unwarranted”.
5. Facility Fees: The Commonwealth should take action to limit newly-licensed and existing sites that can bill as hospital outpatient departments and equalize pay­ments for select services for similar patients between hospital outpatient departments and physician offices.
6. Community-Appropriate Care: The Commonwealth, payers, and providers should work to redirect com­munity-appropriate care to high value, community settings.

Recommendations to PROMOTE an efficient, high-quality health care delivery system

7. Unnecessary Hospital Use and Other Institutional Care: The Commonwealth should continue to focus on strengthening partnerships between the health care delivery system and community-based organi­zations in order to reduce the unnecessary utilization of institutional care, including hospital readmissions, behavioral health-related ED visits, and institutional post-acute care.  
8. Substance Use Disorder Treatment: The Com­monwealth, payers, and providers should continue to improve treatment of substance use disorder, par­ticularly including opioid use disorder.
9. Adherence to Evidence-Based Care: The Common­wealth, payers, and providers should work to focus on the highest possible adherence to evidence-based care, including putting systems in place to track and reduce the provision of non-recommended care.   

Recommendations to advance aligned and effective incentives

10. Adoption of Alternative Payment Methods (APMs): Payers and providers should continue to focus on increasing the adoption of alternative payment meth­ods (APMs). The Commonwealth should set APM adoption targets for HMO and PPO patients, and MassHealth members. 
11. Alignment and Improvement of APMs: Payers should align and improve features of APMs in order to increase their effectiveness in promoting high quality, efficient care, including through improving quality measure­ment, reducing disparities in spending levels, inclusion of behavioral health, and adopting HPC’s ACO cer­tification standards.
12. Demand-Side Incentives: Payers and employers should continue to enhance strategies that empower consumers to make high-value choices, including increasing the transparency of comparative prices and quality to enhance the selection of value-based providers.  

Recommendations to enhance data and measurement for transparency and accountability

13. Data and Measurement: Center of Health Informa­tion and Analysis (CHIA) should continue to improve and document its data resources and develop key spending measures on drug rebates, Total Medical Ex­penditures (TME) for PPO populations, provider-level measures of spending growth, and ambulatory quality measures. CHIA should also evaluate the impact on the All-Payer Claims Database (APCD) of the expected loss of data due to the Gobielle decision.