Commissioners also voted to initiate the first retrospective cost and market impact review of Beth Israel Lahey Health’s 2019 formation
BOSTON — Today, the Massachusetts Health Policy Commission (HPC) Board reviewed new HPC research on improving affordability and predictability in cost sharing, to be included in the upcoming 2025 Health Care Cost Trends Report, as well as updates on the agency’s implementation of recent legislation, including establishing two new offices within the HPC: the HPC Office of Health Resource Planning (OHRP) and the HPC Office of Pharmaceutical Policy and Analysis (OPPA). Commissioners also voted to initiate the first retrospective cost and market impact review (CMIR) on the Beth Israel Lahey Health 2019 formation.
Focus on Affordability: Improving Affordability and Predictability in Cost Sharing
Health care affordability in Massachusetts is getting worse for residents with private insurance, largely due to increasing out-of-pocket health care costs. The HPC found average annual cost sharing per person grew from $849 in 2019 to $1,049 in 2023 (a 29% increase), faster than insurer-paid spending (24%). Cost sharing is the portion of health care costs that a patient pays directly out-of-pocket for the services they use, including copayments, coinsurance, and deductibles.
Deductible spending grew 38% from 2019 to 2023, while spending on copayments grew 12%, resulting in cost sharing that is increasingly the result of deductibles. Deductibles can mean unpredictable and often large bills for patients, even for primary care services. For an ED visit with imaging or lab tests, 10% of patients paid more than $1,500 out of pocket. Patients routinely paid more than $100 for a doctor’s visit where they got a common lab test. This high variation in cost sharing for care episodes suggests opportunities for improvement in cost sharing benefit design to increase predictability and reduce financial risk.
Alongside this, one-quarter to one-third of preventive visit episodes (i.e., well visits or checkups) for Massachusetts residents with commercial coverage resulted in cost sharing, rising from 27% in 2019 to 30% in 2023, with vide variations among payers.
“As deductibles and other out-of-pocket costs continue to climb, reflecting persistent growth in underlying health care prices, families in the Commonwealth are increasingly facing medical debt and dealing with unmet medical needs due to the high cost of care,” said Deborah Devaux, HPC Chair. “Stakeholders across the health care system must come together to address rising cost sharing and work toward our shared goal of affordable, accessible health care for all Massachusetts residents.”
Key Findings for Cost Sharing among Commercially-insured Massachusetts Adults (2023):
- The average annual cost sharing per person grew from $849 in 2019 to $1,049 in 2023 (a 29% increase), faster than insurer-paid spending (24%). 10% of residents paid more than $3,000 annually in cost sharing in 2023; those paying $5,000 or more doubled from 2019 (1.5%) to 2023 (3.1%).
- Deductible spending grew 38% from 2019 to 2023 while spending on copayments grew 12%, resulting in cost sharing that is increasingly the result of deductibles, which leads to highly variable cost sharing for care episodes and suggests opportunities for improvement in cost sharing benefit design to increase predictability and reduce financial risk.
- Cost sharing for emergency department (ED) visits is highly variable when imaging and lab tests are involved, which are services typically subject to the deductible. In those cases, 10% of patients paid more than $1,500 out of pocket. Compared to an ED visit with no ancillary services, the likelihood of $1,500 or more in cost sharing increased 10-fold when imaging and labs/tests were performed.
- One-quarter to one-third of preventive visit episodes result in cost sharing, rising from 27% of preventive care visits for Massachusetts adults with commercial coverage in 2019 to 31% in 2023. Cost sharing for preventive visit episodes varies by payer, from about 18% of visits covered by Health New England to 45% of visits covered by United in 2023, and the average costs for these visits with cost sharing also vary widely.
- The most common sources of cost sharing during preventive visit episodes are problem-based codes and labs (i.e. blood tests for high cholesterol or anemia). While this type of cost sharing is permitted, patients with chronic conditions are about twice as likely as patients without chronic conditions to have a preventive visit episode that includes a problem-based code, and as a result patients with chronic conditions are more likely to pay cost-sharing for preventive visit episodes (38%) than people without chronic conditions (26%).
Policy Considerations for Improving Affordability and Predictability in Cost Sharing Include:
- Fostering products that reduce or eliminate deductibles, especially for routine care, and using a more predictable copay-based benefit design. This design would redistribute cost sharing dollars, rather than raising premiums.
- Developing standards to designate consumer-friendly benefit design.
- Consideration of requiring non-profit hospitals to provide a minimum level of charity care and reduce medical debt for low-income patients.
- Prioritizing efforts to address high and growing prices of care. Rising cost sharing and deductibles reflects rising underlying health care spending, driven in large part by growing prices.
This work will be further explored in the upcoming 2025 Health Care Cost Trends Report.
First Retrospective CMIR Report on Beth Israel Lahey Health 2019 Formation
Commissioners voted to authorize initiation of the HPC's first retrospective cost and market impact review (CMIR), a review of the impact of the formation of Beth Israel Lahey Health in 2019. The conditions of the Determination of Need for the merger included a requirement that the Department of Public Health (DPH) could request, and BILH would submit to, a CMIR by the HPC. DPH has now made this request to the HPC.
HPC staff expect to formally initiate the CMIR later this month. The CMIR will examine the impacts of the formation of BILH on health care spending, market dynamics, quality of care, and equitable access to care. The HPC will conduct its independent, data-driven review by examining confidential information provided by BILH and other market participants, as well as all available data on measures of health care costs, prices, quality, and access in Massachusetts.
“The HPC’s market oversight authority is a critical tool for assessing changes in the Massachusetts health care system, and the HPC’s first retrospective cost and market impact review will allow us to understand how these changes impact and serve our residents over time. We appreciate the collaboration of Beth Israel Leahy Health as we undertake this assessment, and their continued partnership from our initial assessment of this formation in 2019,” said HPC Executive Director David Seltz. “The BILH merger resulted in the second-largest health care provider organization in the Commonwealth, and this review will give the public an opportunity to consider the extent to which BILH has been able to achieve its goals of promoting market competition, expanding access to community-based services, and improving quality across providers in its system.”
Read more about the findings from the initial CMIR and the HPC’s transactional review process.
Other Topics at the HPC Board Meeting
Deputy Executive Director Coleen Elstermeyer provided an update on the HPC’s progress in implementing recent health care legislation, including the work and structure of two new offices, the HPC Office of Health Resource Planning (OHRP), led by OHRP Director Kara Vidal and the HPC Office of Pharmaceutical Policy and Analysis (OPPA), led by OPPA Director Matthew Frank. The latest issue in the HPC’s interactive DataPoints series, focused on polypharmacy use by adults in Massachusetts, is now available on the HPC’s website.
Commissioners also reviewed findings from the upcoming evaluation of the Moving Massachusetts Upstream (MassUP) investment program. MassUP was a three-year initiative that provided funding to partnerships of hospitals and community-based organizations working together to promote sustainable improvements to the social determinants of health in their communities.
This is the final meeting of the current term of the HPC Board before the changes to membership included in Chapter 343 of the Acts of 2024 take effect on July 1, 2025. A recording of the meeting and presentation materials are available on the HPC’s website.
