Best Practices in Health Care Claims Data Analysis to Inform State Action and Control Costs

Introduction

Over the last decade, high and rising health care costs have squeezed patients’ wallets, strained local economies, and consumed a growing share of state budgets. In response, states have increasingly recognized the urgency of addressing unsustainable health care cost growth through innovative cost containment strategies. A critical first step in this effort is to understand the cost drivers – the root causes of health care spending growth. The most effective way to identify cost drivers is by generating actionable insights from health care spending data.

In 2021, Peterson-Milbank published a guide for states on analyzing health care spending data from state All-Payer Claims Databases (APCDs). Since then, state agencies have made significant progress in building their capacity and expertise in this area. This updated resource incorporates lessons learned from that experience, offering enhanced recommendations for analyzing APCD data to produce meaningful insights that support data-driven communications and policymaking.

This document begins with an overview of best practices for conducting health care spending analyses, and then recommends specific cost driver analyses states should conduct to better understand where spending is high and growing. Where applicable, the analyses include examples – primarily from states, though some come from stakeholder coalitions – to demonstrate the types of insights these analyses can yield.