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October 31, 2022
Sustainable Health Care Costs Peterson-Milbank Program for Sustainable Health Care Costs Health Care Costs Accountability
Debra Lipson, Cara Orfield, Rachel Machta, Olivia Kenney, Kelsey Ruane, Marian Wrobel, and Sule Gerovich, Mathematics
Apr 10, 2023
Mar 13, 2023
Jan 10, 2023
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See the The Massachusetts Health Care Cost Growth Benchmark and Accountability Mechanisms landing page to review all related publications.
In 2012, Massachusetts became the first state in the country to adopt legislation establishing a statewide benchmark for health care cost growth. This benchmark sets a target for the annual rate of increase in health care spending and ties it to expected growth in the state’s overall economy. Known as Chapter 224, the law applies the benchmark to public and private expenditures and most types of health spending. The law also established the Health Policy Commission (HPC) and gave it the authority to monitor and promote payers’ and providers’ compliance with the benchmark through a set of accountability mechanisms described below.
Following Massachusetts’ lead, policymakers in eight other states have adopted similar initiatives to establish benchmarks for cost growth. To support these states, the Peterson Center on Healthcare and Gates Ventures commissioned Mathematica to conduct a study of Massachusetts’ stakeholders’ experiences with, and perceptions of, the HPC’s accountability mechanisms and to identify lessons and considerations for other states that are setting cost growth benchmarks. This issue brief summarizes key study findings and raises lessons and considerations for state policymakers about the design and use of accountability mechanisms to meet a health care cost growth benchmark. (See the full report.)
In 2016, the Health Policy Commission began reviewing the performance of entities whose annual spending growth exceeded the benchmark.
Although the HPC reviewed dozens of entities over the next six years, the HPC did not require any of them to prepare a PIP, leading many payers and providers to believe that a PIP referral did not have serious consequences.
After the HPC Board voted to require Mass General Brigham to prepare a PIP in January 2022—the first one in its history—the prospect of preparing a PIP might regain its influence on payer and provider spending.
All stakeholders are watching closely to see how the Mass General Brigham PIP process plays out to shed light on the strength of this accountability mechanism.
For more details, check the Interactive Tracker on the HPC’s website to learn about the PIP’s progress.
As of 2022, eight states have followed Massachusetts’ lead and adopted programs setting targets for health care cost growth; several other states adopted elements of the initiative. Massachusetts’ experience highlighted important lessons and raises considerations for policymakers in other states about the design and use of mechanisms to hold payers and providers accountable for keeping health care spending growth below the benchmark (Table 2). Policymakers must decide which options are best suited to their state, based on the health care market structure, the capacity and resources of state agencies to implement benchmarking initiatives, and political consensus. For more discussion of these lessons and considerations, read the full report.
Table 2. Lessons and considerations for state policymakers
“For the benchmark to be effective, it needs to connect with what consumers pay for and how their costs are rising.” — Interview respondent
“I think that what really makes [the cost growth benchmark] so powerful is the credibility that the Health Policy Commission and Center for Health Information and Analysis bring to the table. We know that very thoughtful and thorough data analysis underlies their work. They are highly respected, both the staff and the commission. They command a place that they’ve been given by the statute, and I think that is really what has made them as successful as they have been.” — Interview respondent
“One of the things we’ve learned is you need to give [the HPC] more enforcement authority, more teeth. In certain situations, they should be required to apply penalties for lack of compliance as opposed to letting them decide.” Interview respondent
This study used qualitative research methods to examine how the HPC implemented the four accountability mechanisms. From November 2021 to March 2022, we interviewed nearly 50 key stakeholders involved in or affected by the Massachusetts cost growth benchmark initiative. These included state officials (including the HPC and other state agencies), payers, providers, and consumer representatives and other stakeholders. We also collected and catalogued extensive documentation about the HPC’s use of each accountability mechanism through a systematic search of publicly available documents.
The authors thank colleagues at the Peterson Center on Healthcare, the Massachusetts Health Policy Commission staff, and the nearly 50 people in Massachusetts who participated in interviews. This project was supported by the Peterson Center on Healthcare and Gates Ventures. The statements contained in this issue brief are solely those of the authors and do not necessarily reflect the views or policies of the Peterson Center on Healthcare or Gates Ventures.
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