Press Release  AG Healey Issues New Report on Health Care Cost Trends

Boston — A new report released today by Attorney General Maura Healey finds that health care services are paid for in complicated ways and with little consistency across insurers and providers, resulting in increased administrative costs and difficulty for market participants to identify high quality health care options.

This is the eighth report the AG’s Office has issued in its ongoing work to examine health care cost trends in Massachusetts. These reports aim to increase transparency around the forces and conditions that affect health care spending.

“Health care costs are one of the highest expenses for Massachusetts families,” AG Healey said. “This report shows that there is more we can do to reduce administrative costs and make health care price comparisons easier for patients, employers and health care professionals.”

The new report details key findings that have significant implications for the health care marketplace in Massachusetts. First, commercial health care fee-for-service payments are determined using complex and varied methods with little consistency across payers, providers or insurance products. Risk contracts are similarly complex and vary from insurer to insurer, adding another layer of complexity on top of the fee-for-service framework that underlies alternative payment methods. This varied payment system generates administrative costs that do not appear to add value to patient care. Complexity also serves as an obstacle to price transparency for consumers, employers, policymakers and providers.

The AG’s Office offers the following recommendations to address these key findings, reduce costs and promote actionable price transparency:

• Reduce complexity and explore increased standardization, where appropriate, of the methods for determining fee-for-service payments and the key terms that govern risk contracts.
• Establish real-time, service-level price transparency for employers, consumers, policymakers and providers. A simpler underlying approach to health care payment practices would allow for new transparency initiatives that would enable purchasers and providers to compare options for specific services.
• Further study the administrative costs associated with current approaches to health care payment practices that significantly vary between insurers, insurance products, market-segments within insurance products and providers.

The AG’s Office encourages consumers to exercise their rights under Massachusetts law to make requests for and obtain advance disclosure of costs and cost-sharing responsibility for upcoming appointments from their health care provider and health insurance plan, including by using their insurance plan’s cost estimator website. Links to each insurance plan’s website are available through the Massachusetts’ CompareCare website at https://masscomparecare.gov/.

Prior cost trends reports from the AG’s Office have focused on inefficiencies in the distribution of health care dollars, including provider price variation unexplained by differences in quality, complexity of services, and other common measures of consumer value. Prior reports have also documented higher per capita spending on commercially insured people in more affluent communities as compared to less affluent ones, despite the higher sickness burden found in less affluent communities

AG Healey and staff from her office will be speaking and presenting on these findings at the 2018 Cost Trends Hearing on October 17, 2018.

Today’s report was prepared by Assistant Attorneys General Sandra Wolitzky and Amara Azubuike, and Legal Analyst Elizabeth Carnes-Flynn, all of AG Healey’s Health Care Division.

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