Press Release  ON MILESTONE ANNIVERSARY, HPC CALLS ON INCOMING ADMINISTRATION AND LEGISLATURE TO TAKE IMMEDIATE ACTION TO CONFRONT HEALTH CARE AFFORDABILITY

BOSTON — Today, the Massachusetts Health Policy Commission (HPC) voted to approve the Performance Improvement Plan (PIP) submitted by Mass General Brigham (MGB), the first PIP ever required of a health plan or provider system by the HPC, and the first such plan ever required in the nation. In addition, the HPC released its 2022 Health Care Cost Trends Report and Policy Recommendations (available here; accompanying chartpack here) examining health care spending and the state’s performance against the health care cost growth benchmark.

Commissioners voted to approve the PIP submitted by MGB. In January 2022, MGB was required to develop a PIP after the HPC identified significant concerns regarding MGB’s spending performance, noting that MGB’s spending growth in excess of the benchmark was greater than any other provider in Massachusetts, had likely already impacted the state’s ability to meet the health care cost growth benchmark and, unless addressed, was likely to continue to impact the state’s ability to meet the benchmark.

The HPC consulted with Mass General Brigham since an initial plan was submitted in May 2022 and encouraged MGB to submit a revised proposal to ensure the criteria for approval were met. MGB submitted a revised proposal on September 20, 2022, in which they increased their targeted annual savings from $70 million to $127.8 million, included new savings strategies and additional pricing reforms with local commercial health plans, and made commitments to sustain their comprehensive market solution to address pricing beyond the 18-month PIP implementation timeline.

The approved PIP proposal describes four strategies that MGB claims will result in $127.8 million in reduced health care spending annually, including:

1. Price Reductions – $90 million
2. Reducing Utilization – $32.4 million
3. Shifting Care to Lower Cost Sites – $5.4 million
4. Enhancing Accountability through Value-Based Care

Based on a review of the plan and confidential supporting data and information, the HPC’s Board found that the proposed plan met the standard for approval, and that it was reasonably likely to meaningfully improve MGB’s cost growth.

In the plan, MGB committed to providing data and reports to enable the HPC to assess whether the plan is successful and sustained over time. Following approval of the plan, MGB will begin implementation and the HPC will monitor compliance.

This is the first PIP to be required from a health plan or provider system by the HPC and the first such plan to be implemented in the nation.

More information, including a copy of the approved PIP and an overview of the PIP process and timeline are available on the HPC’s website.

2022 COST TRENDS REPORT ISSUED

HPC Recommends Policy Reforms to Promote Affordability, Constrain High Prices, and Strengthen Oversight

The HPC issued its annual Health Care Cost Trends Report and Policy Recommendations identifying factors contributing to the state’s performance relative to the benchmark, highlighting opportunities to increase quality and efficiency, and recommending policy reforms to address the continued high growth of health care costs in the Commonwealth.

The Center for Health Information and Analysis (CHIA)’s Annual Report, released earlier this year, showed that health care spending decreased 2.4% from 2019 to 2020, largely due to reduced use of care during the COVID-19 pandemic. However, the HPC identifies that persistent challenges and market failures in health care have not been adequately addressed, resulting in health care spending that is anticipated to increase at an unsustainable rate in the future. The HPC’s priorities for action to improve state oversight and accountability include:

1. Target Above Benchmark Spending Growth. The Commonwealth should take action to strengthen the Performance Improvement Plan (PIP) process, the HPC’s primary mechanism for holding providers, payers, and other health care actors responsible for health care spending growth. Specifically, the HPC recommends that the metrics used by CHIA to identify and refer organizations to the HPC should be expanded and include measures that account for the underlying variation in provider pricing and baseline spending, that HPC should have greater oversight tools, including authority to impose escalating financial penalties to deter excessive spending.
2. Constrain Excessive Provider and Pharmaceutical Prices. The Commonwealth should take action to constrain excessive price levels, variation, and growth for provider services and pharmaceuticals by imposing hospital price growth caps, enhancing scrutiny of provider mergers and expansions, limiting hospital facility fees, and expanding state oversight and transparency of the entire pharmaceutical sector, including how prices are set in relation to value.
3. Limit Increases in Health Insurance Premiums and Cost-Sharing. The Commonwealth should take action to hold health insurance plans accountable for affordability and ensure that any savings that accrue to health plans are passed along to businesses and consumers, including by setting affordability targets and standards as part of the annual premium rate review process.

The full slate of six policy recommendations, developed in reflection of ten years of Massachusetts experience, data, and evidence, chart a bold path forward for the next decade. The policy recommendations reflect a comprehensive approach to reduce health care cost growth, promote affordability, and advance equity. Review the full list here.

“As today’s report highlights, the long-term systemic factors underlying high spending growth persist, and the ongoing impact of the COVID-19 pandemic has only added new headwinds,” said Deborah Devaux, HPC Chair. “We must continue to address affordability challenges or the Commonwealth will not be able to meet its cost containment goals. Today’s report makes strong recommendations for all stakeholders to address these challenges.”

“We should be proud of ten years of cost containment effort but there are significant challenges left to confront, and new ones that have emerged. After ten years, we must rethink and retool our approach,” said David Seltz, HPC Executive Director. “The policy recommendations issued today reflect a hallmark of the Massachusetts coalition – the willingness to change course and provide a new, progressive blueprint to address the most important challenges facing our health care system today.”

2022 HEALTH CARE COST TRENDS REPORT

Key Findings

2020 Spending Declined Due to the Pandemic, but Affordability Challenges Remain

• While spending declined in 2020, the average cost of health insurance for a Massachusetts family totaled $22,000 per year, including employer and employee contributions, but not including out of pocket spending such as copayments and deductible spending.

Pharmaceutical Spending Trends

• Higher spending on prescription drugs reflected price increases for existing branded drugs and high launch prices for new branded drugs entering the market.
• Average out of pocket spending for a 30-day supply of prescription drugs for common chronic conditions grew approximately 50% from 2017 to 2020.

Psychotherapy Use During the Pandemic

• One category that saw increased utilization in 2020 was psychotherapy, which jumped among Massachusetts residents with the onset of the pandemic. More than 85% of psychotherapy visits were delivered by telehealth.

Variation and Growth in Prices for Inpatient and Hospital Outpatient Care

• From 2018 to 2020, prices for procedures and services grew by 3.2% in physician offices, 7.1% in hospital outpatient departments (HOPDs) and 7.9% in hospital inpatient settings. Higher-priced hospital systems also tended to have faster price growth between 2018 and 2020; thus, price variation between hospitals increased over this time period. 

Hospital Use

• Massachusetts continues to have higher hospital utilization than the U.S. overall, including inpatient stays (7% higher), outpatient visits (42% higher), and ED visits (11% higher), but the gap has narrowed slightly in recent years.
• Between January 2018 and December 2021, the rate of boarding for behavioral health-related ED visits increased. This increase was driven by mental health-related visits, for which the boarding rate (more than 12 hours in the ED) grew from 37% to 45%.

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