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HPC DataPoints, Issue 10: Health Care Cost Growth Benchmark

Annual Process for Monitoring Health Care Spending Growth in Massachusetts

*Note: The below interactive graphics display best in Internet Explorer.  

 

Overview

In 2012, the Massachusetts legislature enacted a landmark health care cost containment law, Chapter 224 of the Acts of 2012,[i] which set the ambitious goal of bringing health care spending growth in line with the growth in the state’s overall economy. It sought to do this by instituting a health care cost growth benchmark, a statewide target for the rate of growth of total health care expenditures (THCE). Further, Chapter 224 established a new independent agency, the Massachusetts Health Policy Commission (HPC), to oversee health care system performance and provide data-driven policy recommendations regarding health care delivery and payment system reform. Under the law, the HPC monitors both statewide spending performance against the benchmark as well as performance of individual health care entities. 

Annual Process

Consistent with this mandate, the HPC and its sister agency, the Center for Health Information and Analysis (CHIA), engage in an annual process to monitor health care spending growth relative to the benchmark, which is indexed to a projection of the Commonwealth’s long-term economic growth. Part of this process requires payers and providers whose cost growth is excessive to implement performance improvement plans (PIPs) and submit to strict monitoring. The annual process is explained in the interactive graphic below. Please click on each numerated step for more information. 

Setting the Benchmark

Each year, the HPC’s 11-member board of commissioners sets the benchmark for the following calendar year between January 15 (when the potential gross state product is established) and April 15. Chapter 224 defines three multi-year benchmarks for health care spending growth. To learn about these targets, please click on each multi-year grouping below.

Since 2013, the growth in health care spending has been, on average, below the benchmark (3.2 percent average growth), and lower than national growth trends.

Related Links

More information about the health care cost growth benchmark and the HPC’s benchmark hearings is available on the HPC’s website. Specifically, the HPC’s annual cost trends reports, which analyze trends in health care across the Commonwealth, are available here. Materials and video from the annual cost trends hearings can be found here. CHIA’s annual reports on the performance of the Massachusetts health care system through 2018 are located on CHIA’s website.

Notes

[i] Chapter 224 of the Acts of 2012,  An act improving the quality of health care and reducing costs through increased transparency, efficiency and innovation (approved August 6, 2012) Available from: https://malegislature.gov/Laws/SessionLaws/Acts/2012/Chapter224.

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