BOSTON (SHNS) – Nearly 10 years after Massachusetts passed a law aimed at reining in rising health care expenses, an agency created under that law is warning that the state is at risk of losing progress made in its cost-control battle without further action.
After the second consecutive year that health care cost growth exceeded a state target, the Health Policy Commission on Wednesday recommended a series of steps intended to respond to the continually rising cost of care.
The recommendations, which the commission approved unanimously, include price caps for the most expensive providers, greater scrutiny around hospital outpatient and ambulatory care expansions, and new affordability standards for health plans.
Stuart Altman, a health economist who chairs the HPC board, said the commission has “major concerns this year about the rising trends in health care costs in Massachusetts” and said the suggested policies would address the issues behind the growth.
“Without further action to enhance the state’s oversight tools, improve health care market functioning, and increase affordability, we will lose any progress made to lower health care cost growth and making health care more affordable for families and businesses in the Commonwealth,” he said.
The recommendations are part of the HPC’s annual cost trends report, which explores the 4.3 percent growth in the state’s total health care spending from 2018 to 2019.
A 2012 cost control law created a benchmark against which spending growth is measured, and 2019 marked the second consecutive year the pace exceeded that target.
While the state as a whole faces no formal consequences for above-benchmark spending, providers and payers deemed to post excessive cost growth can face additional HPC oversight, including a potential requirement that they complete a performance improvement plan (PIP), although the agency has never exercised that requirement.
In its report, the HPC said the state should “strengthen the mechanisms for holding providers, payers, and other health care actors responsible for spending performance,” and recommends the Legislature improve the performance improvement plan process by broadening the metrics used to “to identify entities contributing to concerning spending,” addressing the impact of medical coding, and increasing the financial penalties involved.
Health and Human Services Secretary Marylou Sudders characterized the PIP process as “very ripe for improvement” and said it will be important to separate out the “extraordinary costs” associated with the ongoing COVID-19 pandemic from costs that are annually contributing to spending growth.
Gov. Charlie Baker said Tuesday that he plans to file another health care reform bill this session, likely in January.
Sudders said the commission’s recommendations will be “informative and helpful” as administration officials think about that bill, and noted that PIP reform was one of the components of a health care bill Baker filed in 2019, before the COVID-19 pandemic reshuffled the legislative agenda.
“I do think the timing is right, and particularly if we frame it [as] not really what went wrong, but what have we learned in 10 years, and what do we need to like accelerate going forward on behalf of consumers in the commonwealth,” she said.
Along with cost-focused efforts, the report recommends the state set new measurable goals to advance health equity and reduce disparities.
The commission said 59 percent of commercially insured residents with lower incomes experienced affordability issues — like problems paying medical bills and unmet care needs — compared to 38 percent of those with higher incomes. The report also found that lower-income residents were more likely to go without needed care and prescription drugs because of cost, and those residents reported a key factor in skipping care was that cost-sharing was unaffordable for them.
Among other findings, the report said that price growth is a primary driver of the state’s overall spending growth, that premiums and out-of-pocket spending are rising faster than incomes, and that hospital outpatient spending was the category of service with the largest spending growth in 2019, rising 7.6 percent from 2018.
Inpatient and outpatient hospital spending accounted for 43 percent of total spending in 2019, but 54 percent of spending growth.
The Massachusetts Association of Health Plans supports “many” of the HPC’s recommended policies, “particularly those that directly address the key drivers of health care costs, including reining in drug prices through increased transparency and oversight,” MAHP President and CEO Lora Pellegrini said in a statement.
Pellegrini said the health plans oppose “the establishment of affordability targets unless coupled with the passage of significant reforms addressing underlying health care costs.”
“In the short term, efforts relative to making health care more affordable, such as adopting a ban on facility fees and establishing default out-of-network payment rates to address surprise billing will make a significant difference for consumers,” she said.
Though it exceeded the state’s benchmark, the 4.3 percent health care spending growth rate in Massachusetts landed below the national rate of 4.7 percent in 2019, which the HPC said continues a trend observed since 2010.
The commission plans to further dive into issues raised in the report at its annual cost trends hearing, scheduled for Nov. 17.