The nonprofit Massachusetts Association of Health Plans has released a report examining healthcare cost drivers and trends in the state from 2008 to 2013.
Healthcare cost and spending growth has outpaced the state's economic growth during the past five years. In response, numerous state agencies have investigated the factors influencing the state's healthcare costs. The MAHP report — prepared by Freedman HealthCare — is based on an analysis of 16 healthcare cost and quality reports published by state agencies including the Massachusetts Health Policy Commission, Division of Insurance, Office of the Attorney General and the Center for Health Information and Analysis.
The report includes the following 10 key findings, which are meant to help policymakers better understand healthcare cost and spending trends.
1. Provider prices are the biggest driver of healthcare cost growth in Massachusetts. Commercial health plans attribute most of their cost increases to higher provider prices. One major private insurer reported that an average of 80 percent of total cost growth within its network from 2004 and 2008 was the result of unit price increases.
2. There is a significant gap between high- and low-price providers in the state, across various services and in their health-adjusted total medical expenses.
3. Patient volume is concentrated in high-price provider settings; the majority of payments from payers and providers go to network providers that cost the most. In a 2011 report, the attorney general found price variation was at least 170 percent for hospitals.
4. High-price providers don't necessarily provide the highest quality care. In fact, there is little variation in quality ratings among providers, despite price differences, according to the report.
5. Disproportionate share hospitals, which have the highest public payer case mix, consistently receive lower payment rates from commercial payers, compared with non-DSH hospitals.
6. Academic medical centers tend to have higher prices and get higher commercial payer payments, compared with community hospitals. Subsequently, they tend to have a greater market share.
7. Increasing provider prices have driven up premiums and cost-sharing in the commercial market. Premiums have been growing, while the value of health plan benefits has gone down.
8. Healthcare providers with bigger market shares have higher prices and greater patient volumes. They also invest more in resources. All of these factors increase their market share even more. Additionally, a payer with significant market share can also influence healthcare costs through its influence over price negotiations with providers.
9. State agency reports have expressed concern that healthcare provider consolidation could drive up healthcare prices by increasing providers' market share and leverage.
10. Based on the Massachusetts market, global payments don't necessarily lead to lower spending, and, in fact, they can result in higher costs. Overall, there's limited evidence that global payments lead to savings.
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