Projects

Learning from a Pioneer: Massachusetts’ Experience with State Cost Containment

2021-2022

Project Overview

Objective

To determine the effectiveness of Massachusetts' approach to holding payers and providers accountable for meeting the state’s health care cost growth benchmark. 

Project Motivation

The rising costs of health care impose an increasing burden on consumers, employers, and federal and state budgets. Massachusetts’ experience with a cost growth benchmark provides valuable lessons to other states using this model to control health costs.

Prepared For

Peterson Center on Healthcare

Gates Ventures

The Peterson Center on Healthcare and Gates Ventures partnered with Mathematica to determine the influence of Massachusetts’ four major accountability mechanisms on actions taken by payer and providers to control costs.

The Massachusetts cost growth benchmark initiative is multi-faceted. The accountability mechanisms used by the Health Policy Commission (HPC) aim to promote voluntary compliance by health care payers and providers since the HPC does not have authority to enforce compliance with the benchmark, and cannot impose penalties on payers and providers for excessive spending growth, with one narrow exception. The four accountability mechanism studied are the following:

  1. Annual Cost Trends Reports, which assess statewide cost growth trends and make policy recommendations to address the key drivers of cost growth;
  2. Annual Cost Trends Hearings, which bring together all stakeholders to assess state progress in holding down cost growth; 
  3. Cost and Market Impact Reviews, which investigate the effects of proposed mergers and acquisitions on the state’s ability to achieve the cost growth benchmark, and;
  4. Performance Improvement Plans, which examine the performance of individual payers and providers against the health care cost growth benchmark, and may require entities whose spending growth exceeds the benchmark to develop and implement a performance improvement plan. 

Mathematica reviewed public documents and interviewed nearly 50 individuals involved in, or affected by, the Massachusetts’ health care cost growth benchmark initiative to better understand the influence of their accountability mechanisms and draw lessons for other states developing cost growth target initiatives. Among these are six states that have received support from the Peterson-Milbank Program for Sustainable Health Care Costs to advance their efforts to develop targets for health care spending and address drivers of cost growth.


Related Staff

Debra  Lipson

Debra Lipson

Senior Fellow

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Cara Orfield

Cara Orfield

Senior Researcher

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Rachel Machta

Rachel Machta

Senior Researcher

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Olivia Kenney

Olivia Kenney

Research Analyst

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Kelsey Ruane

Kelsey Ruane

Advisory Services Analyst

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Marian V. Wrobel

Marian V. Wrobel

Principal Researcher

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Kavita Choudhry

Kavita Choudhry

Senior Researcher

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Sule Gerovich

Sule Gerovich

Senior Fellow

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