The
state’s “healthcare growth benchmark” – the
statewide target that the Health Policy Commission (HPC) sets for the
rate of growth of total healthcare expenditures in Massachusetts –
will be 3.1% for 2018, following a unanimous vote by the HPC board on
March 29.
For
the five years before 2018, the benchmark was 3.6% – the same as
the Massachusetts “potential gross state product” (PGSP).
Chapter 224 mandated that for the 2018-to-2022 period the benchmark
would be PGSP minus 0.5%. In January, the state set the PGSP once again
at 3.6%. So 3.6% minus 0.5% equals the 3.1% current benchmark. While HPC
is empowered to alter the benchmark, the panel chose to maintain the
pre-established threshold.
Prior to making its determination, HPC held a public
hearing on the matter. At the hearing, MHA President & CEO Lynn
Nicholas, FACHE, said that MHA endorses the new, lower benchmark of 3.1%
– but with caveats. She said for the benchmark to function
effectively, the state has focus on input costs such as pharmaceuticals
and labor. Efforts to undermine the Affordable Care Act and uncertainty
about delivery system reform in Massachusetts also must be recognized as
factors affecting how the healthcare system operates, she said, adding
that the continued growth in MassHealth enrollment affects healthcare
costs as do socio-demographic factors and an aging
population.
Nicholas said that lowering the benchmark is
“aspirational and we should try to meet it, but the state must be
cautious to avoid creating unintended consequences – especially
regarding behavioral health.”
“Currently, providers cross subsidize
underpaid behavioral health services by relying on revenue from higher
paid services,” Nicholas noted. “Targeting cuts for higher
margin services in an effort to reduce the cost growth benchmark has the
potential to result in fewer resources to support underfunded services
such as behavioral health and could potentially result in unintended
consequences for those services.”
The state’s healthcare
system as a whole has missed meeting the 3.6% benchmark for the past two
years. However, the hospital segment of the system has consistently
remained under the benchmark. According to the Center for Health
Information and Analysis’ 2016 Annual Report on the Performance of
the Massachusetts Health Care System, the rates of growth for
commercially insured members on a per member per month basis for
hospital inpatient (2.2%) hospital outpatient (2.9%) and physician
services (1.9%) all fell well below the 3.6%
benchmark.
Under Chapter 224, CHIA is required to identify and refer
healthcare entities (payers and providers) that miss the benchmark to
the HPC; the HPC reviews those entities and determines whether it will
require submission of performance improvement plans detailing how the
entities will lower costs.