Report: Health spending below state benchmark

Findings from the Center for Health Information and Analysis' 2017 Annual Report will be discussed at a cost trends hearing on Oct. 2.

The Massachusetts Center for Health Information and Analysis (CHIA) reported Wednesday that healthcare spending in the Bay State fell below a cost-growth benchmark set by state law, growing 2.8 percent to $59 billion in 2016.
The results, detailed in CHIA’s annual report, follow two years of spending that exceeded the 3.6-percent spending cap set by the state’s healthcare cost containment law in 2012. In 2015 and 2014, total healthcare expenditures grew 4.8 percent and 4.2 percent, respectively. The 2016 increase is a projection, and may be revised.
Healthcare expenditures encompass all medical spending for services covered by commercial and public payers, including payments to providers; patient cost-sharing amounts, including deductibles and copays; and administrative costs.
The 2016 healthcare spending growth rate fell below overall economic growth in Massachusetts, but outpaced growth in national wages and salaries and regional inflation, CHIA said. Increases in healthcare spending were driven primarily by pharmacy costs and outpatient hospital spending.
In a statement responding to the report Wednesday, The Massachusetts Health and Hospital Association (MHA) noted that outpatient spending increased in 2016 while inpatient spending continued to decline.
“Hospitals have been investing heavily in outpatient care and ambulatory care facilities to be able to provide care in the most appropriate setting, in line with state and federal policy directives. It’s possible that CHIA’s most recent report is reflecting this investment,” MHA President and CEO Lynn Nicholas said.
“If the increase stems from transitions of care from higher cost settings to lower cost settings, it may indeed be a logical trend, but needs to be better understood,” Nicholas said.
CHIA also reported Wednesday that the use of alternative payment methods instead of traditional fee-for-service insurance contracts rose 6.3 percent in 2016, after declining the previous year. The report found that 42 percent of commercial insurance members received care under alternative payment contracts.
The 2016 findings will be discussed at the Health Policy Commission's 2016 Health Care Cost Trends hearing on Oct. 2.