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Massachusetts health costs rise almost 5%, report finds

But insurers in the state increasingly embrace alternative payment models

Insurers operating in Massachusetts, a closely watched state for its plan to lower costs and provide healthcare for all residents, haven't successfully saved money yet--though they have boosted alternative payments to providers.

Healthcare costs in the state rose 4.8 percent last year, which is twice the amount of growth in 2013 and well over the 1.6 percent inflation rate, according to a new report from the Center for Health Information and Analysis (CHIA), an independent state agency.

"It is terribly disappointing for all of us who have been working on healthcare cost control," Brian Rosman, research director of Health Care For All, a consumer advocacy group, told the Boston Globe. "But I'm not sure if this is a temporary fluke or if we've strayed from the path."

Much of the higher costs were concentrated in the state's Medicaid program, MassHealth, which spent $15.3 billion to cover almost 2 million members in 2014--a 19 percent increase from 2013. MassHealth also increased its membership by about 23 percent during that time.

"Part of the growth in spending is related to this increase in enrollment. What's not clear is where these people came from and where they were insured before," Stuart Altman, chair of the state's Health Policy Commission, told the Boston Business Journal. "We need to find that out. We just don't know."

The CHIA report also included some good news--insurers have increased alternative payments to providers. Harvard Pilgrim, for example, had 46 percent of its members on an alternative payment contract in 2014, up from 26 percent in 2013. And Fallon Community Health Plan enrolled 26 percent of members in an alternative payment contract, an increase from 21 percent.

"The fact that we have a higher percentage of the commonwealth population (in alternative payment methods) is a good thing," Altman told the BBJ.

Massachusetts also is one of seven states in which the Centers for Medicare & Medicaid Services will test a new value-based insurance design model for individuals with certain chronic conditions enrolled in Medicare Advantage plans, FierceHealthPayer reported.

To learn more:
- here's the CHIA report
- read the Boston Globe article
- see the Boston Business Journal article

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