How 4 states tackle healthcare cost measurement

A new report from the Milbank Memorial Fund examines healthcare cost measurement initiatives in four states and the policies that drive them.

The report analyzed measurement programs in Maryland, Oregon, Massachusetts and Vermont. While the idea of states setting measures and priorities for population health and care quality is not a new one, measuring cost across the state's care system and identifying cost reduction goals is comparatively untested, according to the report. 

To conduct its study, Milbank analyzed the four states' cost measurement programs based on regular group and one-on-one conference calls with representatives from each state, reviewed online state policy documents and evaluated a draft report by the four states.

The four participating states have implemented two main strategies, according to the report: payment reforms aligned with overall care cost measures for services and populations, and healthcare system performance transparency, which includes cost measures. Of the states involved in the study, all but Massachusetts directly regulate care costs through rate-setting. Maryland focuses on rates for hospital payments or budgets, while Vermont emphasizes hospital payments, budgets and accountable care organizations, and Oregon focus on coordinated care organizations. Massachusetts' program aims to determine and publish healthcare-specific cost measures.

Despite the four states' substantial investment and progress in cost measurement, they and other states seeking to implement similar measures must take numerous factors and challenges into account, the report states. For example, the existing models focus primarily on expenditures or revenues, but measuring total costs is more complex. Moreover, states still experiment with different measurement periods, including annual, real-time and quarterly, to determine which time frame best suits their needs.

The report also recommends states integrate Medicaid and Medicare claims data into their all-payer databases to bridge data gaps.

There have been attempts to track healthcare costs at the system level as well; one such program at the University of Utah Health System was able to reduce expenditures up to 2.5 percent.

To learn more:
- here's the report (.pdf)