Massachusetts healthcare cost growth beat its benchmark, but commission says drug prices are still a concern

For the seventh year in a row, the growth of medical spending in Massachusetts was slower than in the rest of the country.

Massachusetts’ total healthcare costs grew 2.8% in 2016, below the national growth rate of 3.5%, according to the Massachusetts Health Policy Commission (HPC). State healthcare spending also fell below the 3.6% benchmark set by the HPC, an independent state agency.

The HPC monitors key healthcare cost drivers and found that prescription drugs and hospital outpatient departments were the biggest drivers of Massachusetts healthcare spending in 2016, growing 6.1% and 5.5%, respectively, according to the HPC report (PDF).

"While health care spending overall in Massachusetts was below the 3.6% benchmark and national trends, continued challenges, including high hospital outpatient spending and avoidable hospital use, remain,” Stuart H. Altman, Ph.D., HPC Board Chair and health economist, said in a release, highlighting ongoing affordability concerns for patients and employers. 

“The recommendations we make in the report—especially around enhancing transparency of pharmaceutical price growth, protecting consumers from outrageous out-of-network bills, and emphasizing the importance of social determinants of health—are critical to curbing this trend and ensuring the system works for everybody,” he added

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The impact of prescription drug costs isn't limited to Massachusetts. A recent report released by Sen. Claire McCaskill, D-Mo., showed the prices of some brand-name drugs have soared since 2012. As policymakers gear up to address rising drug prices, the issue has been and remains a top concern for healthcare leaders.

To address leading cost drivers, HPC recommended that Massachusetts increase transparency and accountability in drug pricing to determine whether prices are excessive and unjustified, and to enhance the state's negotiating authority. It also calls on Massachusetts to equalize payments for services delivered at hospital outpatient departments and physician offices.

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The HPC outlined several opportunities to improve the quality and efficiency of care delivered to the people of Massachusetts that could save $4.7 billion by 2022. The cost-savings targets include:

  • Reduce hospital readmissions by 20%.
  • Reduce institutional postacute care discharges by 25%.
  • Reduce available emergency department visits by 66%.
  • Shift 25% of community appropriate discharges from teaching hospitals to community hospitals.
  • Implement site-neutral outpatient reimbursement for certain conditions.
  • Limit the growth of prescription drug prices to 1.6%.
  • Expand the use of alternative payment methods.