Massachusetts healthcare struggles with rising costs

Massachusetts, which introduced Affordable Care Act-like reforms a decade ago, has struggled with cost increases, although market dynamics rather than the law itself are apparently the main driver, according to a new report issued by state Attorney General Maura Healey.

The report blamed escalating costs on wide variations in pricing for identical services, lack of price transparency and the use of global payments without taking into account the healthcare needs of various patient populations.

"We found wide variation in the prices health insurance companies pay providers for similar services, unexplained by differences in quality, complexity of services, or other common measures of consumer value," the report said. "We found that increases in these prices negotiated between insurers and providers have been a major reason for escalating healthcare premiums. And we found that higher-priced providers are drawing patient volume from lower priced providers.This further increases costs as care is shifted from less expensive settings to more expensive settings."

Health plans that try and provide incentives for tiered network pricing are also not succeeding in their mission. "Current approaches appear hampered by inconsistent incentives for consumers to obtain care at higher value providers," the report said.

The report confirms findings by other organizations this year. For example, a report issued by the Pioneer Institute earlier this year concluded that the state's groundbreaking price transparency initiative has been wanting. Another report by the Center for Health Information and Analysis concluded that hospitals in the Bay State that charge more get more revenue as a result.

Some in the state's provider community pushed back against the findings. "Price variation exists in almost every state in the nation, so Massachusetts is not unique," Partners Healthcare spokesperson Rich Copp told the Boston Globe about the report. "When evaluating healthcare prices or costs, you must also carefully consider the quality of care and the types of services being delivered to patients, which this report did not do."

The report recommended that the state continue to push forward on price transparency, and make pricing among network tiers more stark.

To learn more:
- read the report (.pdf)
- check out the Boston Globe article