Report breaks down health care cost trends in Massachusetts

Martha’s Vineyard Hospital is one of iVantage Health Analytics’ top 100 Critical Access Hospitals. – MV Times file photo

Ongoing market consolidation and higher U.S. health care spending growth rates are identified as reasons for concern in the Massachusetts Health Policy Commission’s 2015 cost trends report, which concludes that a low rate of growth in hospital and physician services, a well-functioning Connector Authority website, and stabilized MassHealth enrollment are reasons for optimism.

The report raised red flags around a 6.3 percent premium increase schedule to take effect in January 2016 in the state’s merged insurance market.

It also cited a 5 to 6 percent increase in U.S. health care spending growth in 2015 — a larger spike than in recent years — and an 8 to 9 percent increase in U.S. spending on prescription drugs in 2015.

High patient readmission rates and emergency department use, particularly for behavioral health issues, were also flagged by the commission, which was created under a law aimed at containing cost increases.

The report’s authors said the spread of alternative payment methods, which were also encouraged by the 2012 law, “may enhance providers’ incentives to contain costs and improve quality.”

Other findings in the report

  • Growing government health care spending is increasingly consuming revenue that might otherwise be steered into other priorities like education, human services, public safety, mental health and public health, local aid, and economic development and infrastructure. The report estimates a 58 percent inflation-adjusted increase in government health care spending between fiscal 2006 and fiscal 2016, compared with a 2 percent inflation-adjusted reduction in spending on the other categories combined.
  • Increases in health insurance premiums have outpaced income gains, consuming over 40 percent of family income growth since 2005. The report estimates a 23 percent increase in incomes between 2005 and 2014, compared to a 55 percent increase in health insurance premiums and cost sharing over the same period.
  • Medicare will penalize most hospitals in Massachusetts in fiscal 2016 for high readmission rates. At 17.4 percent in 2013, the Massachusetts Medicare readmission rate was the 13th highest in the United States.
  • Massachusetts is one of the 12 most restrictive states for nurse practitioners due to required physician supervision for prescribing drugs. Massachusetts has a “large number” of primary care physicians, but 500,000 residents live in a federally designated primary-care professional shortage area, according to the report, which concludes that primary-care nurse practitioners “provide care at comparable quality at lower cost than physicians, and are more likely to practice in rural areas and to serve Medicaid patients.” The report calls scope-of-practice restrictions “anti-competitive” and says such constraints “add layers of unnecessary bureaucracy and can disrupt care.”
  • There are continued price variations for similar health care services. The report, for example, cites a $6,300 difference in spending between Massachusetts General Hospital and Mount Auburn Hospital for a low-risk pregnancy. “Prices vary significantly among providers in Massachusetts and, in general, this variation is not related to quality,” the report said. “Price variation, combined with increasing concentration of volume in high-cost providers, leads to higher spending.”