Report Details Big Players’ Dominance Of Mass. Health Care
The inaugural report by the Center for Health Information and Analysis (CHIA) on the Massachusetts health care industry released Aug. 14 painted a picture of a market dominated by high-cost providers and large health plans, raising questions about how Massachusetts will curb health care spending in the coming years, as required by the Legislature.
CHIA, an independent agency that compiles and analyzes health care data to inform policy makers and the public, is charged with publishing the annual report under the state's 2012 cost containment law. The report seeks to curb health care spending by setting annual benchmarks for providers.
This year's report is based on data from 2009 to 2011, so the effects of cost containment are not yet reflected in the results. But what the 2013 report shows is that Massachusetts has a long way to go to bring health care costs under control, and it raises questions about whether next year's report will show meaningful reductions.
Among the report's key findings:
• The cost of health care premiums for insurance plans increased 9.7 percent, while the value of benefits fell 5.1 percent from 2009 to 2011. In other words, health insurance plans became more expensive while benefits decreased.
• Massachusetts' three largest health insurance providers — Blue Cross Blue Shield, Tufts Health Plan and Harvard Pilgrim Health Plan — held 79 percent of the plans for Massachusetts members in 2012. The rest were held by smaller companies, including Worcester-based Fallon Community Health Plan (FCHP), which held 6 percent.
• The state's high-cost health care systems received more than 80 percent of all payments to acute care hospitals and physicians, and payments were highly concentrated among a few large systems in 2012. Boston-based Partners Health Care led the way, taking in 31 percent of payments, followed by CareGroup, also of Boston, at 9 percent and Worcester's UMass Memorial Health Care, at 7 percent. Steward and Lahey Health, two other Boston systems, each took 5 percent of payments; the rest were shared by non-affiliated providers.
“We see a lot of concentration in both the insurer market and the provider market,” said Aron Boros, executive director at CHIA. Boros said it's hard to say whether this is good for the Bay State health care industry. He said larger systems have more opportunity to find efficiencies and provide seamless care, which should bode well for cost cuts. But he noted that there are higher costs associated with larger systems.
“If your goal is to reduce costs, you have to focus on the largest systems and hospitals and physician groups,” Boros said. ”
Asked how the report's findings set the stage for next year, when the data will be more telling, Boros said it's unclear. But changes on the state and federal levels, such as an increasing shift toward a global payment system, in which insurers reimburse based on the number of patients served, should start to influence state health care spending, he said.
Boros said he's curious to learn how the benchmark to limit health care spending by Massachusetts providers outlined in the cost containment law (this year, the limit for spending growth is 3.7 percent) will impact costs, in particular.
“I've heard plans and providers are really using that target in negotiating their plans and their cost increases and price increases,” Boros said.
Smaller plans are finding ways to stay competitive. Niche players, like Worcester's FCHP, may also be a factor in driving prices down by offering lower-cost options to companies than their larger competitors.
FCHP takes about one-third of the market share in Central Massachusetts but is considered a niche player statewide, offering limited networks outside the region. “It gives us an opportunity to put together a lower-cost option for the employers, said David Przesiek, senior vice president of sales and marketing.
Potential clients see niche players as a good force in a market that offers relatively few choices, he said.
Jack Myers, vice president at Worcester-based Benefit Development Group, which helps firms design benefit plans for their employees, predicted that more companies will try to mitigate rising costs by turning to plans that ask employees to pay more out of pocket, creating a higher level of consumerism.
Meanwhile, Myers said health care reform efforts are “really bringing the stakeholders together so they can really focus on the rising cost of health care ... it's still very early days in that, though.”
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