Total Health Care Expenditures, Total Medical Expenses and Alternative Payment Methods

Key THCE Metric for 2018

Total Health Care Expenditures in Massachusetts

Key TME Data for 2018

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Key APM Data for 2018

 Alternative Payment Methods (APMs) in Massachusetts

For More Information on THCE, TME, and APMS, see CHIA's 2018 Annual Report

CHIA annual report 2018 cover

CHIA monitors health care spending by public and private payers in Massachusetts using three key metrics: Total Health Care Expenditures (THCE), Total Medical Expenses (TME), and alternative payment methods (APMs). These measures are all reported in CHIA's Annual Report on the Performance of the Massachusetts Health Care System.


Total Health Care Expenditures (THCE) compares actual health care cost growth with the growth benchmark set by the Health Policy Commission. This measure of total health care spending in the Commonwealth includes: 

  • All categories of medical expenses paid to providers


  • All non-claims related payments to providers, such as performance payments


  • Member cost-sharing payments to providers, such as deductibles, co-payments, and co-insurance


  • The net cost of private health insurance.


Total Medical Expenses (TME) represents the full amount paid to providers for health care services delivered to a payer’s member population, expressed on a per member per month (PMPM) basis. TME includes the amounts paid by the payer and patient cost-sharing, and covers all categories of medical expenses and all non-claims related payments to providers, including provider performance payments.


Alternative Payment Methods (APMs) are methods of payment used by health care payers to reimburse health care providers not solely based on a fee-for-service (FFS) basis. APMs function so that the financial risk associated with both the occurrence of medical conditions as well as the management of those conditions is shifted from payers to providers to incentivize efficiency and quality of health care delivery. APMs include payment mechanisms such as global payments, limited budgets, and bundled payments.

While fee-for-service remains the dominant type of payment method utilized in the Commonwealth, APMs have been implemented in recent years among a cross-section of the commercial, Medicaid, and Medicare populations.


Key THCE, TME, and APM Findings
from CHIA's 2018 Annual Report on the Performance of the Massachusetts Health Care System

  • THCE totaled $61.1 billion in 2017, or $8,908 per capita; this represents an increase of 1.6% from 2016, below the health care cost growth benchmark of +3.6%.


  • Spending for MassHealth members decreased 0.2% in 2017, driven in part by a 2.4% decrease in enrollment.


  • Increases in pharmacy and hospital outpatient spending continued to be the largest drivers of THCE growth between 2016 and 2017.


  • Spending for prescription drugs totaled $9.7 billion in 2017, a 5.0% increase from 2016. This trend has continued to slow from 6.4% growth in 2016 and 12.1% growth in 2015.


  • TME increased in 2017 for commercial and MassHealth MCO members, and decreased for Medicare Advantage members.


  • Per member per month spending for commercial full-claim members slowed across all major service categories.


  • Adoption of APMs increased significantly in the MassHealth PCC plan, and remained nearly level in the commercial and MassHealth MCO markets.


  • Commercial APM adoption continued to increase in the PPO product type, increasing four percentage points between 2016 and 2017.

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