Annual Report on the Performance of the Massachusetts Health Care System (March 2023)

Annual Report on the performance of
the Massachusetts health care system

The Massachusetts health care system
charts a new normal

 Annual Report Page TheSecondAct

A new online supplement to the Annual Report explores utilization trends and the continued strain on the health care system, the emergence of new COVID-19 treatments and testing, and the adoption of telehealth as an essential part of the delivery system.

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The Annual Report on the Performance of the Massachusetts Health Care System includes a final calculation of Total Health Care Expenditures (THCE) for 2021. THCE is a measure of total statewide health care spending in the Commonwealth.

The report examines trends in costs, coverage, and quality indicators to inform policymaking. This year, the Annual Report focuses on data through 2021, during which policies to support Massachusetts residents and the health care system continued to evolve in response to the COVID-19 pandemic.

This report includes a new chapter on behavioral health pursuant to the recently passed Mental Health ABC Act: Addressing Barriers to Care, as well as new sections on telehealth and COVID-19-related spending and utilization.

Given the significant impacts of the pandemic on the health care system in 2020 and 2021, CHIA calculated Total Health Care Expenditures (THCE) and analyzed other relevant metrics on an annualized basis over the three-year period of 2019 to 2021, to provide a more contextualized picture of health care spending and utilization.   

The Annual Report includes information from public and private sources related to specific health care expenditures for Massachusetts residents and examines adoption of alternative payment methods (APMs); commercial and public insurance enrollment, premium, and cost-sharing trends, quality of care in the Commonwealth compared to national performance; as well as provider and health system financial information.

Findings from the report were presented at the Health Policy Commission’s Hearing on the 2024 Health Care Cost Growth Benchmark on March 15, 2023.

The annual public hearing solicits data, information, and feedback from market participants, stakeholders, and other interested parties regarding whether modification of the Health Care Cost Growth Benchmark for calendar year 2024 is necessary. Members of the state Legislature’s Joint Committee on Health Care Financing, led by Senate Chair Cindy Friedman and House Chair John Lawn Jr., co-hosted this year's hearing alongside the HPC’s Board.

The hearing was livestreamed and is now posted on the Massachusetts Legislature’s web site.


Key Findings from the Annual Report (Released March 2023)

    • Total health care expenditures (THCE) in Massachusetts totaled $67.9 billion in 2021. From 2019 to 2021, THCE per resident increased at an annualized rate of 3.2%. THCE per capita increased 9.0% in 2021 to $9,715 per resident, following a 2.3% decline in 2020.

    • While most service categories experienced fluctuations in spending due to the impacts of the pandemic, pharmacy spending both gross and net of rebates increased consistently in 2020 and 2021, resulting in the fastest three-year service category growth rates. From 2019 to 2021, pharmacy spending increased at an annualized rate of 7.5% net of rebates, and 9.6% gross of rebates.

    • In 2021, spending on behavioral health (BH) services comprised 6.6% of total health care spending for commercial members, 15.9% for Medicaid MCO/ACO-A members, and 1.9% for Medicare Advantage members. During this time period, payers reported that 18.9% of commercial members had a behavioral health diagnosis, compared to 23.8% of Medicaid MCO/ ACO-A members, and 18.6% of Medicare Advantage members.

    • In 2020, overall acute hospital inpatient discharge volume declined driven largely by decreases in the number of planned procedures and related hospitalizations; at the same time, the average length of stay continued to increase due to several factors including throughput challenges and shifts in the type and severity of conditions.

    • The statewide acute hospital median total margin increased by 2.6 percentage points, from 2.6% in HFY 2020 to 5.2% in HFY 2021; this was followed by a decrease to a statewide median total margin of -4.4% in HFY 2022, as of data reported through June 30, 2022.

    • Private commercial health plan member cost-sharing increased by 16.9% in 2021 to $58 PMPM. At the same time, enrollment in high deductible health plans grew by 4.1%—now accounting for 42.7% of total enrollments in the private commercial market.

    • Between 2019 and 2021, premiums as well as claims covered by payers and employers increased at annualized rates of 4.7% and 5.7%, respectively, surpassing wages and salaries (3.6%) and regional inflation (2.2%).

    • After growing rapidly due to the COVID-19 pandemic and resulting policy directives, telehealth spending declined slightly from $1.8 billion in 2020 to $1.7 billion in 2021. In both years, spending for telehealth services provided by non-physician professionals, such as nurse practitioners, physical and occupational therapists, and certain behavioral health providers, accounted for more than half of telehealth spending.

Previous CHIA Annual Reports