Glossary

Group of health care providers that contracts with a payer to assume responsibility for the delivery of care to its attributed patients and for those patients’ health outcomes.

Commercial payers that perform administrative services for self-insured employers. Services can include plan design and network access, claims adjudication and administration, and/or population health management.

Federal tax credits available to those with incomes below 400% of the Federal Poverty Level (FPL) who enrolled in plans sold on the Health Connector. Credits may be applied directly to premiums to lower the member’s monthly payments or may be paid in a lump sum as a part of the member’s tax return. APTC amounts are calculated by comparing the individual’s income with the cost of the second-cheapest silver tier plan available to them. If the cost of that plan exceeds a specified percentage of the member’s income, the federal government pays the difference in APTCs.

In the Massachusetts Health Insurance Survey, affordability issues are defined as reporting any of the following: problems paying family medical bills in the past 12 months; having family medical bills at the time of the survey that are being paid over time, also known as family medical debt; spending a high share of family income on out-of-pocket health care expenses, defined as 5% or more of income for families below 200% of the Federal Poverty Level or 10% or more of income for other families, in the past 12 months; or having any unmet need for health care in the family due to cost in the past 12 months.

A set of quality measures for voluntary adoption by private and public payers and providers, specifically for use in global budget-based risk contracts, which aims to reduce administrative burden and focus quality improvement efforts on meaningful and high-priority measures. The measure set was developed and is updated annually by the Quality Measure Alignment Taskforce.

The Massachusetts All-Payer Claims Database (MA APCD) is the most comprehensive source of health claims data from public and private payers providing insurance to Massachusetts residents and employees. The CHIA data sets include: medical, pharmacy, dental, vision, behavioral health and specialty services. The data also includes data on insurance products, affiliated providers and benefit plans. For more information on the collection, releases and data requests, please see the Massachusetts All-Payer Claims Database web page.

Payment methods used by a payer to reimburse health care providers that are not solely based on the fee-for-service basis. As part of the design of these payment methods, some of the financial risk associated with the delivery of medical care as well as the management of health conditions is shifted from payers to providers. Generally, APMs are intended to give providers new incentives to control overall costs (e g , reduce unnecessary services and provide services in the most appropriate setting) while maintaining or improving quality.

Calculates a smooth spending trend across multiple years, also known as compound annual trend CHIA used the annualized trend to examine per capita spending for 2019 to 2021, calculated as (2021 Value/2019 Value)^(1/2)-1

Hospital Financial Metrics > Capital Reinvestment

The financial age of the fixed assets of the entity. The older the average age, the greater the short-term need for capital resources. Trended over time, measures the reinvestment in plant.

Formula: Less: Accumulated Depreciation / Depreciation and Amortization Expense

Hospital Financial Metrics > Liquidity

This ratio measures the average number of days in the collection period. A larger number of days represent cash that is unavailable for use in operations.

Formula: Net Patient Accounts Receivable/(Net Patient Service Revenue / Days in Period)

Hospital Financial Metrics > Liquidity

This ratio measures the average number of days it takes a hospital to pay its bills.

Formula: (Total Current Liabilities-Estimated 3rd Party Settlements) / [(Total Expenses-(Depreciation Expense + Amortization Expense))/365)]

A measure of the proportion of covered medical expenses paid by insurance Actuarial values may be estimated by several different methods; for the method used in this report, see the technical appendix.

Hospital financial metrics that assess the extent to which an entity has reinvested in capital assets.

The Massachusetts Acute Hospital Case Mix Database is a CHIA database comprised of:

• Hospital Inpatient Discharge Database (HIDD)
• Emergency Department Database (EDD)
• Outpatient Observation Database (OOD)

For each of these patient encounter types, CHIA maintains detailed information, including: patient demographics, admission and discharge information, diagnostic and procedural coding, provider details and detailed charge information. For more information on the collection, releases and data requests, please see the Case Mix Data web page.

Hospital Financial Metrics > Solvency

This ratio reflects the amount of cash flow being applied to total outstanding debt (all current liabilities in addition to non-current long-term debt) and reflects how much cash can be applied to debt repayment. The lower this ratio, the more likely a hospital will be unable to meet debt payments of interest and principal and the higher the likelihood of violating any debt covenants.

Formula: (Net Income + Depreciation Expense + Amortization Expense – Unrealized Gains/Losses) / (Current Liabilities + Non-Current Long-Term Debt)

A type of qualified health plan offered through the Health Connector, the Commonwealth’s marketplace for health and dental insurance, with lower monthly premiums and cost-sharing for those with household incomes at or below 300% of the Federal Poverty Level (FPL).

The amount of an allowed claim that the member is responsible for paying. This includes any copayments, deductibles, and coinsurance payments for the services rendered. Cost-sharing does not include out-of-pocket payments for goods and services not covered by the members’ health insurance policies (e.g., over-the-counter medicines, vision, and dental care).

Payments made by the federal government and/or the Commonwealth of Massachusetts directly to ConnectorCare payers to lower copayments and eliminate deductibles and coinsurance in ConnectorCare plans.

Hospital Financial Metrics > Liquidity

Measures how long the entity can operate without any revenue inflow. This is a measure of the strength of available cash relative to an entity’s operations.

Formula: (Cash + Cash Equivalents + Short Term Investments) / [(Total Expenses – Depreciation and Amortization) / Days in Period]

Hospital Financial Metrics > Liquidity

Measures how long the entity can operate without any revenue inflow. This is a measure of the strength of available cash relative to an entity’s operations.

Formula: (Cash + Cash Equivalents + Short Term Investments) / [(Total Expenses – Depreciation and Amortization) / Days in Period]

Hospital Financial Metrics > Liquidity

This ratio measures the hospital’s ability to meet its current liabilities with its current assets (assets expected to be realized in cash during the fiscal year). A ratio of 1.0 or higher indicates that all current liabilities could be adequately covered by the hospital’s existing current assets.

Formula: Total Current Assets / Total Current Liabilities

Hospital Financial Metrics > Solvency

This ratio measures the ability of a hospital to cover current debt obligation with funds derived from both operating and non-operating activity. Higher ratios indicate a hospital is better able to meet its financing commitments. A ratio of 1.0 indicates that average income would just cover current interest and principal payments on long-term debt.

Formula: (Net Income + Interest Expense + Depreciation Expense + Amortization Expense – Unrealized Gains/Losses) / (Interest Expense + Current Portion of Long-Term Debt)

A person who is enrolled in both Medicaid and Medicare.

Health insurance plans purchased by employers on behalf of their employees as part of an employee benefit package.

Hospital Financial Metrics > Solvency

This ratio reflects the ability of a hospital to take on more debt and is measured by the proportion of total assets financed by equity. Low values indicate a hospital has used substantial debt financing to fund asset acquisition and, therefore, may have difficulty taking on more debt to finance further.

Formula: Total Net Assets / Total Assets

The United States Federal Poverty Level (FPL) guidelines are used to determine eligibility for certain programs. The 2026 guidelines are published at:
https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines

A fully insured employer contracts with a payer to pay for eligible medical costs for its employees and dependents in exchange for a pre-set annual premium.

The segmentation of health plans into 2 types—fully insured and self-insured—based on how they are funded.

The organization that provides health benefits to state employees and retirees in Massachusetts.

The projected annual percentage change in Total Health Care Expenditure (THCE) measure in the Commonwealth, as established by the Health Policy Commission (HPC). The benchmark is tied to growth in the state’s economy, the potential gross state product (PGSP). For 2023 and beyond, the benchmark will be established by law at a default rate of PGSP, though the HPC Board can modify to any amount deemed reasonable, subject to legislative review.

The Commonwealth’s state-based health insurance marketplace where individuals, families, and small businesses can purchase health plans from insurers.

Insurance plans that have a closed network of providers, outside of which coverage is not provided, except in emergencies. These plans generally require members to coordinate care through a primary care physician.

As defined by the IRS, a health plan with an individual plan deductible exceeding $1,400 in 2021-2022; $1,500 in 2023; and $1,600 in 2024 For a family plan, HDHPs are those with a deductible exceeding $2,800 for 2021-2022; $3,000 for 2023; and $3,200 for 2024.

For families under 200% of the Federal Poverty Level, spending 5% or more, or for all other families, spending 10% or more, of family income on out- of-pocket health care expenses. Out-of-pocket health care expenses include all family spending on deductibles, copays, and coinsurance for benefits covered by insurance, and all family spending on non-covered medical, dental, and vision services that family members paid for directly. Out-of-pocket expenses do not include premiums for health insurance.

Financial ratio analysis is one critical component of assessing a hospital’s financial condition. CHIA examines several main areas including capital reinvestment, liquidity, profitability, and solvency in hospital financial reporting.

A health insurance plan that offers members access to a reduced or selective provider network, which is smaller than the payer’s most comprehensive provider network within a defined geographic area and from which the payer may choose to exclude from participation other providers who participate in the payer’s general or regional provider network. This definition, like that contained within Massachusetts Division of Insurance regulation 211 CMR 152.00, does not require a plan to offer a specific level of cost (premium) savings in order to qualify as a limited network plan.

Hospital financial metrics that measure the ability to which the entity can meet debts with liquid assets (assets that can be quickly converted to cash while maintaining their value).

Hospital Financial Metrics > Solvency

Measures the ratio of long-term debt to total available capital.

Formula: Non-Current Long-Term Debt /(Non-Current Long-Term Debt + Unrestricted Net Assets)

Measure of the total health care spending of members whose plans require the selection of a primary care provider associated with a physician group, or who are attributed to a primary care provider according to a contract between a payer and provider.

Average employer or group size segregated into the following categories: individual purchasers, small group (up to 50 employees), mid-size group (51-100 employees), large group (101-499 employees), and jumbo group (500+ employees) In the small group market segment, only those small employers that met the definition of “Eligible Small Business or Group” per Massachusetts Division of Insurance Regulation 211 CMR 66 04 were included; otherwise, they were categorized within mid-size.

MassHealth provides health benefits and help paying for them to qualifying children, families, seniors, and people with disabilities living in Massachusetts. It is a joint federal and state program designed for low to moderate income residents. Learn more about MassHealth.

Primary care practices participating in any of MassHealth’s Accountable Care Organizations (ACOs) are paid a fixed per-member, per-month rate for a set of primary care services. Sub-capitation rates are designed to cover typical primary care services and to increase MassHealth’s investment in primary care. Through the sub-capitation program, MassHealth is investing to help primary care providers shift their care model and operations away from typical fee-for-service medicine and towards more team-based, integrated primary care to improve their patients’ experience and quality of care, and to better support primary care providers.

As established by the Division of Insurance: the sum of a payer’s incurred medical expenses, their expenses for improving health care quality, and their expenses for deductible fraud, abuse detection, and recovery services, all divided by the difference of premiums minus taxes and assessments. This ratio is calculated within a licensed payer and market segment over a 3-year average.

The combined health insurance market within which both individual (non-group) and small group plans are purchased.

A hospital financial metric that measures the revenue a hospital would expect to collect for services provided less contractual allowances. Net Patient Service Revenue is the primary source of revenue for a hospital.

Payments made to pharmacies for members’ prescription drugs minus rebates received by the health plan from manufacturers.

Hospital Financial Metrics > Profitability

Non-operating income includes items not related to operations, such as investment income, contributions, gains from the sale of assets and other unrelated business activities.

Formula: Total Non-Operating Revenue / Total Revenue

Hospital Financial Metrics > Profitability

Operating income is income from normal operations of a hospital, including patient care and other activities, such as research, gift shops, parking and cafeteria, minus the expenses associated with such activities. Operating margin is a critical ratio that measures how profitable the hospital is when looking at the performance of its primary activities. A negative operating margin is usually an early sign of financial difficulty.

Formula: (Total Operating Revenue – Total Expenses) / Total Revenue

Out-of-pocket expenses include spending by an individual consumer on deductibles, copays, and coinsurance for benefits covered by insurance, and all spending on non-covered medical, dental, and vision services that the individual pays for directly Out-of-pocket expenses do not include premiums for health insurance.

The estimated percentage of a comprehensive package of benefits (e.g., pharmacy, behavioral health) that are accounted for within a payer’s reported claims.

Insurance plans that generally require members to coordinate care through a primary care physician and offer both in-network and out-of-network coverage options.

Insurance plans that identify a network of “preferred providers” while allowing members to obtain coverage outside of the network, though typically with higher levels of cost-sharing. PPO plans generally do not require enrollees to select a primary care physician.

The difference between the total premiums collected by payers (net of MLR rebates) and the total spent by payers on incurred medical claims. Also known as non-medical expenses and surplus.

The total gross premiums earned after removing medical loss ratio rebates incurred during the year (though not necessarily paid during the year), including any portion of the premium that is paid to a third party (e g , Connector fees, reinsurance).

A refund for a portion of the price of a prescription drug Such refunds are paid retrospectively and typically negotiated between the drug manufacturer and pharmacy benefit managers, who may share a portion of the refunds with clients that may include insurers, self-funded employers, and public insurance programs. The refunds can be structured in a variety of ways, and refund amounts vary significantly by drug and payer.

A set of indicators that assess the rate of hospitalizations for “ambulatory care sensitive conditions,” conditions for which high-quality preventive, outpatient, and primary care can potentially prevent complications, more severe disease, and/or the need for hospitalizations. These indicators calculate rates of potentially avoidable hospitalizations in the population and can be risk-adjusted.

The segmentation of health plans along the lines of provider networks. Plans are classified into one of four mutually exclusive categories in this report: Health Maintenance Organizations, Point-of-Service, Preferred Provider Organizations, and Other.

Hospital financial metrics that measure the extent to which an entity made or lost money in a given period.

A health plan certified by the Health Connector to meet benefit and cost-sharing standards.

The Affordable Care Act program that transfers funds between payers offering health insurance plans in the merged market to balance out enrollee health status (risk).

A self-insured employer takes on the financial responsibility and risk for its employees’ and employee-dependents’ medical claims, paying claims and administrative service fees to payers or third-party administrators.

Hospital financial metrics that measure the ratio of long-term debt to the overall value of assets.

The Commonwealth’s Statewide Quality Advisory Committee recommends quality measures annually for the state’s Standard Quality Measure Set. The Committee’s recommendations draw from the extensive body of existing, standardized, and nationally recognized quality measures.

Insurance plans that segment their provider networks into tiers, with tiers typically based on differences in the quality and/or the cost of care provided Tiers are not considered separate networks, but rather sub-segments of a payer’s HMO or PPO network. A tiered network is different than a plan simply splitting benefits by in-network vs out-of-network; a tiered network will have varying degrees of payments for in-network providers.

A measure of total spending for health care in the Commonwealth Chapter 224 of the Acts of 2012 defines THCE as “the annual per capita sum of all health care expenditures in the Commonwealth from public and private sources, including (i) all categories of medical expenses and all non-claims related payments to providers, as included in the health status adjusted total medical expenses reported by CHIA; (ii) all patient cost-sharing amounts, such as deductibles and copayments; and (iii) the net cost of private health insurance, or as otherwise defined in regulations promulgated by CHIA.” CHIA uses this statutorily defined measure in its Annual Report on the Performance of the Massachusetts Health Care System..

Hospital Financial Metrics > Profitability

This ratio evaluates the overall profitability of the hospital using both operating surplus (loss) and non-operating surplus (loss).

Formula: (Total Revenue – Total Expenses) / Total Revenue

The total medical spending for a member population based on allowed claims for all categories of medical expenses and all non-claims- related payments to providers. TME is expressed on a per member per month basis.

A hospital financial metric that measures the difference between the assets and liabilities of a hospital. Comprised of retained earnings from operations and contributions from donors. Changes from year to year are attributable to two major categories: 1) increases (decreases) in unrestricted net assets (affected by operations) and 2) changes in restricted net assets (restricted contributions).

A hospital financial metric that measures the total dollar amount of surplus or loss derived from all operating and non-operating activities.

Formula: Total Revenue – Total Expenses

An emergency department visit not resulting in an inpatient admission or an outpatient observation stay at the same facility.

Health care that a resident or a family member living in the household perceived as necessary but decided to forgo in the past 12 months due to the cost of that care. This includes the following types of health care: doctor care; nurse practitioner, physician assistant, or midwife care; specialist care; mental health care or counseling; substance use care or treatment; prescription drugs; dental care; vision care; or medical equipment.