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

Key Annual Report THCE Metric

Components of Total Health Care Expenditures in Massachusetts

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Key Annual Report TME Data

Commercial Unadjusted TME

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Key Annual Report  APM Data

Adoption of APM Graphic

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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)

  • 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)

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)

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)

Alternative payment methods (APMs) are payment arrangements in which some of the financial risk associated with delivering medical care and managing 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. The most common APMs in Massachusetts are global budgets, which establish spending targets for a comprehensive set of health care services to be delivered to a specified population.

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 Annual Report on the Performance of the
Massachusetts Health Care System (March 2024)

  • THCE totaled $71.7 billion in 2022, increasing $3.9 billion from 2021. THCE per capita increased 5.8% from 2021 to 2022, above the 3.1% health care cost growth benchmark. 14.8% of THCE growth was attributable to COVID-19-related supplemental payments made by MassHealth to providers in 2022.


  • Commercial, Medicare, and MassHealth spending experienced growth from 2021 to 2022 at 0.7% (4.1% PMPM), 4.1% (3.3% PMPM), and 11.1% (1.7% PMPM), respectively, as commercial membership continued to decline while enrollment continued to increase in Medicare and MassHealth.


  • Pharmacy spending net of rebates was the largest driver of the increase in THCE from 2021 to 2022, increasing by $775.0 million, with the fastest growth of any claims-based service category at 8.3%. Without adjusting for rebates, pharmacy spending increased 8.8%.


  • Medicare Advantage spending increased 13.3% from 2021 to 2022, accompanied by a 7.8% increase in enrollment, resulting in a 5.1% increase in PMPM spending. Enrollment increases were primarily driven by increased membership in Aetna (+25.4%) and United (+15.9%) plans.


  • In 2022, all commercial payers reported increases in unadjusted TME PMPM, ranging from 0.9% to 7.4%.


  • Following the rebound from the pandemic in 2021, HSA TME PMPM spending continued to increase in 2022 for most commercial payers, with six of 11 payers reporting trends above the benchmark.


  • Overall APM adoption remained generally consistent across all insurance categories in 2022. Payer adherence to the Aligned Measure Set for quality measures in global budget APM contracts improved steadily from 2019 to 2022, but some payers continued to report below 60% adherence in 2022.


  • Six of the 10 largest physician groups had HSA TME PMPM trends above the 3.1% growth benchmark in at least two payer networks in 2022.


Previous THCE, APM, Publications