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

Change in Commerical Unadjusted TME by Payer

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Key Annual Report  APM Data

Adoption of Alternative Payment Methods (APMs) in Massachusetts

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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


To learn more about Total Health Care Expenditures and CHIA's analysis of COVID-era data, please watch the short video "Examining Health Care Spending in Massachusetts."




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)

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 Annual Report on the Performance of the
Massachusetts Health Care System (March 2022)

  • In 2020, THCE per capita decreased 2.4% to $8,912. The decrease in THCE was driven by declines in commercial and Medicare spending.


  • Decreases in physician and hospital outpatient spending were the largest service category drivers of the decline in THCE, due to postponed or cancelled nonessential procedures and preventative visits during the COVID-19 pandemic.


  • Non-claims and pharmacy spending accelerated across all major insurance categories.


  • Eight of 11 commercial payers reported HSA TME below the benchmark of 3.1%.


  • APM adoption remained relatively stable among commercial and Medicare Advantage payers, but continued to increase for MassHealth MCOs and ACO-As.


Previous Total Health Care Expenditures, THCE, APM, Publications