Implementing a Statewide Healthcare Cost Benchmark

Prepared with the Robert Wood Johnson Foundation

State interest in healthcare cost containment has grown dramatically since Massachusetts enacted the nation’s first cost benchmarking program in 2012. At that time, most states were focused on coverage expansion through the Affordable Care Act. More recently, however, coverage gains have plateaued, and in some cases contracted, primarily because of affordability issues.

Seeking methods to better understand and control healthcare costs, many states are assessing how to build on Massachusetts’ benchmarking model. In 2019, the Oregon Legislature followed on the heels of Massachusetts when it enacted a benchmarking program to act as the state’s leading strategy for improving system transparency and accountability.

In a new white paper prepared for the Robert Wood Johnson Foundation, “Implementing a Statewide Healthcare Cost Benchmark: How Oregon and Other States Can Build on the Massachusetts Model,” Manatt Health investigates the benchmarking programs adopted in Massachusetts and Oregon. Drawing on extensive interviews with Oregon state officials and leading stakeholders, the paper examines the benefits of cost benchmarking and how those benefits may be made applicable to all state spending, as in Massachusetts. The paper also discusses the benchmarking programs enacted by executive order in Delaware and Rhode Island.

All four of these state programs share certain common elements: establishing a statewide cost benchmark; collecting data to measure health spending against the benchmark; publishing health spending reports to identify systemic cost drivers; and using a variety of levers, including public hearings and performance improvement plans, to enhance transparency and contain spending growth that exceeds the benchmark. This white paper explores how the programs in Massachusetts, Oregon, Delaware and Rhode Island vary in scope and focus, despite their shared goal of healthcare cost reduction, and lays out seven key areas that other states should discuss as they consider developing their own benchmarking programs.

To read the full white paper, click here.

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