State agencies and the federal government can take administrative actions through various programs to curb rising health system costs. This section explores some of these innovative actions.
A cost-growth benchmark program is a cost-containment strategy that limits how much a state’s health care spending can grow each year. Massachusetts pioneered the policy initiative to bring total cost of health care growth closer in line with the state’s overall economic growth. A growing number of states are now exploring the strategy.
This chart provides an overview of states’ health care cost-growth benchmark programs.
This webinar, convened in partnership with the Milbank Memorial Fund for state officials only, explores the strategies and experiences of states that are implementing cost-growth benchmark policies. To view the recording, email Amanda Attiya.
Connecticut Resources
- Office of the Governor: Executive Order No. 5, signed January 22, 2020
- Connecticut Office of Health Strategy: Cost Growth and Quality Benchmarks, and Primary Care Target Website
- Connecticut Office of Health Strategy: Reports and Updates
- Connecticut Office of Health Strategy: Guidance for Payers and Providers
Delaware Resources
- Office of the Governor: Executive Order 25, signed November 20, 2018
- Delaware Health Care Commission: Health Care Spending and Quality Benchmarks Website
- Delaware Health Care Commission: Benchmark Implementation Manual, updated January 31, 2019
- Delaware Health Care Commission: Calendar Year 2019 Benchmark Trend Report, posted April 1, 2021
Massachusetts Resources
- Massachusetts Chapter 224 of the Acts of 2012, enacted August 6, 2012
- Massachusetts Health Policy Commission: Health Care Cost Growth Benchmark Overview
- Massachusetts Health Policy Commission: Annual Process for Monitoring Health Care Spending Growth in Massachusetts
- Massachusetts Health Policy Commission: Annual Benchmark Hearings
- Massachusetts Health Policy Commission: Annual Cost Trends Hearings
- Massachusetts Health Policy Commission: Annual Cost Trends Reports, updated February 2020
- Massachusetts Center for Health Information and Analysis: Annual Reports on the Performance of the Massachusetts Health Care System, updated March 2021
Oregon Resources
- Oregon SB 889/Chapter 560, enacted 2019
- Oregon HB 2081/ Chapter 51, enacted 2021
- Oregon Health Authority: Sustainable Health Care Cost Growth Target Website
- Oregon Health Authority: Cost Growth Target Technical Advisory Group Website
- Oregon Health Authority: Cost Growth Target Overview
- Oregon Health Authority: Health Insurer FAQ, posted February 14, 2020
- Oregon Health Authority: Provider FAQ, posted October 16, 2020
- Sustainable Health Care Cost Growth Target Implementation Committee: Final Report to the Oregon Legislature, posted January 2021
Rhode Island Resources
- Rhode Island Executive Order 19-03, signed February 6, 2019
- Rhode Island Health Care Cost Trends Steering Committee: Compact to Reduce the Growth in Health Care Costs and State Health Care Spending in Rhode Island, signed on December 19, 2018
- Rhode Island Office of the Health Insurance Commissioner: Health Care Cost Trends Project Website
- Rhode Island Office of the Health Insurance Commissioner: Health Care Cost Growth Target Implementation Manual, posted July 27, 2020
- Rhode Island Office of the Health Insurance Commissioner and Executive Office of Health and Human Services: 2020 Health Care Cost Trends Collaborative Project Report to the Legislature, posted December 2020
Washington Resources
- Washington HB 2457/Chapter 340, enacted April 3, 2020
- Washington Health Care Authority: Health Care Cost Transparency Board Website
Insurance rate review gives states the authority to examine proposed premium increases charged by health insurance companies that offer plans in a state. Rate review is used both to assure the financial viability of insurers and to ensure that companies have a legitimate reason to raise costs. For more than a decade, Rhode Island has used a unique insurance rate review approach to keep hospital costs from rising any more than inflation plus 1 percent through a set of “affordability standards” that insurers must meet to have rates approved. States are using affordability standards to oversee hospital costs and to require insurers to invest in a state’s health priorities, such as primary care.
This blog explores Rhode Island’s experience with insurance rate review as a hospital cost containment tool.
This blog explores how states can leverage their existing health market authority via insurance departments to slow cost growth and aim to ensure there is a level playing field between hospitals and insurers to drive fair negotiations for lower prices.
This brief highlights how states can disrupt hospital price increases using growth caps in insurance rate review and provides an overview of state action and academic research on implementing affordability standards.
Delaware Resources
- Delaware SB 116, enacted August 14, 2019
- Delaware SB 120, enacted _____
- Delaware Department of Insurance: Delaware Office of Value Based Health Care Delivery Website
- Delaware Office of Value Based Health Care Delivery: Delaware Health Care Affordability Standards, posted February 15, 2021
New Jersey Resources
- Executive Order #217, signed Jan. 28, 2021
- Office of the Governor: Office of Health Care Affordability and Transparency Website
- Office of the Governor: Governor Murphy Announces Members of Health Care Affordability Advisory Group, posted March 1, 2021
Rhode Island Resources
- Rhode Island Chapter 42-14.5, enacted 2004
- Rhode Island Office of the Health Insurance Commissioner: Original Affordability Standards, posted November 2011
- Rhode Island Office of the Health Insurance Commissioner: Amended Affordability Standards, posted December 12, 2016
- Rhode Island Office of the Health Insurance Commissioner: Provisional Affordability Standard Targets, posted November 16, 2020
Hospital rate setting is a system in which a state agency establishes uniform rates for hospital services for multiple payers. Maryland’s Medicare waiver, instituted in 1977, made the state an all-payer state, meaning that all third-party payers must pay the same rate for the same services
Maryland Resources
- Maryland Health Services Cost Review Commission: Hospital Rate Setting Website
- Maryland Health Services Cost Review Commission: Accounting and Budget Manual
- Annual Update to Unit Rates and Global Budget Revenue
- Maryland Health Services Cost Review Commission: Approved Hospital Unit Rate Reports
- Maryland Health Services Cost Review Commission: Policy Clarifications and Regulation Updates
- Maryland Health Services Cost Review Commission: Procedures and Template for the Filing and Docketing of Full Rate Review Requests, posted January 2019
- Center for Medicare and Medicaid Innovation: Final Evaluation Report of Maryland All-Payer Model, posted November 2019
Reference-based pricing to Medicare is a method of paying hospitals and other medical facilities based on a standard reference point, in this case, the amount paid by Medicare to the exact same hospital for the exact same services and supplies. Reference-based pricing aligns a hospital’s prices more closely with its costs, generating savings for states and patients money.
In this webinar, state health policy officials who are working to standardize prices paid to hospitals explore two state models to maintain access and keep spending in check.
This blog explores Washington’s experience with their public option, which utilizes reference-based pricing.
This blog describes Nevada’s public option law, which also utilizes reference-based pricing.
Colorado Resources
- Colorado HB 21-1232/Section 10-16-13, enacted June 16, 2021
- Division of Insurance: Colorado Option website
- Colorado’s Section 1332 State Innovation Waiver:
- Amendment Application
- Approval Letter (approved June 23, 2022)
- Division of Insurance: Regulation 4-2-81 – Concerning Colorado Option Standardized Health Benefit Plan (effective June 30, 2022)
Montana Resources
- Montana Legislative Fiscal Division: Reference Based Pricing, posted November 24, 2015
Nevada Resources
- Nevada SB 420/Chapter 537, enacted June 9, 2021
North Carolina Resources
- North Carolina Department of State Treasurer: North Carolina State Health Plan Resolution, approved October 22, 2018
- North Carolina Department of State Treasurer: North Carolina State Health Plan Update, posted February 19, 2019
Oregon Resources
- Oregon SB 1067/Chapter 746, enacted August 15, 2017
- Oregon Health Authority: Public Employee Benefits Board Rules Related to Hospital Payments, posted July 16, 2019
- Oregon Office of the Secretary of State: Notice of Proposed Rulemaking Including Statement of Need & Fiscal Impact, posted July 19, 2019
- Oregon Health Authority: Oregon Acute Care Hospitals Financial and Utilization Trends. 3rd Quarter 2019, published June 2020
- Presentation from Oregon’s actuary with results from a savings analysis and audit of carrier reimbursements in 2020, released March 15, 2022
- Presentation from Oregon’s actuary with results from a savings analysis and audit of carrier reimbursements in 2021, released October 18, 2022
Washington Resources
- Washington SB 6626/Chapter 364, enacted May 13, 2019
- Washington SB 5377/Chapter 246, enacted May 10, 2021