State Benchmarking Updates: The State of Play

The Manatt State Cost Containment Update

March 20, 2023

A PDF of our update is also available here.

The State of Play: Cost Growth Benchmarking Programs (as of March 23, 2023)

Detailed State Updates as of March 20, 2023

State	Update	Detail
CA	Benchmarking Update	Members of California’s Office of Health Care Affordability’s Affordability Board have been appointed by state leadership. The Board will begin regular meetings through 2023 and will soon begin appointing members to the Health Care Affordability Advisory Committee.
CT	Benchmarking Update	The Office of Health Strategy (OHS) Healthcare Benchmark Initiative Steering Committee met in February to discuss the state’s approach to considering inflation in the state’s cost growth benchmark, discuss benchmark timeline and performance reporting, and present updated commercial and Medicaid cost driver analyses. The Committee also engaged in cross-state dialogue with other cost growth benchmarking states (including Rhode Island and Oregon) around their strategies for addressing pharmaceutical costs, advancing value-based payment models, and accountability measures.
MA	Benchmarking Update	On March 13, the Massachusetts Center for Health Information and Analysis (CHIA) published its Annual Report on the Performance of the Massachusetts Health Care System, which examines state trends in costs, coverage, and quality indicators. Key findings include: Total health care expenditures (THCE) totaled $67.9 billion in 2021. From 2019 to 2021, THCE per resident increased at an annualized rate of 3.2%. THCE per capita increased 9.0% in 2021 to $9,715 per resident, following a 2.3% decline in 2020. From 2019 to 2021, pharmacy spending increased at an annualized rate of 7.5% net of rebates and 9.6% gross of rebates, resulting in the fastest rate of three-year service category growth in Massachusetts. In 2021, spending on behavioral health (BH) services comprised 6.6% of total health care spending for commercial members, 15.9% for Medicaid MCO/ACO-A members, and 1.9% for Medicare Advantage members. On March 15, the Massachusetts HPC will hold the annual hearing on the potential modification of the health care cost growth benchmark. The hearing will feature a presentation from the HPC on the Health Care Cost Growth Benchmark modification process, national health care spending trends, and affordability implications for Massachusetts residents. Staff from the Center for Health Information and Analysis (CHIA) will also present its Annual Report on the Performance of the Massachusetts Health Care System.
ME	Benchmarking Update	Gov. Janet Mills has nominated Meg Garratt-Reed to serve as the Executive Director of the state’s new Office of Affordable Health Care. Garratt-Reed currently leads the state’s office of the Health Insurance Marketplace.
MN	Legislative Update	Minnesota has introduced legislation to create a health affordability board that would establish health care spending targets for hospitals and providers, measure and publish health care system performance, develop accountability mechanisms, and collaborate with state agencies using APCD data to analyze and understand specific drivers of health care cost growth.
NV	Benchmarking Update	From January through March of 2023, the Patient Protection Commission (PPC) will be validating, analyzing, and reviewing baseline benchmark findings with Nevada insurers who responded to the State’s request for the aggregated baseline benchmark data in late 2022. Additionally, the Commission will be working to further develop cost growth mitigation strategies.
NV	Legislative Update	Nevada’s Gov. Lombardo has stated he will not support proposed legislation to establish into law the executive order former Governor Steve Sisolak signed in 2021, which created the state’s health care cost growth benchmark program.
OR	Benchmarking Update	The Oregon Cost Growth Target Advisory Committee met in January to discuss findings from the 2021 Oregon Health Insurance Survey, review 2013-2019 cost growth data, and discuss state approaches to incorporating inflation into state cost growth benchmarking accountability measures.
WA	Benchmarking Update	The Washington Healthcare Cost Transparency Board met with the Advisory Committee on Data Issues at a public meeting on February 7 that included a presentation on preliminary findings from a study on cost growth drivers in the state using APCD data and an update on the WA multi-payer Primary Care Model Framework.
WA	Legislative Update	Washington advocates introduced HB 1508 to empower the Health Care Cost Transparency Board (HCCTB) and incorporate an accountability framework into the state’s cost growth benchmarking program.

To return to the Manatt Cost Containment Update Home Page, please click here.

May 2022 Update

A PDF of our update is also available here.

The State of Play: Cost Growth Benchmarking Programs (as of May 11, 2022)

Detailed State Updates as of May 11, 2022

State	Update	Detail
CA	Legislative	California’s Legislative Analyst’s Office (LAO) released a brief assessing Governor Gavin Newsom’s budget proposals to improve access and affordability in California, including the Governor’s renewed proposal to establish the Office of Health Care Affordability. California continues to advance its proposal to establish an Office of Health Care Affordability.
CT	Legislative	On March 10, Connecticut filed HB 5042, which codifies Executive Order No. 5, which established the state’s cost growth benchmark and established requirements that the statewide benchmarks account for primary care spending, and set a target of 10% of primary care spending as a percentage of total health care expenditures by 2025.
CT	Benchmarking Program	Findings from Connecticut’s pre-benchmark analysis of 2018 and 2019 cost growth data determined that the state’s Total Health Care Expenditures grew 3.3% in 2019, with per capita spending growth in 2019 varying significantly by market: Commercial, 6.1% Medicaid, -0.9% (2.1% when long-term care is removed) Medicare, 2.2% Retail pharmacy and hospital outpatient were primary drivers of state, Medicaid and Medicare spending growth in 2019. In the commercial market, hospital outpatient and hospital inpatient services were the largest drivers of cost growth.
IN	Other Activity	In response to targeted letters from Indiana state leaders calling on health care industry leaders to propose and implement specific measures to bring Indiana hospital prices down to “at least the national average” by 2025, Indiana University Health tells legislative leaders that health care costs cannot be reduced. Eight other health care institutions in the state have responded to the legislative letters as well.
MA	Benchmarking Program	Mass General Brigham requested a 60-day extension to respond to the Health Policy Commission’s Performance Improvement Plan requirement.
MA	Legislative	On March 15, the Baker-Politico Administration filed S. 2774, titled “An Act Investing in the Future of Our Health,” which proposes to set a statewide primary care and behavioral health spending target, requiring health care providers and payers to increase expenditures on primary care and behavioral health by 30% over three years. This is estimated to result in a systemwide investment of approximately $1.4 billion into primary care and behavioral health.
ME	Other Activity	On March 29, Maine’s Governor Janet Mills signed LD1778, requiring the Office of Affordable Health Care to expand the scope of its annual public hearing on cost trends to include barriers to health care affordability beginning in 2023, and extends the date for the office to report to the Legislature on its study of the effects of policies aimed at improving health care affordability and coverage from January 1, 2023, to January 1, 2024.
MN	Legislative	On April 1, Minnesota introduced HF4430/SF4354, which proposes to establish a Health Care Affordability Board to monitor health care costs, set targets to limit those costs and issue fines if those targets are exceeded.
NJ	Benchmarking Program	On March 30, the Murphy Administration released the Health Care Affordability, Responsibility, and Transparency (HART) Program, which outlines the state’s plan to improve health care affordability in New Jersey through its new cost growth benchmarking program. In 2022, the New Jersey Office of Health Care Affordability and Transparency plans to identify an Implementation Advisory Group and a Technical Subgroup to work through the details of data collection and reporting, and to convene an Expert Panel to advise the state on economic and other factors influencing benchmark attainment, begin the data collection for benchmark and cost driver analysis, and more.
NV	Benchmarking Program	On April 20, the Nevada Patient Protection Commission (PCC) reviewed and discussed the benchmarking program’s first cost driver analyses: Medicaid Phase 1 Cost Driver Analysis and Public Employees Benefits Program (PEBP) Phase 1 Cost Driver Analysis. Bailit consulting also provided an introduction to the data use strategy for program leaders to begin strategizing in advance of the state’s 2023 baseline cost growth benchmark report.
NV	Benchmarking Program	On March 28, Dr. Malinda Southard was appointed by Governor Sisolak to serve as the new executive director of Nevada’s Patient Protection Commission, which leads the state’s cost growth benchmarking program.
OR	Benchmarking Program	On April 8, Oregon held its first cost growth target annual hearing, which included panels on the impact of COVID-19 on Health Care Costs in Oregon, the Health Care Cost Impacts on Consumers, and Efforts to Address Health Care Costs. Speakers for the consumer panel included representatives from OSPIRG, SEIU Local 49, Saldivar Insurance, Main Street Alliance and several consumers.
RI	Benchmarking Program	Governor McKee’s 2022–2023 budget proposal included funding from the State Fiscal Recovery Fund to continue the work of the state’s cost growth benchmarking program.
UT	Other Activity	Governor Cox has named the organization committee members for One Utah Health Collaborative (previously known as the Utah Sustainable Health Collaborative).
WA	Benchmarking Program	Plan for Year Two. During the January Health Care Cost Transparency Board meeting, the Board outlined its plans for year two of the benchmarking program. In March, the Board will review existing data on Washington cost growth drivers. Over the following months, the Board will then identify areas of interest in cost growth mitigation, review the pre-benchmark data call process and reporting, and review the initial cost driver analysis. Pre-Benchmark Insurer Data Request. In late March, the Board notified health insurers about the benchmark and asked them to share “pre-benchmark” performance data for calendar years 2017, 2018 and 2019. Preparing for Preliminary Data Call. The Washington Advisory Committee on Data Issues plans to hold payer seminars and office hours in May and June of 2022, with a request for preliminary data submission to be opened on June 30, 2022. Full meeting materials for the Board and Advisory Committees are available here.

To return to the Manatt Cost Containment Update Home Page, please click here.

February 2022 Update

A PDF of our update is also available here.

Benchmarking Updates as of September 17, 2021

The State of Play: Cost Growth Benchmarking Programs (as of February 1, 2022)

Detailed State Updates as of February 1, 2022

State	Update	Detail
CA	Legislative	California’s 2022-2023 proposed state budget proposes to allocate $30 million for a new Office of Health Care Affordability. The legislature is expected to re-introduce benchmarking legislation (AB 1130) this year.
CT	Benchmarking Program	In November 2021, Connecticut appointed Sumit Sajnani to serve as Health Information Technology Officer within the Office of Health Strategy (OHS). OHS presented pre-benchmark cost growth trend data for 2018-2019 at its January 24^th meeting. All OHS Health Benchmark Initiative (HBI) Meeting Materials are available here.
DE	Legislative	In October 2021, Delaware Governor John Carney signed Senate Bill No. 120 into law, requiring insurers to spend a defined percentage of their total health care spend on primary care and preventive health services, such as annual check-ups and management of chronic care. In 2022, carriers will be required to spend at least 7 percent of their total cost of medical care on primary care, followed by 8.5 percent in 2023; 10 percent in 2024; and 11.5 percent in 2025.
IN	Other Activity	In January 2022, Indiana state leaders have distributed letters to health care industry leaders in the state giving them until April 1 to propose and implement specific measures to bring Indiana hospital prices down to “at least the national average” by 2025. If the industry is unable to provide a viable plan for doing so by April 1st, the legislature promises to pursue legislation to statutorily reduce prices through to-be-determined methods.
MA	Benchmarking Program	During the Massachusetts HPC January 2022 Board Meeting, the HPC Board announced it has voted to require a Performance Improvement Plan (PIP) from Mass General Brigham (MGB), finding that the systems’ spending performance “raises significant concerns” and has likely already impacted the state’s ability to meet the health care cost growth benchmark. Within 45 days of receiving the PIP notice, MGB will be required to file either: a PIP proposal; a request for a waiver; or, a request for an extension. MGH will be subject to ongoing monitoring by the HPC during the 18-month implementation process, and if needed, a fine of up to $500,000 may be assessed as a last resort.
ME	Other Activity	In July 2021, Maine established a new Office of Affordable Health Care with the passage of LD 120. Duties of the new Office include: Analyzing health care cost growth trends and correlation to the quality of health care; Monitoring the adoption of alternative payment methods in this State and other states that foster innovative health care delivery and payment models to reduce health care cost growth and improve the quality of health care; Developing proposals for consideration by the legislative oversight committee on potential methods to improve consumer experience with the health care system, including the provision of a consumer advocacy function on health care matters not addressed by the Health Insurance Consumer Assistance Program. Maine is seeking an Executive Director for the new Office.
NJ	Legislative	In December 2021, Governor Phil Murphy signed an Executive Order officially launching the New Jersey Health Care Cost Growth Benchmark Program. The program launch is bolstered by a stakeholder compact organized by the Murphy Administration consisting of advocacy groups, hospitals and health care providers, insurers, a union, employers and other stakeholders across New Jersey. The compact reflects a shared goal for stakeholders and the State to work toward constraining the growth of health care costs over time. The state’s benchmark targets are built from a 75%/25% blend of forecasted median income and potential gross state product (PGSP). The benchmark target will be implemented for 2023-2027, starting at 3.5% and gradually declining to 2.8% in 2027, following an initial “transition” year for reporting in 2022, in which providers and payers would begin reporting data to the state without accountability measures in place. More information on the state’s benchmarking program is available here.
NV	Legislative	In December 2021, Governor Sisolak issued an Executive Order establishing a benchmark for health care cost growth beginning in 2022. The cost growth targets are generated from a blend of median wage and gross state product each year, resulting the following targets: 3.19% for 2022 2.98% for 2023 2.78% for 2024 2.58% for 2025 2.37% for 2026 The Patient Protection Commission will work with the Division of Insurance, the State Based Health Exchange and the Department of Health and Human Services to monitor progress to ensure that payors and providers are meeting these goals.
OR	Benchmarking Program	The Oregon Health Authority (OHA) is transitioning governance of the Cost Growth Target program to the Advisory Committee beginning in 2022, which will oversee ongoing program implementation processes established by the previous Implementation Committee. The Advisory Committee will include industry representatives; non-industry representatives; ex-officio members; and subject matter experts in health care financing, administration, economics, and equity. In early 2022, OHA intends to publish state and market level trends data from CY 2018 and 2019 using payer-submitted benchmarking data, once data validation is complete. This will be the first public report released by OHA using data collected by the state’s Cost Growth Target program. More information on the state’s Cost Growth Target Program activities and working program timeline is available here.
RI	Benchmarking Program	In November 2021, Rhode Island became the sixth state to join the Peterson-Milbank Program for Sustainable Health Care Costs. In an interview with Milbank Memorial Fund, Rhode Island Insurance Commissioner Patrick Tigue discusses Rhode Island’s progress on cost containment and next steps for the program.
UT	Other Activity	In November 2021, Utah Governor Cox announced the formation of the Utah Sustainable Health Collaborative, which will be focused on reducing health care costs and improving health outcomes for Utahns. In a December 2021 interview, Rich Saunders, chief innovation officer and senior advisor to Gov. Spencer Cox, discusses the purpose, partners, and future plans for the Utah Sustainable Health Collaborative.
VT	Other Activity	Vermont’s Joint Task Force on Affordable, Accessible Health Care is examining a number of policy considerations to improve consumer affordability of health care, including a cost growth benchmark as an option for future legislative action
WA	Benchmarking Program	As of mid-November 2021, the Washington Health Care Cost Transparency Board was actively discussing: Risk adjustment for determining benchmark performance at the carrier and provider levels (raised Massachusetts and Rhode Island’s experiences with rising risk scores) Patient attribution to clinicians and organizing clinicians into large provider entities

To return to the Manatt Cost Containment Update Home Page, please click here.

October 2021 Update

A PDF of our update is also available here.

Benchmarking Updates as of September 17, 2021

Detailed State Updates as of September 17, 2021

Legislative Updates
State	Update
Nevada	On May 27, Governor Sisolak approved Assembly Bill 348, which moves the Patient Protection Commission (PPC) to the Department of Health and Human Services and designates the PPC in law as the entity responsible for the state’s participation in the Peterson-Milbank Program for Sustainable Health Care Costs, which works with states to establish and implement health care cost growth targets. Under AB 348, the PPC is also charged with facilitating interoperability of health information in the state, making recommendations on how the state can analyze and use health care data to improve access and quality, and how to make that data publicly available and transparent.
Massachusetts	On June 29, the Massachusetts State House and Senate held a joint hearing on Senate Bill 782, “An Act to Ensure More Affordable Care,” which proposes to establish a consumer benchmark for premiums and OOP costs set at the state’s aggregate cost growth benchmark beginning in 2023. This bill is now pending a recommendation from committee members.
California	California’s legislative deliberations on Assembly Bill 1130 have been paused until next year. AB 1130 proposed to, among other provisions, establish the Office of Health Care Affordability within the Office of Statewide Health Planning and Development, and charge the office with analyzing the health care market for cost trends and drivers of spending, developing data-informed policies for lowering health care costs for consumers, setting and enforcing cost targets, and creating a state strategy for controlling the cost of health care and ensuring affordability for consumers and purchaser. As Assemblyman Jim Wood, one of the leading champions of the cost growth benchmarking program in California, notes (regarding AB 1130), “although much progress has been made … other priorities in the state force us to begin discussions again next year.”
Program Updates
State	Update
Massachusetts	On September 16, the Massachusetts HPC released its 2021 Annual Cost Trends Report, sharing several recommendations that have implications for the state’s cost growth benchmarking program, including: Strengthening payer/provider accountability by expanding the metrics examined and increasing financial penalties for above-benchmark spending (see here for our spotlight feature on accountability); Constraining excessive provider prices by establishing price caps for the highest-priced providers in the state,¹ limiting facility fees, enhancing scrutiny and monitoring of provider expansions and ambulatory care, and adopting default out-of-network payment rates; Holding health plans accountable for affordability by setting new affordability targets and affordability standards, improving health plan rate approval processes, and other strategies; and Examining increases in medical coding intensity and improving patient risk adjustment and taking action to mitigate the impacts of these practices on spending and performance measurement. Other recommendations outlined in the report include advancing health equity for all by setting health equity targets, addressing social determinants of health, and improving data collection; and other targeted strategies and policies to address a range of other issues, including curbing pharmaceutical drug spending, improving investments in primary care and behavioral health, and continuing to address low-value care.
Oregon	In late July, the Oregon Sustainable Health Care Cost Growth Target Implementation Committee announced plans to conduct broad provider outreach to expand awareness of the statewide benchmark and its implications for providers. The committee also identified priority analyses for implementation in 2022, including spending trends by market, geography, service category, and demographics, as well as quality measures and an assessment of negative impacts that may arise in pursuit of the cost growth target. The committee has also started planning for the establishment of a successor committee for 2022 and beyond, a Cost Growth Target Advisory Committee under the Oregon Health Policy Board (OHPB). The Advisory Committee will be charged with overseeing ongoing program implementation; reviewing, understanding, and monitoring cost growth trends and cost drivers; and advising OHA, the Department of Consumer and Business Services (DCBS) and OHPB, among other responsibilities.
Washington	In August and September, the Washington Health Care Cost Transparency Board continued to explore its preliminary recommendation to set the benchmark value using a 70/30 hybrid of the state’s historical median wage and PGSP, which yields a benchmark value of 3.2%. The board also plans to tighten the benchmark over four years, following similar protocols implemented by other benchmarking program states. In September, the board modeled potential savings from various scenarios of cost growth benchmark value reductions over time, ranging from 3.0% to 3.2% to start in 2022 and 2023, down to 2.8% to 3.0% by 2026, and continued to deliberate its final recommendation of the benchmark value. The board has also discussed other technical recommendations, including the use of statistical confidence intervals to determine insurer and provider entities’ benchmark performance, a method currently under development in Oregon and Connecticut.
Connecticut	Connecticut’s OHS is currently collecting and validating pre-benchmark data from payers and large provider entities as it works to establish its analytic processes and quality assurance procedures. OHS intends to release cost growth data in the fall of 2021 at the state and market levels only.
New Jersey	As of late May,² the New Jersey Health Care Affordability Advisory Group finalized its charter, and it is discussing options for calculating total health care spending, as well as criteria and options for an economic indicator to which the state’s spending growth target would be tied. Members of the advisory group emphasized the need for an indicator that links to “the pocketbooks of New Jersey consumers,” is predictable and sustainable over time, and promotes quality and other desired investments.

To return to the Manatt State Cost Containment Update Home Page, please click here.

_{¹ Massachusetts’ Center for Health Information and Analysis (CHIA) reports annually on Relative Price and Provider Price Variation data, which facilitates the comparison of average provider prices and is one potential tool that may be used to classify the state’s “high price” providers.}

_{² The New Jersey Health Care Affordability Advisory group also met on June 23, 2021. Meeting materials are not yet publicly available.}