On March 29, 2017, the Massachusetts Health Policy Commission voted to decrease its annual health care cost growth benchmark from 3.6 percent to a 3.1 percent, effective in 2018. The benchmark applies to hospitals, certain physician groups and individual health insurers. The Commission also voted to finalize regulations to require those entities that fail to comply with the benchmark to file and follow performance improvement plans. Non-compliant entities will be subject to oversight by the Commission, during which they will be required to file monthly progress reports and demonstrate that they are taking steps to slow their cost growth. The regulations also authorize the Commission to assess civil penalties against non-compliant entities in certain circumstances, such as when an entity willfully neglects to file a required performance improvement plan.

Per state law, the Commission had an option to keep the growth target at 3.6%, but the Commission did not find the status quo to be “reasonably warranted.” The Commission’s decision to lower the growth benchmark received widespread support from hospitals, insurers and the physician community. This Commission’s decision arises from notable challenges Massachusetts has faced in containing health care costs. In 2014 and 2015, the state’s health care costs grew at 4.2 percent and 4.1 percent, respectively, in excess of the previous benchmark. Massachusetts’ health care remains among the most expensive in the nation; in 2017, 43 percent of Massachusetts’ $39 billion budget is allocated to health care, mostly through the state’s Medicaid program. The Commission’s decision seeks to remedy this situation.