division of health care finance and policy


Report: Disparities In Medical Costs Abound

Not to be outdone by state Attorney General Martha Coakley’s thorough and provocative report earlier this week on the cost of medical care, the state Division of Health Care Finance and Policy released its own report on medical spending today, which showed some comparable findings. The bottom line is this: There’s a great deal of variation in the cost of care in this state, depending on your neighborhood, your insurer and your medical provider.

Some of the DHCFP key findings include:

–Massachusetts statewide unadjusted total medical expenses in the commercial market were $403 per member per month (PMPM) in 2009. Hospital inpatient and outpatient services accounted for 41% of unadjusted total medical expenses, while physician services represented 28%, followed by spending for prescription drugs at 17%.

–There is significant variation in unadjusted TME by payer, ranging from $356 PMPM for Neighborhood Health Plan to $412 PMPM for Blue Cross Blue Shield of Massachusetts. Unadjusted TME represents actual spending, and the reason for these variations requires further analysis. Among the potential contributing factors include differences in the health status of members, the geographic residence of members, utilization differences, provider network, and different payment rates and methods.

–There are considerable differences in TME by geographic area, based on member residence. At the regional level, unadjusted TME ranged from $372 PMPM in central Massachusetts to $426 PMPM in the North Shore region, a variation of nearly 15%.3

–There is a correlation between health status adjusted average TME for the residents of a city and the median income of that city.

–For individual cities and towns with at least 3,000 members, health status adjusted TME varied by as much as 60% for Blue Cross Blue Shield of Massachusetts (from a low of $305 in Holyoke to $489 in Watertown), 27% for Harvard Pilgrim Health Care (from a low of $353 in Lowell to $450 in Brookline), and 28% for Tufts Health Plan (from a low of $337 in Lowell to $431 in Newton).

(These findings seems to corroborate a similar trend noted in the attorney general’s report, that health plan members living in higher-income zip codes cost far more when it comes to medical care than those living in lower income zip codes. With little variation in premiums, this suggests that the poor are subsidizing the higher-cost health care of wealthier residents.) Continue reading