State Cost Growth Benchmarking Programs: An Evaluation of Eight States’ Experiences and the Lessons Stakeholders Have Learned
February 25, 2025
Background
In 2024, Health Management Associates (HMA) evaluated programs implemented by eight states (California, Connecticut, Delaware, Massachusetts, New Jersey, Oregon, Rhode Island, and Washington) aimed at controlling healthcare cost growth. In recent years, these states have tried to address the trend of escalating healthcare costs using an approach referred to as cost growth benchmarking (CGB). This is the act of setting a target for annual healthcare cost growth and measuring actual performance against the target. Since 2018, the Peterson-Milbank Program (PMP) for Sustainable Health Care Costs has invested in state-based CGB efforts by funding program development, implementation, and technical assistance. HMA evaluated the Peterson Center on Healthcare’s cost growth benchmarking efforts across the eight states.
Methodology
HMA’s evaluation for the Peterson Center on Healthcare included a detailed landscape review for each of the eight states and interviews with 45 state officials, providers, payers, and other stakeholders in these states. The HMA team synthesized findings from the landscape review and the key informant interviews and produced an internal evaluation report.
Analytic Approach
The landscape review captured the state’s CGB program chronology, governance structure, growth targets, enforcement authority, and performance against the target. The interviews examined the contextual factors, stakeholder influence, implementation developments, capacity to control costs, facilitators and barriers to developing cost control capabilities, and the lessons learned based on the states’ experience. The interview discussion guide included a scoring component which enabled quantitative analysis in addition to the qualitative findings. HMA analyzed these findings by state, category of interviewee (state officials, payers, providers, or others) and implementation stage (early vs. more recent adopters).
Findings
States’ efforts to engage and gather stakeholders, establish cost growth targets, collect and report data, and identify cost drivers have been successful, but states have had challenges to date in developing policies aimed at containing costs.
Utility
The findings from this analysis can be useful to the existing states in enhancing their CGB programs and to states interested in launching new CGB initiatives.
