Introduction

This is the first of a series of occasional comments on the new health care reform act (the “Act”), adopted by the Massachusetts Legislature, which the Governor is expected to sign soon. This alert relates to one of the core cost containment provisions of the Act, benchmarking overall health care cost growth and the obligation of certain providers, provider organizations and carriers to develop and implement performance improvement plans. It is based on these provisions of the Act that the legislative leadership has projected a $200 billion savings in health care costs in Massachusetts over the next 15 years.

Setting the Benchmark

Under the Act, the Legislature annually, in collaboration with the Commonwealth’s budget office, will establish an annual “growth rate of potential gross state product” (the “growth rate”) reflecting the “average growth rate of the Commonwealth’s economy, excluding fluctuations due to the business cycle.”

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