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Staff flags growth in an uncategorized 'other medical' claims category as a major driver of cost increases
Summary
HCA staff reported claims-based growth from 2017—2024 concentrated in a catchall 'other medical' category (durable medical equipment, freestanding testing/imaging and uncategorized claims). The board asked staff to break that category into subcomponents and add Medicare FFS data.
Harrison Fontaine, a staff analyst with the Health Care Authority, told the COST Board that analysis of the all-payer claims database (2017—2024) shows sustained increases in per-member-per-month spending driven in part by a broad "other medical" category.
"If this other medical category is growing faster than others, we have this sort of growing swath of uncategorized spending that we could consider looking into further," Fontaine said, identifying durable medical equipment, freestanding diagnostic facilities and certain testing services as examples that may be contributing.
Fontaine showed that commercial and Medicaid markets experienced a pronounced utilization spike in 2020—2021 that did not fully return to baseline, and that increases in average price per service largely explain growth in some markets. Board members asked whether the spike related to COVID testing, freestanding labs, or private-equity activity in diagnostic providers; Fontaine recommended further procedure-code-level analysis and adding Medicare fee-for-service data where available to test those hypotheses.
Board members also requested follow-up on how physician-administered specialty drugs are categorized (medical benefit vs retail pharmacy) and whether those high-cost medicines appear in the outpatient categories staff presented. Fontaine agreed to pursue the additional subcategorization and return results to the board.
