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The Boston market boasts a healthy population and some of the highest-quality care in the nation, but it also features lofty prices and above average hospital use. Payment reform initiatives are well-established, but prestigious health systems continue to demand very high reimbursements. Reimbursement disparity has compromised the sustainability of smaller community hospitals and drives consolidation. Blue Cross Blue Shield of Massachusetts continues to lead in payment reform by expanding value-based contracts to cover hospital services and care for PPO members. Although they are a primary driver of cost growth, drug prices are largely exempt from the state’s famously rigorous oversight. Health systems have responded by creating and expanding their own specialty pharmacies. Expect momentum to build around proposals that would force drug companies to provide more price transparency.