High stakes in health battle

THE KNOCKDOWN fight between Tufts Medical Center and Blue Cross Blue Shield of Massachusetts over the reimbursement rate for doctors at the hospital is Exhibit B of the dysfunction of the state's health insurance system. Exhibit A, of course, is the much better rate that Partners HealthCare muscled Blue Cross into granting to its teaching hospitals, Mass. General and Brigham and Women's, in 2000. Two sides of the same coin, these deals cry out for reform.

Doctors who meet quality standards while handling complex cases at academic centers should get uniform reimbursement - not just from private insurers but from Medicaid and Medicare as well. Reformed rates should also better reward primary care.

But comprehensive changes will have to await action by a payment reform commission that the Legislature called for last year. Lamentably, that panel has yet to meet. In the meantime, Tufts said Monday that talks with Blue Cross, the state's largest insurer, had reached a stalemate. Starting Feb. 1, Tufts doctors will no longer take part in the Blue Cross HMO plan.

This is a drastic step for a hospital to take, with an impact on patients. Also, with the recession cutting into employers' and workers' ability to afford insurance of any kind, Tufts's bid for a Blue Cross rate increase well above the rate of inflation could be seen as the last thing the state needs.

But Tufts CEO Ellen Zane makes a good case that her hospital, with rates lower than the two Partners hospitals and Beth Israel Deaconess, treats difficult cases more efficiently than the other three. If Blue Cross's current rates for Tufts, which Tufts says are 32 to 35 percent below rates for Partners, cause doctors to switch - with their patients - to the other hospitals, the overall cost to the system would also rise.

Not all insurers do as Blue Cross does. Zane argues that the state's second-largest insurer, Harvard Pilgrim, reimburses more fairly. Blue Cross pays Tufts below the average for teaching hospitals in Boston, she says, and not enough to cover her costs. Blue Cross denies that.

Blue Cross has said it is willing to pay Tufts more if the hospital would sign its new alternative quality contract, which bases a portion of payment on performance quality and not just fee for service. However, the insurer has not imposed such a condition on the higher rates it pays to doctors at Partners.

Performance-based contracts are still relatively new in this state, and might become more attractive to Tufts - and a major part of a reformed payment system - if they prove themselves in the future. Until then, Tufts deserves a better deal from Blue Cross. And the state deserves a better payment system than the current one - a monument to inequity and inefficiency.