Blue Cross, Tufts break fee deadlock
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A high-stakes showdown between Tufts Medical Center and the state's largest healthcare insurer, which could have forced thousands of patients to change insurance coverage or hospitals, ended yesterday when the hospital and Blue Cross reached an agreement that allowed both sides to claim success.
Tufts and its affiliated doctors said they will join Blue Cross's "alternative quality contract," which the insurer has been pushing as a way to slow the spiraling cost of healthcare while improving treatment. Under the deal, Tufts and its doctors will get a raise with the potential to earn even more money if they reduce the costs of treatment and reach ambitious quality goals.
Tufts Medical Center had warned 60,000 patients that Tufts doctors would no longer accept Blue Cross Blue Shield HMO insurance after Jan. 31, charging that Blue Cross was not paying a "reasonable rate" for the medical care of its HMO members. But both sides were under mounting pressure to resolve the dispute from confused patients and doctors, and Attorney General Martha Coakley, who oversees the state's nonprofit hospitals.
"Today's agreement is another example of how our community can achieve quality care for patients and fair payments to providers while addressing the problem of steeply rising healthcare costs," said Blue Cross, Tufts Medical Center, and Tufts doctors in a joint statement issued after the agreement was reached shortly after 2 a.m. yesterday. Under the agreement, all parties agreed to provide no details or give interviews to the media.
The deal ends the most contentious healthcare contract fight in Massachusetts in nearly a decade, a fight that underscored the yawning payment gap that has grown between the state's most powerful hospitals and everyone else.
A series by the Globe Spotlight Team recently revealed that Blue Cross pays hospitals such as Massachusetts General, Brigham and Women's, and Children's Hospital at least 30 percent more, on average, than other major teaching hospitals even though there is no clear evidence that the quality of their care is better. The series prompted Governor Deval Patrick to call together hospital and insurance executives last week to look for ways to curb the runaway cost of insurance generally.
Tufts, which lacks the bargaining clout of its more famous rivals, has seen its insurance payments gradually fall far behind. Though Tufts Medical Center is the major teaching hospital of Tufts University as well as Boston's sixth largest employer, the hospital has struggled financially for years, in part because the hospital loses money on major insurance contracts. Tufts officials estimated that their 750 physicians are typically paid 20 percent to 40 percent less for each procedure than doctors at other Boston teaching hospitals even though quality measures are comparable.
Marc Bard, a hospital management consultant with
"At first, this was about inequity in payments," said Bard. "But ultimately, it was about unsustainably low reimbursement [for Tufts]. It just couldn't continue."
Zane wanted a 9 percent a year raise from Blue Cross for Tufts doctors, but Blue Cross balked, noting that other physician groups were getting closer to 5 percent a year raises under contracts negotiated this year. If Tufts wanted to earn more, Blue Cross argued, the hospital and its doctors should accept the new-style contract that makes the physicians and doctors more responsible for cost control.
Instead, Zane gambled on Jan. 5, announcing plans for Tufts doctors to stop accepting Blue Cross, the most popular brand of private health insurance, a move that could have cost Tufts millions in lost business. But the risk was considerable for Blue Cross as well, causing public controversy at a time when the insurer is negotiating contracts with businesses across the state.
Bard said he did not know the details of the new contract, but, based on his experience negotiating recent contracts for other hospitals, he believes Tufts could get a pay increase from Blue Cross of up to 20 percent over the next three years.
"Tufts comes out of this in a much stronger position," he said.
Tufts doctors announced the settlement, which covers both Tufts doctors and the hospital itself, in an e-mail to employees, patients, and supporters late last night. "Our physicians and Blue Cross Blue Shield are extremely glad that patients no longer have to worry about this situation and can continue to count on the caregivers they know and trust," read the joint statement issued by doctors at the Chinatown hospital as well as community physicians affiliated with Tufts.
Separately, Cleve Killingsworth, chief executive of Blue Cross Blue Shield of Massachusetts, thanked members for their patience during the 12-day dispute, describing the settlement as a positive step for healthcare in Massachusetts.
Conventional contracts pay doctors a fee for each procedure they perform, giving them little incentive to control costs.
But Blue Cross has been pushing an alternative contract that gives hospitals and doctors a budget for each patient, allowing them to make more money if they can reduce the overall cost of providing care while still meeting quality goals.
Until recently, Blue Cross has struggled to persuade doctors and hospitals to try the new system, announced with much fanfare in early 2008.
But Mount Auburn Hospital in Cambridge and its doctors announced plans to sign the alternative contract last week. Hampden County Physician Associates, a doctors' group in Springfield, also announced they would sign the contract.
"The more the healthcare system can move to alternative payment agreements like this one, the greater opportunity we have to sustain the promise of health reform and achieve affordability for patients, employers, and the community at large," said Killingsworth in his joint statement with Tufts officials.
