Blue Cross Blue Shield of Massachusetts Walks Away From Negotiations with Tufts MC and 1,500 Community Physicians

BCBS's actions could disrupt care for thousands of patients across the Bay State

BOSTON, Nov. 15, 2011  /PRNewswire-USNewswire/ -- Tufts Medical Center and Floating Hospital for Children announced today that Blue Cross Blue Shield (BCBS) of Massachusetts has walked away from negotiations with the Medical Center and 1,500 physicians - potentially disrupting care for more than 200,000 patients across Eastern Massachusetts.

The surprise move came after Blue Cross officials walked away from the negotiating table early Monday evening, having refused to review a proposal from Tufts Medical Center. With the parties only $11 million apart on a $1.2 billion contract, Tufts Medical Center officials had been optimistic about reaching a resolution that would be good for patients and employers and fair to the Medical Center and its physicians' network, New England Quality Care Alliance (NEQCA). Tufts Medical Center was requesting an increase across its network of 3 percent, under the rate of medical inflation, and in line with modest increases given to other providers in Massachusetts.

Tufts MC has been negotiating with BCBS for more than four months to secure fair treatment from Blue Cross with regard to physician and hospital reimbursement. BCBS's actions could result in severe network interruptions for BCBS members, potentially interfering with patient care throughout the Commonwealth.  Blue Cross would also saddle employers and consumers with some $70 million in costs by forcing them to use more costly health care providers.

"We're shocked and disappointed that Blue Cross Blue Shield has chosen this threatening tactic rather than continuing to negotiate a fair contract," said Eric Beyer, president and CEO of Tufts Medical Center. "BCBS executives had made every indication that our reasonable 3 percent increase was within their parameters and agreement could be reached. We don't understand why they would walk away when we could work together to enhance patient care and save employers valuable health care dollars."

BCBS recently provided 2-3 percent increases to several of the state's highest paid providers.  

If an agreement is not reached by January 17th, BCBS of Massachusetts will no longer include Tufts Medical Center and NEQCA in its insurance coverage. Physicians in the network include primary care physicians, pediatricians and specialists from towns and cities including Lowell, Woburn, Winchester, Quincy, New Bedford, Framingham and others. These physicians care for approximately 200,000 patients who would be affected by BCBS's actions.

Patients insured by BCBS who wish to continue visiting their community physician or Tufts Medical Center should call BCBS to express their concern at 800-262-2583. There are a variety of options for patients who wish to change to a new health insurer that does not cover their physician. For additional information and to see if their physician is impacted, patients can go to or call 855-9-KEEPMD.

During negotiations BCBS demanded - upon threat of termination - that Tufts MC allocate revenue across its network in ways that were arbitrary, and failed to meet the pressing needs of the impacted hospitals and physicians so they can continue building an accountable system of care. Having an insurer dictate how a network's resources are used has severe negative implications for patients – restricting the Medical Center's ability to enhance services and address existing disparities with competitors. BCBS's proposals also tried to unfairly burden the state's small businesses by placing a disproportionate increase on HMO policies, which are primarily held by small business owners.

"An insurance company should not substitute its judgment for that of physicians and academic medical center leadership in the internal financial management of a health care organization" added Beyer. "BCBS is attempting to negatively interfere with our internal operations by dictating how we should distribute funds to our community physicians and hospital."

If Tufts Medical Center, Floating Hospital and NEQCA physicians are not in the BCBS network, the cost to the Massachusetts system would be at least an additional $70 million annually because many patients would be forced to receive care from higher cost providers. BCBS would likely have to increase employer and individual premiums significantly to cover this additional cost for care from more expensive hospitals and doctors.

"Three years ago, we were excited to join BCBS in its stated commitment to reward quality and efficiency. And we've done our part and more. Since 2008 our physicians have improved on 88 percent of the Quality Measures in the Alternative Quality Contract with BCBS and we are among the most efficient providers in Eastern Massachusetts," said Jeff Lasker, MD, a pediatrician and CEO of New England Quality Care Alliance. "Now they want to change the terms. Blue Cross has nationally touted the AQC as a cutting-edge model that pays physicians for performance, not individual services. Yet suddenly they've decided to move away from their promises and penalize high-quality providers that deliver care at lower cost."

Tufts Medical Center and its physician network have requested a modest 3 percent overall rate increase - simply keeping up with the rate of inflation. It is also well below the 5.9 percent premium increase BCBS recently lobbied the state to receive, and would have virtually zero impact on the premiums BCBS charges patients. BCBS reported $76.5 million in profits in the first half of 2011 alone.

The Medical Center is currently paid 20 to 40 percent less than other academic medical centers and is paid far less than many community hospitals in Massachusetts. Children's Hospital Boston currently receives reimbursements that are double the rate paid to Floating Hospital for Children for the same services to care for extremely complex and sick children, including pediatric trauma patients and children with cancer and serious cardiac conditions. NEQCA physicians are paid significantly less – at least 20 percent in most cases – than large, comparable practices in their markets.

"BCBS has a well established pattern of paying disproportionately, higher fees to less efficient providers," said Beyer.  "In this rapidly changing healthcare environment where the ability to provide efficient, cost-effective healthcare is so vital, Blue Cross Blue Shield is doing the citizens of the Commonwealth a disservice by continuing this harmful practice and making it virtually impossible for lower cost systems of care to compete."

"The actions of BCBS would hurt thousands of patients, physicians and small businesses in Massachusetts at the worst possible economic time," said Ted Herwig, MD, chairman of the NEQCA board and a family practice physician on Cape Cod. "It makes no sense that BCBS is refusing a reasonable and modest 3 percent increase for efficient care, when at the same time the employees of NEQCA just received notice of a massive 11.5 percent premium increase."

SOURCE Tufts Medical Center