Massachusetts insurers leading charge to control provider payments

Massachusetts health insurers are preparing a comprehensive attack to rein in payments to the state's hospitals and physician groups--even at the risk of some providers leaving their networks, reports the Boston Globe. Blue Cross Blue Shield of Massachusetts, Harvard Pilgrim Health Care and Tufts Health Plan are all on board, believing the political and social climate is right to seek modest increases, payment freezes or even payment reductions.

Blue Cross is currently negotiating with 25 hospitals (roughly one-third of its network) that have contracts that expire this October. The insurer plans to take each hospital's financial situation into account during negotiations, executives tell the Globe. Hospitals in a financially precarious position could be offered small increases, but the company will request that hospitals earning high profits from Blue Cross contracts accept payment reductions. During newly opened negotiations, Blue Cross has asked Southcoast Health System (operator of three hospitals in Fall River, New Bedford and Wareham) to accept a 10 percent cut. Southcoast hasn't released recent financial data, but the system isn't among the top-tier hospitals in terms of payment, CFO Bill Grigg tells the Globe.

It's not just providers with expiring contracts that are at risk. Blue Cross has asked Partners HealthCare, University of Massachusetts Memorial Health Care and other high-paid hospitals to accept payment reductions before their contracts expire, says Andrew Dreyfus, executive vice president for health care services. Similarly, Harvard Pilgrim wants 25 of its biggest hospitals and physician groups to reopen contracts and nix planned increases for this year. Instead, Harvard Pilgrim will offer those providers (and providers whose contracts expire Jan. 1, 2011) either payment freezes or increases topping out at 3 percent, says Rick Weisblatt, senior vice president for health services. Tufts also is seeking to reopen provider contracts and cut 2010 rate increases to 3.2 percent. The insurer will take "a very hard line" negotiating contracts that expire next year, adds spokeswoman Patti Embry-Tautenhan.

To learn more:
- read this Boston Globe article