Insurer in deal to curb its rates

Increase would slow in Partners, Blue Cross accord

September 14, 2011|By Robert Weisman, Globe Staff

I hope other providers will follow suit to help provide relief for families…

Partners HealthCare System Inc. is close to reaching an agreement with Blue Cross Blue Shield of Massachusetts that could provide relief to tens of thousands of insurance customers by slowing the rate of their premium increases, potentially by nearly a quarter of a billion dollars.

A preliminary understanding calls for Partners hospitals to accept $80 million less in reimbursements annually for the next three years under a new contract, according to business and government officials briefed on their plans. The officials spoke on condition of anonymity because they weren’t authorized to discuss the plans.

Employers and individuals who buy Blue Cross insurance covering Partners hospitals would still pay more under the proposed contract, but the increases would not be as much as they would have been otherwise. Annual premium increases that were projected at 5 to 6 percent for 2012 through 2014 would be pared to between 2 and 3 percent, for a total savings of about $240 million during that period.

The contract would also shift the way Partners hospitals are reimbursed, giving them budgets for patient care rather than paying them for each visit and procedure.

Blue Cross has been moving health care providers to such “global payment’’ systems under the so-called alternative quality contract it rolled out in 2009. Now, the nine area hospitals run by Boston-based Partners - including Harvard-affiliated Massachusetts General and Brigham and Women’s in Boston- will join that plan. They are among the state’s highest-paid hospitals.

A cost-savings agreement between the state’s largest hospital network and its biggest health insurer is sure to reverberate across the Massachusetts health care industry at a time when Governor Deval Patrick and state lawmakers have introduced legislation aimed at reining in premium increases and changing the way hospitals are paid by insurance companies. Partners is also negotiating new contracts with two other insurers, Harvard Pilgrim Health Care and Tufts Health Plan.

At all three companies, Partners has agreed to reopen existing contracts that were scheduled to expire next year, in effect tearing up the last year of those contracts and negotiating new ones. Partners last year said its goal was to free up $40 million in cost savings that would be used to reduce premiums for small businesses and individuals insured by all three health plans. While a $240 million savings agreement would far exceed that target, the savings would come in the form of lower rate increases rather than refunds.

Spokesmen for Partners and Blue Cross would not confirm yesterday that the two companies had reached an understanding on moderating premium rate increases, stressing that no deal has been signed.