Childrenās, Blue Cross deal curbs payments
The Boston Globe
January 24, 2012
Children’s Hospital Boston has agreed to a three-year contract with Blue Cross Blue Shield of Massachusetts…
Perhaps most important, Children’s and its doctors groups will accept global payments for the first time, meaning they will be given a budget for patients’ care rather than billing for each visit and procedure.
“The contract is completely aligned with our aggressive and comprehensive efforts to take costs out of the system, while also improving quality,” said Children’s president Sandra Fenwick.
Until recently, it was thought unlikely that specialty providers such as Children’s, a 395-bed teaching hospital that is a national leader in pediatric research and training, would join the new global payment plans being offered by insurers.
Fenwick said the deal makes Children’s the first pediatric hospital in the nation to take global payments instead of traditional fee-for-service reimbursements. The contract also covers the Children’s Physicians Organization, made up of 959 specialists, and the Pediatric Physician Organization at Children’s, which includes 279 primary care doctors.
Comment:
By Don McCanne, MD
Under a well designed single payer system, hospitals would be funded through global budgets, much like police and fire departments, libraries and other civic institutions. Single payer eliminates the need to provide complex, itemized billings for each and every patient to any of hundreds of third party payers. The hospitals are simply paid a global fee that covers all of their costs for the year. As Canada and other nations have shown, global budgeting dramatically reduces the high costs of the administrative excesses that U.S. hospitals face.
Blue Cross Blue Shield of Massachusetts has now negotiated the first contract with a pediatric hospital that they say uses global budgeting. So can we use this as an experiment to prove that global budgeting will work in the United States? Unfortunately, no.
This contract has almost nothing in common with global budgeting under a single payer system. A global budget limited to one insurer does not place the entire hospital under a single global budget. Far from it. They still have to interact with all other payers in our fragmented financing system. Further, the products and services provided to Blue Cross Blue Shield patients must be segregated and itemized separately to know the amount of the budget to be negotiated. The uncertainties on how to allocate various hospital costs also can result in inequities amongst the various payers, likely making Blue Cross Blue Shield a winner while other payers lose.
When we are told later on that we do not want hospitals globally budgeted under a single payer system because it did not work for Children’s Hospital Boston, be prepared to answer that this was not global budgeting. This was merely another individual contract between one hospital with its physicians’ organizations and one insurer, under a fragmented financing system in which it was impossible to achieve the efficiencies of globally budgeting of the hospital’s entire costs.
We can even invent a term based on what this process is. It is “segregated budgeting.” We can make that a pejorative term by demonstrating that it is merely another insurer gimmick in our dysfunctional system of financing health care. Let’s keep the definition of “global” clean, and not let the insurers steal it from us.