Tufts Medical Center and its doctors group say they will stop doing business with Blue Cross Blue Shield of Massachusetts on Jan. 17 because the two sides can’t agree on a new contract. The move could force tens of thousands of Blue Cross members to change doctors and compel employers across Massachusetts to consider switching to another insurer.
Blue Cross disclosed the termination notice yesterday as it prepared to send letters to about 55,000 employers and other customers alerting them to the Tufts threat, which came as increasingly tense contract negotiations stalled Monday night.
“This is confusing and disruptive,’’ said Amy Whitcomb Slemmer, executive director of Health Care for All, a Boston advocacy group. “We have essentially a train wreck that has nothing to do with the quality of health care, but is all about escalating costs. In their failure to reach agreement, Tufts and Blue Cross are affecting people’s care.’’
Bill Vernon, Massachusetts director of the National Federation of Independent Business, a small-business group, said he hopes the two sides can resume talks and reach an agreement that will keep Tufts Medical in the Blue Cross network. “Our members are trying to run their businesses,’’ Vernon said. “They’re not experts in insurance, but they’re going to have to deal with this.’’
The contract dispute comes as hospitals are bracing for likely reimbursement cuts from state and federal health insurance programs. At the same time, insurers are under mounting pressure from consumers and regulators to reduce premiums.
The contract governs how much Blue Cross - the state’s largest health insurer - pays Tufts and its doctors for patient care. If it’s voided in January, employers who now offer Blue Cross insurance would have to decide whether to present employees with alternative plans that cover patients of Tufts and its doctors group. Otherwise, about 88,000 Blue Cross members who have Tufts-affiliated primary care physicians would have to change their doctors by mid-February and the insurer would no longer cover members’ visits to Tufts Medical.
Tufts has about 1,500 doctors, including 500 who work there, and another 1,000 affiliated primary care doctors in various communities.
The health care provider initially issued a six-month termination notice in April, in anticipation of difficult contract negotiations. The notice, which was not made public until yesterday, was later extended until January, but Tufts refuses to extend it further.
Tufts chief executive Eric Beyer said Blue Cross walked away from the bargaining table Monday after Tufts made a revised contract proposal. He said he was “very surprised’’ by the insurer’s decision to go public with the termination notice because he believed progress was being made.
Blue Cross said it remains committed to working toward a contract agreement. The insurer said its chief executive, Andrew Dreyfus, invited Beyer to a meeting yesterday morning, but that he declined. Tufts said Beyer could not go because he was busy, but would be available to talk with Dreyfus today.
Jay McQuaide, senior vice president for Blue Cross, said it is contractually obligated to notify members and customers 60 days in advance if a hospital or physicians group is leaving the insurance network.
Tufts Medical is the major teaching hospital of Tufts University and Boston’s sixth largest employer. But for years the hospital has struggled financially, in part because it lacks the negotiating leverage of Harvard-affiliated rivals such as Massachusetts General Hospital, Brigham and Women’s Hospital, and Children’s Hospital Boston.
Three years ago, a Boston Globe Spotlight Team series reported that Blue Cross pays those hospitals an average 30 percent more than what other medical centers receive for similar care. The payment disparities were later documented by Attorney General Martha Coakley’s office. Coakley’s most recent report, in June, showed that Blue Cross pays Tufts and Boston Medical Center, a Boston University affiliate, far less than other Massachusetts teaching hospitals - and less than many community hospitals as well.
The contract issues facing Blue Cross and Tufts include details of fee-for-service coverage at the hospital and so-called global payments given to Tufts-affiliated doctors belonging to the New England Quality Care Alliance. But the chief stumbling block appears to be disagreement over how the insurance payments will be distributed.
Both parties said they have agreed in principle to a contract that would give the hospital and doctors in the Tufts network annual increases of about 3 percent, less than what they initially wanted. But they remain at odds over Blue Cross’ insistence on restricting how Tufts can direct its payments. The medical care provider wants more of the money to go to the hospital, while Blue Cross wants to boost doctors working under its global payment plan, which it has been pushing as a way to slow rising health care costs by putting providers on a budget.
“Our priority is affordability,’’ McQuaide said. “We can’t go back to the situation where we give large increases to hospitals.’’
Beyer, however, said only one-sixth of Tufts’ business involves global payments from Blue Cross. “The underpaid party here is the hospital,’’ he said. “It needs the resources to do the job we want to do for the patients we serve. The doctors believe they are paid fairly. If Blue Cross is willing to give us money, we should be able to determine where it goes.’’
Nancy Turnbull, associate dean at the Harvard School of Public Health, said Tufts’ request for 3 percent increases seems “very much in line’’ with what other providers such as Partners HealthCare System and Children’s Hospital have received in recent contracts. And she noted that those providers already were getting higher reimbursements than Tufts.
Turnbull said the dispute underscores why the government needs to get more involved in setting payment rates.
This isn’t the first time Tufts and Blue Cross have clashed. A contract showdown in 2009 also could have forced patients to change insurers or hospitals. Tufts and its affiliated doctors eventually agreed to sign on to the insurer’s global payment contract, in exchange for a raise.
A similar dispute erupted in 2000 between Partners HealthCare and Tufts Health Plan, which threatened to freeze out 925,000 Tufts members from Partners hospitals, including Mass. General and Brigham and Women’s. In that case, Partners forced the issue, saying it could no longer participate in Tufts Health Plan because the system was losing millions treating the insurer’s members. Tufts Health Plan eventually agreed to give Partners sizable fee hikes.
Robert Weisman can be reached at weisman@globe.com, Liz Kowalczyk at kowalczyk@globe.com.