Children’s Hospital, 3 health plans push cost-control effort

The goal, says Children's Hospital's Sandra Fenwick, is lower costs with the same or higher quality. The goal, says Children's Hospital's Sandra Fenwick, is lower costs with the same or higher quality.
By Robert Weisman
Globe Staff / November 4, 2009

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Children’s Hospital Boston has agreed to limit increases in fees it charges the state’s major health insurers next year as part of a larger push to control the rise in pediatric health care costs.

In exchange, the three health plans - Blue Cross-Blue Shield, Harvard Pilgrim Health Care, and Tufts Health Plan - along with the state’s Medicaid program, will contribute a portion of their savings, about $10 million in total, to a fund that will enable Children’s Hospital to accelerate pilot programs aimed at providing better care at lower costs.

One program gives doctors immediate feedback on the success of treatments. Another explores ways to expand the range of services provided by primary care physicians, potentially enabling them to handle ailments like headaches and asthma without having to refer patients to specialists. A third is pioneering new payment models for pediatric care as state lawmakers consider revamping the current payment system.

“We’re trying to look at the efficiency of these kind of services that are delivered to patients,’’ said Children’s Hospital’s president, Sandra L. Fenwick. “Hopefully, over time we’ll be developing not only lower-cost health care, but also health care of the same quality or higher quality.’’

Andrew Dreyfus, executive vice president at Boston-based Blue Cross and Blue Shield of Massachusetts, the state’s largest health insurer, said the Children’s Hospital arrangement is the first in Massachusetts in which a hospital and its physicians voluntarily agreed to reduce fees and target some of the savings to boost effectiveness.

“The Holy Grail that everyone’s been after is how do we lower costs and improve care at the same time,’’ Dreyfus said. “This gives us a great opportunity to try to do that in a pediatric setting.’’

Children’s Hospital, which hosts the world’s largest research operation based at a pediatric center, has begun funding some of the pilot programs on its own over the past 18 months and will still contribute to what it calls a “collaborative clinical effectiveness fund.’’

The hospital also will be forming a 10-member advisory committee for the pilot programs, consisting of representatives of each of the health insurers and the Massachusetts Department of Health and Human Services, which oversees the state’s Medicaid program, along with the hospital and its physicians group. “If we can get everyone to the table, we can harness all of their expertise,’’ Fenwick said.

Forming a partnership between a hospital, its doctors, and a consortium of payers is a novel approach to controlling costs, said Marc A. Bard, managing director of Navigant Consulting in Needham, who has advised Children’s and other hospitals on health care issues.

“This is quite innovative,’’ Bard said. “What they’re looking at is making the fundamental trade-off that up to now hasn’t been made: investing in prevention of illness on the front end to save money on the back end. There is now ample evidence that paying for the better coordination of care up front will reduce the need for hospitalization.’’

Fenwick said hospital officials approached the health plans over the summer to propose the plan. Under the arrangement, the hospital will curb its rate of fee increases for doctor visits, tests, and surgical procedures between 50 and 75 percent during the coming year. The precise amount varies across categories of care, insurance plans, and insurers, each of which has its own contracts with Children’s.

Robert Weisman can be reached at