Health Care Group Represents Children’s Hospital Boston in Groundbreaking Contract

In an agreement sure to become a model for pediatric hospitals throughout the nation, Children’s Hospital Boston has agreed to a three-year contract with Blue Cross Blue Shield of Massachusetts in an effort to contain health care costs.

A Ropes & Gray health care team represented Children’s Hospital in the contract negotiations. The contract is believed to be the first of its kind in the nation involving pediatric care.

The agreement means Blue Cross won’t pay the hospital any more money this year and will be reimbursed at an agreed-upon rate in the second and third years of the pact. The reimbursement rates were not disclosed, but both parties said they are below the current 3 percent rate of medical inflation. Children’s Hospital and its physicians also will begin accepting global payments and establish a budget for patients’ care rather than billing for each visit and procedure.

Specialty hospitals such as Children’s Hospital Boston were considered unlikely to join the new global payment plans being offered by insurers because the criteria insurance companies were using to reward health care providers favored adult care. But Ropes & Gray’s team helped negotiate an accord by modifying the insurer’s “alternative quality contract” so it would include measures for outcomes more associated with pediatric care.

Children’s Hospital is a 395-bed teaching hospital affiliated with Harvard. Blue Cross Blue Shield of Massachusetts is the state’s largest health insurance provider with 2.8 million policyholders.