Blue Cross and Lifespan rethink hospital payments

Providence, RI – Rhode Island's biggest hospital chain and its largest health insurer have a new business agreement aimed at eventually reducing the cost of health care.

The one year contract between Lifespan hospitals and Blue Cross Blue Shield of Rhode Island changes the way the insurer pays for hospital visits. Instead of per procedure, Blue Cross will pay a flat fee for treating a particular condition.

Health Insurance Commissioner Chris Koller says the effect of the changes will be gradual. "Over time this should help to reduce a rate of increase for health care costs, but not next year," he says "It's the kind of payment reform that over time should help.

Koller says the current payment model- where the more medical procedures doctors do, the more they get paid- creates an incentive for providing excessive and expensive medical care.

The contract also ties increases in Lifespan's prices to the rate of increase in Medicare payments.

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