Children's Hospital Boston, Blue Cross Sign "Alternative Quality Contract"

Children's Hospital Boston, its affiliate physician organizations and Blue Cross Blue Shield of Massachusetts have signed a three-year "Alternative Quality Contract," which is a modified global payment model, according to a joint news release.

Children's Hospital Boston is the first pediatric-only hospital to sign an AQC. The hospital will not receive a rate increase this year, and it will receive modest increases in 2013 and 2014 that are below the general medical inflation rate of 3 percent.

AQCs pay hospitals and physicians for quality, not quantity, of care provided. They also reward hospitals and physicians for keeping patients healthy and effectively managing chronic illnesses, similar to a shared savings program.

The contract is expected to save $115 million on healthcare costs between 2010 and 2014, according to the release.

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