Blue Cross Blue Shield of Michigan and seven health organizations will share financial risk for patient care and health

First wave of new reimbursement contracts will transform how patient health is managed and paid in Michigan

News provided by

Dec 11, 2019, 16:00 ET

DETROIT, Dec. 11, 2019 /PRNewswire/ -- Together with seven major Michigan health organizations representing roughly 30 percent of our total Commercial PPO and Medicare Advantage market, Blue Cross Blue Shield of Michigan today announced a transformative new payment relationship through which accountability for cost, quality, efficiency and patient outcomes are shared by all.

The new payment model, "Blueprint for Affordability," advances Blue Cross' decade-old, value-based reimbursement approach into "financial risk" contracting. Under this approach, health systems and physician organizations have agreed to annual targets for the cost of providing care to Blue Cross members. Aggregate costs that come in below those financial targets will result in additional financial rewards for the provider organizations involved. If costs cannot be managed within the target, the provider organization will rebate Blue Cross, and ultimately its customers, a portion of the amount spent beyond the target. This enables costs to be predictable for Blue Cross customers, and incentivizes the provider organizations to improve the cost, quality, efficiency and coordination of patient care delivery.

"Blueprint for Affordability is a transformative shift in the way we approach the management of health care costs. This first wave of provider partners are true leaders in their industry – and courageous for stepping up and joining us in this bold new approach to promote quality and affordability," said Blue Cross Blue Shield of Michigan President and CEO Daniel J. Loepp. "Together with these health organizations, and others we hope will come aboard soon, Blue Cross seeks to permanently change the trajectory of health care costs in Michigan and make health care more affordable for people and employers."

This premier group of Michigan health systems and physician organizations have agreed to join Blue Cross in tackling the skyrocketing cost of health care by signing risk-sharing agreements:

Ascension Michigan (Genesys PHO, Partners in Care, St. Mary's PHO)
Henry Ford Health System
Michigan Medicine
Oakland Southfield Physicians
The Physician Alliance
Trinity Health – Michigan (Saint Joseph Mercy Health System, Mercy Health, Mercy Health Physician Partners, IHA)
United Physicians

"Health systems and physician organizations that sign risk-sharing contracts will be reimbursed according to how well they manage the health outcomes and total cost of care they provide to their patients, potentially impacting millions of Blue Cross members," Loepp said. "They will realize the financial rewards of success and assume some portion of the financial risk for cost overruns. I'm confident that each of the partner organizations standing with us today has the expertise, talent and dedication to be successful."

With Blueprint for Affordability, Blue Cross is incorporating better data and reporting to ensure health organizations have the right tools, capabilities, and resources to manage their patient populations more effectively and efficiently.

Over time, Blueprint for Affordability will contain health care costs and promote insurance affordability as providers improve the patient experience and:

Increase the quality of care for patients
Avoid unnecessary tests, scans and emergency room visits
Reduce complications and rehospitalizations
Better coordinate patient care across all points of service

"This robust, value-based payment strategy is the next step in our collective journey away from the traditional fee-for-service model, which has prioritized volume over value and driven up costs over decades," Loepp said. "It's a model that has been endorsed by the Centers for Medicare & Medicaid Services, and is working in other markets including Massachusetts and New Jersey."

The risk-sharing agreements will be effective January 1, 2020 and will cover Blue Cross Commercial PPO and Medicare Advantage PPO plans. Agreements are five years in duration.

Blue Cross and provider partners have been pioneering the shift to value-based care in Michigan since 2005. Through more than 50 Value Partnerships initiatives, including the nation's leading Patient-Centered Medical Home program, Blue Cross saved $2.2 billion in medical costs. This has translated to nine premium reductions for small group customers over the past four years and moderation of rates in the individual and Medicare Advantage markets.

For more information, visit BlueprintForAffordability.com.

Blue Cross Blue Shield of Michigan, a nonprofit mutual insurance company, is an independent licensee of the Blue Cross and Blue Shield Association. Blue Cross provides and administers health benefits to more than 4.7 million members residing in Michigan in addition to employees of Michigan-headquartered companies who reside outside the state. The company has been committed to delivering affordable health care products through a broad variety of plans for businesses, individuals and seniors for 80 years. For more information, visit bcbsm.com and MiBluesPerspectives.com.