BCBSM extends value contract

May 6, 2013

Two healthcare giants in Michigan enter three-year deal to improve cost trend and reinforce infrastructure

Blue Cross Blue Shield of Michigan (BCBSM) and Trinity Health-Michigan are switching from a traditional fee-for-service payment model to a value-based reimbursement model that focuses on hospital-specific cost reductions and population health improvement.

The arrangement will provide hospital funding for infrastructure improvements needed to better coordinate care between the hospitals and their physician partners. Hospitals will be rewarded with a share of the savings achieved when physicians successfully coordinate care.

For example, when physicians enable efficient and effective treatments, eliminate redundancies and errors in care and prevent rehospitalizations, the savings will be shared between the health plan and provider system.

“We’re incentivizing them to lower cost so we can ultimately affect the overall affordability of healthcare,” says Susan Barkell, BCBSM senior vice president for healthcare value for BCBSM. “One way to do that is by helping to reduce that cost factor and encourage hospitals to continue to work on their overall cost.”

The arrangement spans a three-year period and is a part of Trinity Health's existing agreement from 2012 to partner with BCBSM on the new reimbursement model. BCBSM and Trinity are also creating a shared performance management system that integrates clinical best practices into care delivery to support enhanced performance.

For example, Trinity Health has worked since 2012 with provider partners on an infrastructure plan that includes an all-patient registry system allowing caregivers to have access to patient records. This improves coordination of care, care quality and helps avoid misuse and overuse. 

“We’ve worked with physicians for about 10 years on the same problem-the coordination and alignment of care-to make sure that those who are part of the actual delivery of care understand where the patient is and what procedures the patient has had so there’s alignment and coordination,” Barkell says. “Ultimately, what happen is, the right care happens at the right time, which helps eliminate waste in the system.”

Trinity and its physicians will be able to reduce overall cost but increase their margins as well, she says.

The value-based reimbursement model will be launched at Mercy Health Partners hospitals and Saint Mary's Health Care in west Michigan. Other Trinity Health hospitals will move under the arrangement in July.