Blue Cross says shared-risk plan will rein in costs for Michigan patients

Value-based health care reimbursements traditionally offered incentives to doctors who provide the best care, but BCBS said that new agreements in Michigan will penalize provider groups whose physicians deliver less-than-top-notch care. (Shutterstock image)

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Thousands of Michigan patients who visit their doctors beginning Jan. 1 will do so with a new set of insurance calculations in the background guiding their care.

If all goes as promised, that will mean better health and lower premium costs to customers in the long run.

That’s according to Blue Cross Blue Shield of Michigan and leaders from seven of the state’s largest health providers. New health plans between the Blues and the providers will incentivize doctors to coordinate care for better outcomes, but will also penalize them for care that’s less than top-notch — a new component that one doctor called a “game changer.”

The new shared-risk payment model, called “Blueprint for Affordability,” was announced Wednesday at a media call organized by Blue Cross.
The Blues and each of the health providers have agreed-upon cost targets to provide care to Blue Cross patients over the next five years. 

By analyzing costs, Blues will determine whether the provider systems — Detroit-based Henry Ford Health System and Ann Arbor-based Michigan Medicine, among them — get bonuses for their good work and cost-cutting, or be forced to pay rebates for exceeding costs and falling short on patient care.

That will pressure the provider systems, in turn, to pressure their individual physicians to follow best care guidelines, skip unnecessary tests, and coordinate with other providers.

The new plans mark “the first time we're adding downside financial risk in the equation,” said Stephen Carrier, BCBS senior vice president of network management and provider partner innovation.

The cost savings of the plans could be “significant,” he said, but “we don’t have a crystal ball to know how much this will save.” Ultimately, Blue Cross will pass along the savings to customers, he said.

“When we bend the trend down, when we lower cost, … our provider organizations’ patients will actually see that in their premiums — whether that's lower premiums, or a slower growth in the cost of their premiums, or in the richness of their benefits,” he said.

Conversations about health care costs in recent years have become increasingly focused on shifting provider payments from a more traditional fee-for-service type of plan to ones with a heavier focus on value.

But measuring the quality of health care and staking insurance reimbursements and penalties on those metrics can complicated. 

Most states, including Michigan, are testing different models that move Medicare and Medicaid reimbursements toward more tightly managed care that demonstrate value for the consumer. 

The result is a  “range of approaches and significant variation in the scope, leadership commitment, and resources devoted to the transition from fee-for-service to value-based reimbursement,” according to a report earlier this year by Change Healthcare, a healthcare technology and analytics company.

Managed care is certainly not new to the commercial market, though it traditionally works through incentivizing providers, not penalizing them. In Michigan, for example, Blue Cross now pays a 35 percent boost in insurance reimbursement — hundreds of dollars per procedure — to doctors who follow tight, new prescribing guidelines that reduce the number of pain pills sent home with patients after surgery as a way to combat the state’s opioid crisis.

“Any step away from fee-for-service reimbursement to one that rewards clinicians for doing things that make individuals and populations healthier is an important step forward,” said Mark Fendrick, a primary care physician and researcher who studies the quality and cost of medical care as director of the Center for Value-Based Insurance Design at the University of Michigan.

Penalizing providers is a lot more tricky, Fendrick said. 

New pacts between Blue Cross Blue Shield of Michigan and seven health providers could provide “significant” savings that the insurer can use to hold down future premium hikes, said Stephen Carrier, the insurer’s senior vice president of network management and provider partner innovation.  (Courtesy photo)

While it makes sense to penalize doctors for tests that have been deemed tohave little clinical value to most patients, it’s unfair to hold doctors fully accountable for patients’ actions — a patient who remains sick because he or she didn’t fill the prescription the doctor ordered, for example.

Under the plans announced Wednesday, a traditional fee-for-service transaction still takes place. But layered on top is a score card of patient outcomes.

“It comes down to the physician organizations — whether it be hospitals or independent organizations — have to be monitoring what's done,” said Dr. Jerome Frankel, chief medical director of Southfield-based Oakland Southfield Physicians, who called the plans a “radical new change” for health care.

He said doctors now will be paid for doing things they often aren’t reimbursed for — extra time in patient conversations to encourage annual screenings or a flu shot, for example.

“The bottom line is, the doctor can't say ‘Oh, I do all this stuff and I'm not getting paid enough,’” he said.

In better coordinating care, doctors will be able to reduce unnecessary tests, scans and emergency room visits and drive down complications and rehospitalizations, Blue Cross officials said.

The new agreements also will force doctors to think outside the time limits of single appointments and focus on long-term, preventative health, both doctors and Blue Cross officials said Wednesday.

“If you have a female patient who was due to have a mammogram and a pap smear, and this was not done… at the end of the year, this is going to come up: “Doctor, you have not done this [and the physician organization] is going to be penalized,” Frankel said.

That’s a “game changer,” he said.

“In my 45 years of practice, things have radically changed. It comes down to ‘What have you done for your patient that should have been done? If you’re not doing some of those things, you will be penalized,” Frankel said.

The new plans represent about 30 percent of the Blues’ Commercial PPO and Medicare Advantage markets. The agreements take effect Jan. 1, 2020. All told, patients in that group represent about $4 billion in healthcare spending annually, Blue Cross officials said.

The new pacts cover Blue Cross Commercial PPO and Medicare Advantage patients at Detroit-based Henry Ford Health System; Ann Arbor-based Michigan Medicine; Oakland Southfield Physicians; Livonia-based Trinity Health – Michigan, which includes St. Joseph Mercy Health System, Mercy Health, Mercy Health Physician Partners, IHA, and St. Joe's Medical Group; Ascension Michigan, which includes Genesys PHO, Partners in Care, and St. Mary’s PHO; St. Clair Shores-based The Physician Alliance; and Bingham Farms-based United Physicians, Inc.

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Al Churchill
Wed, 12/11/2019 - 8:04pm

Sorry guys. That's not enough. Health care costs in the US are double what they are in the next most expensive developed countries. An inquiry into the reason for that being the case is long overdue. While some kind of national health care system is warrented, before that occurs, it needs to be established why Americans pay through the nose for medical care.

Paul Jordan
Thu, 12/12/2019 - 11:01am

I think that one thing that is key--but easily overlooked--is that the hoped-for savings are to BCBS's "customers". These "customers" are almost always corporations, employers, or former employers. There can be no assurance that patients will see any savings.
This scheme is intended to alter physicians' behavior, but it could make patients' compliance (or non-compliance) more important in determining whether "health systems" are paid more or less under it. Patient groups that are more likely not to be compliant--such as those with educational or other deficits, or those that can't afford their co-pays and deductibles for their medications or treatment--are going to become less desirable patients under this reimbursement scheme because perhaps they can't afford to pay for needed drugs or don't fully understand what they need to do.
This could result in poorer health outcomes for groups that are already disadvantaged as far as healthcare is concerned.
The bottom line is that we need a single-payer fundamentally non-profit healthcare system that doesn't rely on entities like BCBS and for-profit healthcare corporations. Until we join the rest of the industrialized world by having a single-payer system we will continue to dink around with inadequate patchwork 'solutions' like this.

Nyla Rounds
Thu, 12/12/2019 - 1:57pm

The article did not mention Spectrum Health Services in the "pact" but I think they already practice this. Now I find out they just get money for informing me of screenings, vaccinations, etc. This would explain why I am always informed, "you're due for a flu shot", "we can get you up to date on your TDaP vaccine today". (No thanks to both) Then there's the notification on the "myhealth" system of all the screenings I am due for. Silly me, I just thought the Providers cared about my health or just wanted to add a service to increase their charge to BCBSM. (I really like the mental health doctor asked me quick question about my anxiety to which I responded "just my personality, nothing new" and they charged BCBSM for a mental health assessment).

Thu, 12/12/2019 - 2:49pm

Another profit center for BCBS. Insurance providers work for employers and the government not the consumer. This is another way to deny services and medications selected by a physician for cheaper sub par care. Your employer and BCBS are determining your medical needs and treatment not your physician. Don't be gullible please!

Thu, 12/12/2019 - 2:54pm

The way this reads. If a patient decides that they do not want a test (i.e. mammogram) the physician is penalized. Isn't it the patients decision or is BCBS now allowed to mandate health exams and get more involved in the doctor patient relationships. My records were just sent to Google by Ascension now this. My health, my choices. Stop it!!!!

J Hendricks
Thu, 12/12/2019 - 3:26pm

So now the insurance companies are going to jump their control over doctors into overdrive with deeper micromanagement and start punishing doctors for bad outcomes. Just what we need - a flock of mid-level insurance company bureaucrats dictating medicine to physicians. Just about as smart as punishing teachers for bad student outcomes. And of course “savings will be reflected in lower premiums!” (In 2018 Blue Cross Blue Shield of Michigan CEO Daniel Loepp made $19.2 million!). So guess where the savings will go!

Mike Messer
Thu, 12/12/2019 - 3:31pm

Still trying to figure out how non -medically trained personnel, (analytics) can determine what is best for any individual. Though we are all humans no one is entirely the same. One stop processes "that data shows" are typical, are not correct if the process injures one person. Since BCBS is a non-profit, trying to see where the savings will really go. What I do not need is my physicians group wasting time and resources sending out warnings to my family that we have not had a test or scan. Been through an awful lot the past 3 years and to date every time I tried to call my insurance provider it became a game of "have you tried this department, or call your system administrator." Looks more like the beast feeding itself.

Mike Messer
Thu, 12/12/2019 - 3:40pm

Just a thought, since "Obama Care" says that everyone is to be insured, what good will insurance do a person if the physician refuses to see a patient since they do not agree with all of the tests or scans that an Insurance provider feels is required, and the physicians group gets dinged for the lack of the patients adherence to the supposed standard.

Anne Baer
Thu, 12/12/2019 - 5:12pm

I very much resent this Big Brother approach to medicine. The Medical Police! It's OK for my doctor to remind me that she recommends a mammogram or other test, but the doctor should not be penalized if I do not agree. On many of these tests or vaccinations, there are various opinions as to whether they are necessary, and it is the patient who should allowed to make the final decision. It's not just older people, either. I see my younger relatives being hounded into all types of medically questionable tests by their obstetricians, and I am horrified. Some of this "medically recommended" advice is motivated by profit, NOT the patient's well-being.

middle of the mit
Thu, 12/12/2019 - 8:35pm


This article isn't about Big Brother. It is about how Private insurance companies are putting their profit over your health. They want to know everything they can about your health and then they want to PUSH you into making decisions that you may not make and help to push your PRIVATE doctor into helping push you into spending more money.

This is why we need single payer plans or Medicare for all. It will put cost controls on certain procedures. But isn't that what is needed? That is what conservatives pushed through here in this State for auto insurance reform to lower costs, Even though insurers Never paid those prices. Why won't work it with Heritage Foundation Care, where insurers DO pay those prices(with negotiated contract prices)?

NO insurer EVER pays the full price of what any doctor or hospital charges. If you don't know this, you have never used your insurance or you didn't pay attention to your bill.

America needs to stop paying shareholders and needs to start paying Attention!

Anne Baer
Sat, 12/14/2019 - 11:49am

Basically, I agree with you. Single-payer is the only remedy for this medical fascism. The last couple of years I was on Blue Cross, they kept trying to get me to sign a "contract" with my doctor that I would lose weight, or lower my blood pressure, or quit smoking, whatever. No mention of what would happen if I failed to live up to my "contract". I suspected they would have cancelled my insurance. Fortunately, I am now on Medicare, but this kind of medical policing is very scary and very dangerous. In medicine, one size does not "fit all".

Fri, 12/13/2019 - 12:36pm

I don't trust Blue Cross at all. They are profit heavy and always have been. If they can rip the public off they will. Beware!

Thu, 01/02/2020 - 10:29am

Good ol' monopolies are now controlling our economy (Comcast, DTE, phone companies, gasoline, health providers, etc.) to the point now where the tail is wagging the dog.

Monopolies don't negotiate. Just dictate and refuse to moderate prices. That's what will happen here.