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Michigan Blues, hospitals save $50 million through value-based contracts

Physician-hospital collaborations identify opportunities to work together

Stephen AndersonBlue Cross Blue Shield of Michigan has been a leader in the value-based payment movement, with many contracts already in place with its physicians. Now, the insurer is expanding its focus on value to hospitals, having signed value-based reimbursement agreements with 18 health systems in the state, including 71 hospitals in all.

The value-based contracts pay hospitals for covered services but give participating doctors incentives to work closely with the hospitals to reduce unnecessary care, including unnecessary tests, procedures, hospitalizations and emergency department visits. When the hospitals collaborate with their physicians to provide quality, efficient and effective care, Blue Cross rewards everyone involved with a share of the savings.

So far, five of the contracted health systems have shared $50 million in total savings with Blue Cross for services rendered in 2013.

To learn more about Blue Cross's value-based contracting, FierceHealthPayer spoke with Steve Anderson (pictured right), Blue Cross vice president of provider contracting and network administration, in an exclusive interview.

FierceHealthPayer: Could you describe the value-based contracts you have in place?

Steve Anderson: The overarching call to action here was on behalf of employers asking for the provider community to deliver more value. Employers were just starting to ask providers to be accountable for collaboration with the physician community and finding opportunity to reduce unnecessary medical use.

On the physician side, we've been using value-based reimbursement methods for about 10 years. We've been strategizing how to bring the hospital community along. In 2012, we really started those conversations in earnest with a couple of really big systems in Michigan for them to commit to delivering value, being accountable for the overall cost and committing to working with their physician partners at the population health level.