Michigan Blues, hospitals save $50 million through value-based contracts
FHP: Do you think the healthcare industry as a whole is ready to completely shift to a value-based payment model?
Anderson: There has also been a lot of development in Michigan in terms of this accountable care concept. We have had a number of health systems hire new CEOs who have come out of the other entities who are quite committed to population health. I would say that, generally, the industry is really pivoting toward this concept and away from a fee-for-service mentality. Industry-wide, the shift is really happening and will take hold, but it's a big industry, so I think change happens slowly.
FHP: What has been the biggest challenge in your value-based reimbursement program?
Anderson: Moving hospitals into a world of pay-for-performance has really been the challenge. But once they get into the program, organizationally, there is a large commitment to population health and value delivery by the industry. Moving them from "I just need X percent going forward each year" to them committing to being accountable in order to earn dollars is where the challenge is really.
It's a pretty typical negotiation in terms of give-and-take and trying to find a way to enter into this sort of arrangement. Employers have been really involved in this conversation at large (not in the negotiations), so we try to find opportunities for both parties to enter into these arrangements. Really, it's about doing what's best for the member--having that positive outcome with the least cost possible to create the most efficient health system. We're always thinking about the member and what works best for them and how we can help them save or a better efficient. It helps the hospitals save money, too.
FHP: You mentioned that you have had a successful physician program. Has there been a difference in working with the physician and hospital communities?
Anderson: Because the hospital program is so rooted in the physician program, there have been a lot of similarities. We don't negotiate with physicians as intensely as we do with hospitals, so that conversation--trying to move the hospital off of the simple base rate increase and into accountability--is probably the biggest difference between the two. It was much more of a challenge to move the hospitals than the physicians to the value-based contracts.
FHP: What are your plans going forward? Are you planning to move more hospitals onto these contracts?
Anderson: We have roughly 85 percent of our contracted hospitals under a value-based contract at this point. That leaves small and rural hospitals where the volume isn't that big and the membership isn't that big. What we're focusing on going forward is continuing to support hospitals and delivering more opportunities for them so we can maximize our efforts in accountable care. It will be diving deeper and wider into the data, starting with low-hanging fruit and branching out along the tree. There's a lot here to accomplish, so we're not afraid there won't be work to do.
[Editor's Note: This interview has been edited and condensed for clarity.]
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