7 MI Providers Take on Shared Risk Payment Model with Blue Cross

Seven healthcare organizations in Michigan recently signed on to participate in a new shared-risk payment model with Blue Cross Blue Shield of Michigan that will hold the providers accountable for costs of care, according to an announcement from the insurer. 

The five-year risk-sharing agreement, Blueprint for Affordability, will come into effect January 1, 2020, and affect about 30 percent of Blue Cross’ commercial PPO and Medicare Advantage PPO plans. The seven healthcare providers include Ascension Michigan, Henry Ford Health System, Michigan Medicine, Oakland Southfield Physician, The Physician Alliance, Trinity Health-Michigan, and United Physicians.

“Blueprint for Affordability is a transformative shift in the way we approach the management of healthcare costs. This first wave of provider partners are true leaders in their industry, and courageous for stepping up and joining us in the bold new approach to promote quality and affordability,” Daniel J. Loepp, president and CEO of Blue Cross Blue Shield of Michigan, stated in the announcement.

Through Blueprint for Affordability, the insurer aims to advance its “decade-old, value-based reimbursement approach into ‘financial risk,’” the announcement stated. Through the new shared risk model, the seven healthcare organizations agreed to meet annual targets for the cost of providing care to certain Blue Cross Blue Shield of Michigan members. If costs come in below the financial goals, Blue Cross will reward that specific provider. However, if the providers fail to meet the target, they will have to repay the insurer a portion of the amount spent beyond the target.

Over time, this payment relationship will also avoid unnecessary tests, scans, and emergency room visits, reduce complications and rehospitalizations, and better coordinate patient care across all areas.

“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 CMS and is working in other markets including Massachusetts and New Jersey.”

Although adoption rates are low despite efforts to hold providers accountable for the cost of providing care, shared-risk models in healthcare led to total costs of care being 3.5 percent lower in 2017. And providers in risk-sharing arrangements in California scored 9.2 percentage points higher on average clinical quality performance rates compared to providers taking on no risk via fee-for-service, according to a report from the California Regional Health Care Cost & Quality Atlas.

But providers must revamp their capabilities in order to take on these contracts and pay attention to the adequacy of claims reimbursement rates and data sharing arrangements, according to a September survey from Premier. When respondents were asked to rank their top three barriers standing in the way of moving to risk-based models, reimbursement inadequacy and timeliness of data were the first two, respectively, followed by competing or higher change priorities and access to data tied for third. 

Blue Cross is already ahead and taking this step and will incorporate more accurate data and reports to guarantee health organizations have the correct tools, capabilities, and resources to increase the quality of care for patients and their families.

Representatives from Henry Ford Health System and The Physician Alliance voiced their company’s respective opinions on Blueprint for Affordability during a press call last week. 

Robin Damschroder, executive vice president and chief financial officer at Henry Ford said that this program builds on Blues’ existing incentive programs and helps to reduce costs and improve patient care. “We are very comfortable negotiating contracts with upside and downside risk-sharing,” said Damschroder.

President and chief executive officer of The Physician Alliance said the group was extremely supportive of the Blueprint program. “The Blueprint for Affordability, from our perspective, is just the next phase in the evolution of our partnership, with Blue Cross Blue Shield of Michigan. This is something we always assumed would come,” he stressed.