Beaumont Health System, Blue Cross Blue Shield of Michigan and Blue Care Network Reach Agreement on Reimbursement Contract

January 6, 2012

DETROIT — Blue Cross Blue Shield of Michigan, Blue Care Network and Beaumont Health System signed a new contract today that keeps Beaumont in the hospital network that serves Blue Care Network members, increases reimbursement to the health system and institutes new performance-based standards for paying the health system in the future.    

The five-year agreement provides an increase in base reimbursement to Beaumont Health System while also committing Beaumont to a new performance-based hospital payment model sought by BCBSM. Under the new model, Beaumont will work closely with its affiliated physician organizations and BCBSM to design standards for successful patient health outcomes that will be the basis for part of its reimbursement.

"This agreement is a win-win – not for the health system or the insurer – but for our members and customers," said Daniel J. Loepp, BCBSM president and CEO. "It maintains access to Beaumont facilities for our customers and members. It commits Beaumont, Blue Cross and physicians to work together to achieve high-quality health care and the efficient use of health care dollars. It advances our efforts to deliver innovation in how Michigan pays for health care in the future."

"We are pleased to have reached an agreement that allows us to continue serving all Blue Cross and Blue Care Network patients at Beaumont," said Gene Michalski, president and CEO, Beaumont Health System. "The agreement provides us with payment rates that will help us maintain our high-quality patient care into the future. Even with a payment increase, Beaumont will remain the 'high value' choice for Blue Cross customers by offering quality that ranks among the nation’s best at a cost that’s among the area’s lowest."

The new contract moves away from the traditional fee-for-service payment approach toward an outcomes-based approach that revolutionizes the ways hospitals are paid. The new pay-for-performance contract terms sought by the Blues and achieved in this agreement represent a new standard for how Michigan hospitals are paid for services, and how BCBSM can help hospitals and physician organizations build efficient and coordinated systems of care.

The agreement includes an opportunity for infrastructure improvements needed to better integrate care services between Beaumont and its physicians groups. The performance standards that will be mutually determined by Beaumont and BCBSM will financially reward the hospital for maintaining better overall population health and ensuring the efficient use of tests and procedures.

"As a recognized leader in patient care quality and cost, we welcome the opportunity to partner with Blue Cross and with Beaumont doctors on a new outcomes-based payment model that will help set a new standard for improving and measuring quality care," said Michalski. "Because of our proven record of high quality and value, we believe Beaumont is well positioned to be a leader in developing a value-based payment system."

"It’s a new day in health care when hospitals are financially rewarded for keeping patients healthy and out of the hospital – or for not duplicating a test in the hospital because it already has been performed in the doctor's office," Loepp said. "That’s the kind of change our partners at Beaumont have joined Blue Cross to bring to Michigan health care. It will lead to improved patient health, less cost for customers and better outcomes for everyone.”

Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit and independent licensees of the Blue Cross and Blue Shield Association. For more information, visit and

Beaumont Health System is a three-hospital regional health system with more than 14,000 full-time employees, 3,000 physicians and numerous community-based medical centers in Oakland, Macomb and Wayne counties. Beaumont is the exclusive clinical teaching site for the new Oakland University William Beaumont School of Medicine.

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