Five more Michigan health systems join Blue Cross Blue Shield of Michigan in new reimbursement model focused on quality and value

Provider collaboration to improve patient care and hold down costs for employers is the goal of Blue Cross’ value-based reimbursement arrangements

Feb. 11, 2014

DETROIT – Five Michigan hospital systems have joined or are expanding their hospitals’ participation in Blue Cross Blue Shield of Michigan’s value-based hospital reimbursement model. The systems represent 24 hospitals in the state. The new reimbursement agreements are designed to evolve the focus of hospital payments toward supporting hospitals’ success in improving patient outcomes and delivering care to patients in a more coordinated, efficient fashion working in close concert with physicians and physician organizations. Blue Cross’ model has now been embraced by seven leading Michigan health systems.

“Our new approach to reimbursement puts the patient front and center and represents a new standard for how hospitals are paid,” said Daniel J. Loepp, president and CEO of BCBSM. “The hospitals joining us today in expanding this model across Michigan are on the leading edge of transforming how health care is provided. Their commitment will benefit thousands of Michigan residents by enabling us to focus on what truly matters – keeping patients healthy while keeping costs down. In a marketplace where price is paramount, we are working together to make health care more effective, efficient and ultimately, more affordable.”

New arrangements were announced between Blue Cross and:

  • Botsford Hospital, located in Farmington Hills.
  • Oakwood Healthcare, which includes its flagship hospital in Dearborn, Oakwood Heritage Hospital in Taylor, Oakwood Annapolis Hospital in Wayne and OakwoodSouthshore Medical Center in Trenton.
  • Mid-Michigan Health, which includes facilities in Midland, Gladwin, Clare and Alma.

Expanded arrangements were announced with:

  • Ascension Health Michigan, which expanded its existing reimbursement arrangement to other hospitals in its system – Borgess Medical Center, Borgess Pipp and Borgess Lee Memorial hospitals near Kalamazoo; Genesys Regional Medical Center in Grand Blanc; St. Mary’s of Michigan in Saginaw; St. Mary’s in Standish; and St. Joseph in Tawas. Ascension Health Michigan’s St. John Providence Health System already had signed a value-based reimbursement agreement with Blue Cross for its hospitals, including Providence Hospital in Southfield; Providence Park Hospital in Novi; St. John Hospital and Medical Center in Detroit; St. John Macomb-Oakland Hospital in Warren and Madison Heights; and St. John River District Hospital in East China Township.
  • Beaumont Health System has expanded its existing value-based reimbursement agreement with Blue Cross that includes its hospitals in Royal Oak, Troy and Grosse Pointe.

The new reimbursement model calls for hospitals to identify their provider partners in the community and work with them to develop and implement an infrastructure plan that includes an all-patient registry system that allows caregivers at the hospital and in the physician offices to measure an individual’s health performance against similar populations. This approach promotes coordination of care among all providers who treat the same patient which improves care quality, and helps ensure the right care is given at the right time. The hospitals also will work with their physician partners to develop work plans aimed at improving the health of the patient population they serve.

Previously, hospital reimbursement placed sole emphasis on the long-standing fee-for-service reimbursement model, which pays hospitals for every service performed. By moving toward value-based reimbursement, Blue Cross rewards the hospitals with a share of the savings achieved when hospitals and physicians coordinate the delivery of efficient and effective care, eliminate re-use and over use of care, and prevent unnecessary re-hospitalizations.

“Instead of paying solely for the volume of services provided, we can now leverage our reimbursement approach to incentivize collaboration and focus on rewarding patient outcomes,” said Susan Barkell, senior vice president for Health Care Value at BCBSM.

“This truly is an exciting and innovative approach and we’re looking forward to working with our hospital partners to provide the most effective care possible at lower costs,” Barkell said. “The commitment from these hospitals to evolve the traditional payment model in ways that support a stronger focus on quality patient outcomes further demonstrates their leadership.”

Last year Blue Cross announced similar agreements with CHE Trinity Health-Michigan, and Munson Healthcare.

Blue Cross Blue Shield of Michigan, a nonprofit mutual insurance company, is an independent licensee of the Blue Cross and Blue Shield Association. BCBSM provides and administers health benefits to more than 4.4 million members residing in Michigan in addition to employees of Michigan-headquartered companies who reside outside the state. For more company information, visit and