A message from Steve Anderson, vice president of Hospital Contracting and Network Administration
New Participating Hospital Agreement: A step into the future of health care

I’m pleased to announce that we’ve rolled out our new participating hospital agreement — technically called the Third Amended and Restated Participating Hospital Agreement.

The agreement is the culmination of more than three years of collaboration with hospitals and the Michigan Health & Hospital Association to develop an updated agreement. The last major modification occurred in 2007.

Some people have asked why it needed to be updated. The main reason was to ensure it aligned with current industry standards. The health care landscape has changed rapidly over the past decade and it was essential that our participating hospital agreement reflected those changes.

The Blue Cross Blue Shield of Michigan Board of Directors approved the updated PHA earlier this year. Once approved, electronic and hard copies were sent to all participating hospitals.

As you may have read in a June Record article, the new agreement became effective July 1, 2021. More specifically, it’s effective on the first day of a participating hospital’s fiscal year, beginning on or after July 1, or as otherwise set forth in an applicable Letter of Understanding.

Revisions to the PHA included the following:

• Streamlined the appeals process
• Eliminated Exhibit B and references to reimbursement for Peer Group 1 through 4 hospitals (Reimbursement language is now exclusively included in the hospitals’ Letter of Understanding.)
• Eliminated the annual settlement process
• Updated the Contract Administration Process
• Simplified Peer Group 5 administration
• Eliminated Blue Cross Interim Payments, or BIP, for all hospitals

BIP will no longer be deposited into bank accounts on Thursdays. Instead, hospitals will be reimbursed based on weekly processed claims.

I anticipate that the new PHA will reduce the administrative burden on health care providers and foster a more productive relationship between the hospitals and Blue Cross. It’s also expected to increase our ability to collaborate with health care providers to better control health care costs.

Next steps

Our next steps include:

• Reconciling our Letters of Understanding with hospitals to include the new language
• Converting DRG reimbursement to an all-inclusive rate
• Implementing the enhanced Contract Administration Process
• Aligning incentive and value-based agreements with the PHA
• Applying PHA changes such as distributing final settlement payments based on hospitals, respective fiscal year ending

Over the next few months, our hospital contracting directors and managers will be contacting hospitals about the PHA changes, particularly the Letter of Understanding language and contracted rate changes.

Questions?

If you have any questions, check out our Frequently Asked Questions document or contact a member of our contracting team:

• Mike Andreshak, director, at 313-448-3905 or MAndreshak@bcbsm.com  
• Lynda Cerutti, director, at 269-321-7680 or LCerutti@bcbsm.com
• Fred Schaal, director, at 810-720-8555 or FSchaal@bcbsm.com
• Kurt Prettenhofer, manager, at 313-448-5815 or KPrettenhofer@bcbsm.com
• Lauren Rossi, manager, at 313-448-6090 or LRossi2@bcbsm.com

Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association.