Blue Cross expands risk-based contracting program to 14 health organizations

Blue Cross expands risk-based contracting program to 14 health organizations

Blue Cross Blue Shield of Michigan has added seven health organizations to its risk-sharing payment program, extending the insurer’s Blueprint for Affordability program to providers in all parts of lower Michigan.

Designed to cut costs and improve quality, Blueprint began last December with seven major Southeast Michigan health organizations agreeing to participate in what is believed to be the state’s first comprehensive “two-sided” shared risk program.

Under the five-year contracts, provider systems could gain additional revenue if they lower costs and improve quality, the so-called upside risk arrangement. But the 14 participating health organizations could be forced under the downside risk arrangement to refund payments to Blue Cross if annual total expenses for the covered patients exceeds agreed-upon targets.

“I am proud to welcome these provider organizations to our statewide partnership as we take a stand for quality and affordability in health care,” said Daniel Loepp, president and CEO of the Michigan Blues, in a statement. “The power and value in Blueprint for Affordability comes from everyone joining together to challenge the status quo. Now throughout the Lower Peninsula, people will benefit from higher quality health care at costs they can better manage.”

The second group of health organizations signing on to risk-sharing agreements with Blue Cross include:

  • Ascension Michigan, including Genesys PHO, Flint, and St. Mary’s PHO, Saginaw
  • Trinity Health’s Affinia Health Network, Grand Rapids area
  • Great Lakes OSC, Midland area
  • Holland Physician Hospital Organization, Holland area
  • Munson Healthcare Clinically Integrated Network, Traverse City area
  • Northern Physicians Organization, Traverse City area

These providers join four health systems already in the program. They are Ascension Health, Warren; Trinity Health, Livonia; Henry Ford Health System, Detroit; and Michigan Medicine, Ann Arbor. The three physician organizations are United Physicians, Bingham Farms; the Physician Alliance, St. Clair Shores; and Oakland Southfield Physicians.

Steve Carrier, Blue Cross’ senior vice president of network management and provider partner innovation, said the seven additional health organizations reached out to Blue Cross to participate in the program. He said the organizations have been participating in the Blue’s physician group incentive program, or PGIP, which rewards physicians for improving quality and reducing unnecessary utilization.

“Independent physicians are looking for ways to be successful and increase their income by performance,” Carrier said. “They (told us we) can win by doing this. We have a better mousetrap.”

In 2020, Carrier said all 14 health organizations will be eligible for upside risk, which means they can get bonus payments for hitting various targets. In year two, he said, the downside risks will kick in and they could be subject to penalties. Blue Cross said the program is intended to be budget neutral.

“(The first group) are about two months into the program. So far, we have held training sessions to learn what to expect. We set up population health meetings,” Carrier said. “It will take the first year to get things going.”

Carrier said Blue Cross has heard from other health organizations and likely will add more systems this year, but they won’t go under contract until 2021.

Mark Geary, a spokesman for eight-hospital Beaumont Health in Southfield, said Beaumont is studying the Blue Cross program.

“Blueprint is a true risk sharing model,” Geary said in an email. “We are carefully vetting and evaluating whether the program is ultimately in the best interest of our patients before we decide whether to participate.”

Similar to Medicare “accountable-care organization” and specialty physician two-sided risk models, providers share in the savings but are also responsible for some of the loss if spending is above the benchmark.

Experts believe two-sided risk arrangements will become the norm over the next decade.

A small number of health organizations have accepted downside risk arrangements, although the numbers appear to be growing.

In a recent analysis of Medicare accountable-care organizations, 33 percent, or about 200 of 600 ACOs, included downside risk arrangements in their contracts in 2018, up from 28 percent in 2012, according to a 2019 study in Health Affairs.

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