Blue Cross and Blue Shield of Michigan is extending its value-based reimbursement model to the northern part of the state.
The state's largest insurer has signed a three-year contract with Munson Healthcare, rolling out to three of the health system's eight hospitals, including the 391-bed regional referral hospital in Traverse City.
As part of the deal, Blue Cross and Blue Shield of Michigan (BCBSM) is funding IT and infrastructure improvements for Munson and is also paying a base-rate increase in reimbursement, along with shared savings based on hospital performance in efficiency and readmission preventions.
The three hospitals, in Traverse City, Frankfort and Kalkaska have been developing care coordination strategies over the past year with affiliated primary care and community providers, using an all-patient registry system designed to ease provider access to patient records and enable effective team-based care management.
Munson Healthcare is the largest health system in Michigan north of Grand Rapids, covering 24 counties in Michigan's lower and upper peninsulas. Each of the three hospitals participating in the BCBSM value-based agreement and its physicians have also established "milestones" to try to meet through 2015.
"Our partnership with these Munson Healthcare hospitals focuses reimbursement on the success achieved by doctors and hospitals in improving quality and patient outcomes while also achieving cost efficiency," Daniel Loepp, president and CEO of BCBSM, said in a media release, noting the insurer's focus on moving away from fee-for-service contracts.
"Ultimately, this agreement will benefit our patients by improving the coordination of care and reducing cost," Munson Healthcare president and CEO Ed Ness said in a media release. "That's the right thing to do."
Fresh from its state-approved transition into a mutual company and with a roughly 70 percent market share, BCBSM has been making a torrid push towards value-based reimbursement, signing value-based contracts with three of the state's five largest health systems in 2012 and saving an estimated $232 million in health spending last year through collaborative quality initiatives with physicians and doctors.