7 hospitals, physician groups agree to share risk under BCBS of Michigan payment model

Seven hospitals and physician groups agreed if their costs surpass a specific target, they will pay the difference back to Blue Cross Blue Shield of Michigan under a new risk-sharing program, the organizations said Dec. 11.

The "Blueprint for Affordability" model, which BCBSMI said is the first of the insurer's payment agreements to include downside risk for providers, will affect 30 percent of BCBSMI's market for commercial preferred provider organization and Medicare Advantage plans. BCBSMI said the market represents about $4 billion of its healthcare spending.

While providers will be held at greater financial risk under the arrangement, they could share in savings should their costs come in below target.

The seven organizations that signed on to the program, which will run in five-year durations, reside in Southeast Michigan:

  • Ascension Michigan (Warren)
  • Henry Ford Health System (Detroit)
  • Michigan Medicine (Ann Arbor)
  • Oakland Southfield Physicians (Southfield)
  • The Physician Alliance (Detroit)
  • Trinity Health – Michigan (Livonia)
  • United Physicians (Bingham Farms)

The contracts are effective Jan. 1. BCBSMI said it hopes to eventually extend the program to other providers in Michigan.

More articles on healthcare finance:
Mayo Clinic Health System to close hospital in 2020
UPMC to close hospital in 2020
Rural hospital closures hit record high in 2019 — here's why


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