Restructuring Reimbursements

Rene Letourneau, for HealthLeaders Media , September 13, 2013
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"One of the key components with our arrangement with Blue Cross Blue Shield of Michigan is, about a year or so ago, we were doing our usual contract renegotiations, and we talked about having a different type of relationship—about having a real partnership and not just using the term in the way it is overused, but really being partners," Carter says.

This meant aligning incentives so both the provider and payer were working toward the same goal, he says.

"We still had to renegotiate our rates, which we did, but we also created an opportunity to have a partnership relationship in terms of what we considered to be a value-based contract. … We crafted a methodology that would allow us to take an attributed population of Blue Cross members, group them together, understand the cost per member, and join in the goal of reducing overall cost per member per month. … That way our incentives are aligned, and it's a win-win-win-win: We win, Blue Cross wins, employers win, and patients win."

The contract is "value-based," says Carter, with a gain-sharing feature that allows the providers, physicians, and payers to share the gains by reducing the total cost of care.

CHE Trinity Health phased in the program in stages, starting first with its facilities in west Michigan and then in southeast Michigan, with all of its hospitals in the state coming online by July 2013. The contract with Blue Cross is based on shared savings, and the precise percentages of the split between payer and provider will be revisited annually, Carter says.

Kevin Sears, vice president for payer and product innovation at CHE Trinity Health, says the claims data the health system now receives from Blue Cross is vital to the success of the program.

"Transparency is a fundamental principal and a cornerstone of our relationship with Blue Cross," he says. "They provide a monthly feed of all relevant claims data so it can be disseminated to relevant physicians and to other providers of care. … Traditionally, the transparency of data between payers and providers really hasn't been there, and, oftentimes, it is why these things fall apart. This element of trust is part of what is transformational in our relationship with Blue Cross."

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