As the costs for health care and coverage keep rising, Blue Cross Blue Shield of Michigan expects the billions of dollars in savings it’s achieved with a 20-year initiative to forge tighter ties with doctors to grow even higher.
Michigan’s largest health insurer estimates that the Value Partnerships Programs that now involve 20,000 physicians, 40 organizations and more than 100 hospitals across the state avoided $6.3 billion in medical claims costs over two decades. The savings came through improved quality, increased access, and better managing costly chronic illnesses that each helped to reduce costly ER visits and hospitalizations.
The initiatives, which are now embedded in participating medical practices, continue to gain even more traction, meaning the potential cost avoidance should only grow in the coming years.
“The data that we’ve seen over and over the last decade or so is the longer that they are (participating) and keep on building up their capabilities, they’re actually saving more money for the health plan and our customers,” said Tom Leyden, director of Blue Cross Blue Shield of Michigan’s Value Partnerships Program. “It’s all about building the relationship.”
The bulk of the cost avoidance came from a Value Partnerships program known as Collaborative Quality Initiatives, which aims to improve medical and surgical processes. Through the initiative, Blue Cross Blue Shield avoided $4.08 billion in costs through prevented complications and improved medical outcomes.
Another $1.25 billion in cost avoidance came from a care management program designed to prevent ER visits, hospital admissions and costly readmissions. A Patient-Centered Medical Home designation program with primary care doctors also prevented $813.5 million in costs from avoiding ER visits and hospital stays.
Patients with primary care physicians participating in the medical home program on average record 23% fewer ER visits than people who use non-participating doctors, Leyden said. That’s an indication that because they have better access at participating medical practices, patients were able to get the care they needed in a primary care setting, rather than through an unnecessary and more expensive ER visit.
The costs avoided through the move to a value-based model that pays care providers based on quality and outcomes “should embolden our efforts to continue working together to provide more efficient, higher quality health care,” said Dr. Kurt Lindberg, a family physician and president and medical director at Holland PHO, a physician-hospital organization that partners with Holland Hospital.
“Twenty years ago, the traditional health care reimbursement paradigm preferentially supported reactionary sick visits. As a result, individual providers were left frantically trying to meet the needs of an increasingly complex patient population,” Lindberg said.
While the $6.3 billion in costs avoided over 20 years represents a small amount of the more than $33 billion that Blue Cross Blue Shield of Michigan paid in medical claims in 2023 alone, it still amounts to savings and costs that didn’t get factored into ever-rising health insurance premiums.
“It certainly makes a dent,” Leyden said. “It helps avert costs that otherwise would have been paid and it keeps premiums lower and keeps people out of the hospitals.”
Care providers participate voluntarily in the initiatives and regularly share best practices on improving care, access and quality. The results are shared across all medical practices.
Blue Cross Blue Shield launched the initiatives with the understanding “that there were some very pressing needs” and that primary care “was woefully under-supported and needed to transform to continue meet the needs of an aging and increasingly chronic population,” Leyden said.
Yet despite those best efforts, health insurance costs keep going higher.
Blue Cross Blue Shield of Michigan proposed to increase rates for small businesses with 50 or fewer employees by an 11.5% statewide average for PPO health plans that renew Jan. 1, 2025, according to a rate proposal submitted to state regulators in the spring. HMO subsidiary Blue Care Network submitted a rate proposal to the Michigan Department of Insurance and Financial Services requesting an average 11.2% increase.
“Everyone wants the cost of health care to be more manageable. Health insurance costs would likely be higher in Michigan today if not for the success of these programs in improving quality and patient outcomes,” Blue Cross Blue Shield of Michigan CEO Dan Loepp said in a statement. “Over the past two decades, Value Partnerships has made Michigan a safer, higher quality place to receive health care.”
Loepp has led Blue Cross Blue Shield of Michigan since 2006. He retires at the end of 2024.
Statewide, rate increases proposed for 2025 average 11.2% across 12 insurance carriers that participate in Michigan’s small group health insurance market.
At Grand Rapids-based Priority Health, small group rates would increase by a statewide average of 13.2% for HMO policies, if regulators approve the proposal as submitted. Priority Health Insurance Co. proposed a 12.3% statewide average increase for PPO policies.
Health insurers attribute the double-digit proposal to rising utilization rates, particularly for behavioral health, and the high cost of specialty drugs.
“We need to make health care more affordable and it’s our focus every day and (with) everything we do,” said Dr. Jim Grant, Blue Cross Blue Shield of Michigan’s senior vice president and chief medical officer. “We understand that health care costs are rising and (employers) have to pay, and they’re figuring out how to pay it and they’re trying to get their members the care that they need. We’ve got to figure out how do we do it and still make sure that people get the care that they need at an affordable rate. Programs like this actually help that.”
Source: Crain’s Grand Rapids Business
