Trinity Health and Blue Cross Blue Shield launch new reimbursement model


Detroit-based insurer Blue Cross Blue Shield of Michigan serves more than 4.4 million people. Photo via

Trinity Health-Michigan and Blue Cross Blue Shield of Michigan have jointly announced their new contract that launches a value based health care payment arrangement they claim is the first of its kind in Michigan.

The move away from traditional fee-for-service payments will require the hospitals and doctors to work together to improve care, while Trinity Health and the Blues will be sharing in cost savings that are predicted to result from a value-based reimbursement model.

The goal of the new payment model is better hospital-specific efficiencies and better patient health outcomes achieved by the hospitals working closely with affiliated physicians. It will be launched at Mercy Health Partners hospitals in Muskegon and Shelby, and at Saint Mary’s Health Care in Grand Rapids. Other Trinity Health hospitals will come under the new reimbursement arrangement in July.

“The current fee-for-service approach to paying hospitals is failing to improve care and lower its cost. Trinity Health is a visionary leader in its industry, and we are very pleased that they are joining with the Blues to align payments with their performance in achieving successful health outcomes and better hospital efficiency,” said Daniel J. Loepp, president and CEO of BCBSM.

“We pride ourselves on being innovative at Trinity Health so that we can provide better, more effective and efficient care for our patients. Working with the Blue Cross team to create a first-of-its-kind, value-based arrangement that we can now execute is inspirational,” said Larry Warren, interim president and CEO of Trinity Health at its corporate headquarters in Livonia.

The reimbursement contract covers a three-year period and stems from Trinity Health’s agreement in 2012 to partner with Blue Cross Blue Shield of Michigan on a new value-based reimbursement model to pay for hospital services.

The joint announcement states that the arrangement rewards the hospitals with a share of the savings achieved when hospitals and physicians successfully coordinate the delivery of care to enable efficient and effective treatments, eliminate redundancies and errors in care and prevent re-hospitalizations.

BCBSM and Trinity Health are now working out a shared performance management system and work processes that more fully integrate clinical best practices in all facets of medical care.

“The current system is best described as fee-for-service without a focus on improved health outcomes,” said Susan Barkell, BCBSM senior vice president for health care value. “Insurers pay for most every treatment, no matter how effective. But we don’t pay physicians and hospitals for some things that really improve patient health, like proactively contacting people about their follow-up care or medication compliance. We are working with Trinity Health to usher in a new era of paying for the most effective care possible for people.”

Jeff Connolly, BCBSM president for West Michigan operations, noted that under the Affordable Care Act, the federal government also is shifting to a value-based reimbursement arrangement that focuses on paying for more effective use of medical services and outcomes rather than a specific service.

“Fee-for-service reimbursement does not account for quality or value. It has been a significant factor in the huge growth of health care costs over the last decade — costs that are now unsustainable. It’s time to change what isn’t working, and Trinity has joined the Blues to move this change forward responsibly here in Michigan,” said Connolly.

The arrangement will provide Trinity hospitals funding for infrastructure — specifically an electronic all-patient registry system that allows the hospital staff as well as doctors access to the patients’ records. That will promote coordination of care, improve care quality, and also help avoid misuse and overuse of tests and services, officials said.

The next step in the process is to identify cost efficiencies at the hospital and in the population that is treated by the hospital and its physician partners. Trinity Health and its physicians have established milestones to ensure infrastructure work continues along with funding through 2015.

“This new agreement will not only benefit our patients, but also provide savings for employers. With the insurers as partners, we will be able to improve health and reduce cost. This is an innovative approach to both,” said Roger Spoelman, regional president and CEO for Mercy Health and regional executive for Trinity Health-West Michigan.

Trinity Health has more than 28,000 employees in Michigan serving 31 counties with 12 hospitals, plus numerous ambulatory sites, eight nursing homes, 26 senior living communities, nine home health care agencies and six hospices. Nationally, Trinity Health is among the largest Catholic health care systems in the country. Trinity Health also operates in nine other states, with a total of 47 acute-care hospitals, 432 outpatient facilities, 34 long-term care facilities, and numerous home health offices and hospice programs. It reports about $9 billion in annual revenue.

Trinity Health hospitals in Michigan, in addition to Saint Mary’s and Mercy Health Partners, include Mercy Hospital Cadillac, Mercy Hospital Grayling, Saint Joseph Mercy Health System, Chelsea Community Hospital, St. Joseph Mercy Ann Arbor, St. Joseph Mercy Livingston, St. Joseph Mercy Oakland, St. Joseph Mercy Port Huron and St. Mary Mercy Livonia.

Blue Cross Blue Shield of Michigan provides and administers health insurance benefits to more than 4.4 million people.

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