Blue Cross starts health system payouts for value-based contracts

The first payouts totaling $25 million have been made to five health care systems in Michigan that signed innovative, value-based reimbursement contracts with Blue Cross Blue Shield of Michigan in 2011 and 2012.

Since five-hospital St. John Providence Health System in Warren signed the first value-based contract with the Blues in 2011, 17 other health systems and a total of 71 hospitals in Michigan are participating under various starting dates and terms.

Last month, six health systems signed three-year contracts with Blue Cross, including five-hospital Henry Ford Health System in Detroit and three-hospital University of Michigan Health System in Ann Arbor.

The value-based contracts — which now include nearly all the large hospitals in Michigan eligible for the contracts — pays hospitals for covered services but encourages participating doctors to work closely with hospitals to reduce unnecessary tests and procedures and avoid hospitalizations and visits to the emergency department. 

So far, five health systems have shared $50 million in total savings with the Blues for services rendered in 2013, said Steve Anderson, Blue Cross vice president of provider contracting and network administration. 

Anderson said the savings amounted to about 1 percent of total hospital expenses.