Blue Cross Blue Shield of Michigan unveils big push that lets physicians take on risk, reap rewards

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Doctors are increasingly staking their incomes on their patients’ outcomes.

Six physician groups have inked full-risk reimbursement deals with Blue Cross Blue Shield of Michigan for the care of patients under its Medicare Advantage PPO and Blue Care Network Medicare Advantage plans, the state’s largest health insurer said Wednesday.

A full-risk arrangement puts financial liability on the physicians’ organization in exchange for a larger potential reimbursement for high-quality care. When physicians meet outcome and cost goals for each patient, they get paid more by BCBSM. But if those goals are not met and a patient’s outcome worsens, the physicians group is responsible for any added expenses, tests and treatments.

Medicare Advantage is a federal program that allows private insurers to sell plans tied to Medicare, the federally paid insurance program for people 65 or older. Typically, Medicare Advantage plans include not just inpatient and outpatient coverage, like traditional Medicare, but also include prescription coverage and other wraparound benefits.

The six physicians groups are: Ann Arbor-based HVPA by Village MD; Rochester-based MedNetOne Health Solutions; Sylvan Lake-based Oakland Physician Network Services; Bingham Farms-based United Physicians; Midland-based Great Lakes Physician Organization PC; and Grand Rapids-based Answer Health.

Upon launch of the new programs on Jan. 1, approximately 30 percent of BCBSM’s total Medicare Advantage members will be seen by a doctor under a full-risk contract, the Detroit-based insurer said in a news release.

“These newest agreements are robust and demonstrate our collective leadership in advancing value-based payment models that improve quality and safety, avoid redundancy, and contribute to an improved patient experience,” Daniel Loepp, president and CEO of BCBSM, said in the release. “Physician organizations are willing to enter these arrangements because they know it will enable us to achieve our mutual goal of better, more affordable healthcare.”

Blue Cross launched a plan it called “Blueprint for Affordability” in 2019 with seven organizations on a partial risk-sharing reimbursement plan for Medicare Advantage patients. That total has grown to 22 and covers around 50 percent of all in-state commercial and Medicare Advantage members by BCBSM.

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The insurer says the use of these risk-sharing programs has lowered healthcare spending by $70 million, along with improving quality metrics in breast cancer and colorectal screenings, pediatric immunizations and diabetes control. It’s unclear who received those cost savings.

Medicare Advantage plans have been one of the fastest-growing segments of private health insurance — a privatization of public health benefits that has been highly profitable for insurance companies.

More than 40 percent of Medicare beneficiaries were enrolled in a private Medicare Advantage plan by the of 2020, according to research by the Kaiser Family Foundation. In 2019, about 38 percent of Medicare recipients in Michigan were enrolled in a Medicare Advantage plan.

Reimbursements have continued to grow away from the traditional fee-for-service model, particularly in insurer-sponsored Medicare Advantage plans.

In 2020, 29.3 percent of all Medicare Advantage payments went to a physicians group in some sort of shared-risk contract with an insurer, up from 28.6 percent a year earlier, according to data from the Health Care Payment Learning & Action Network’s Alternative Payment Model report. It’s expected these risk-based contracts will overtake traditional fee-for-service models in the coming years.

The progress has been much slower in the commercial insurance market, with just 10.8 percent of payments involved in a risk-based contract in 2020, according to the report.

“We owe it to our members and customers to think and work differently; to address the key drivers of healthcare costs and collaborate on solutions that promote more successful outcomes and more affordable health insurance costs, said Todd Van Tol, executive vice president of healthcare value at BCBSM.

This story first appeared in our sister publication, Crain’s Detroit Business.

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