The Blues partner with Munson Healthcare to implement new model of reimbursement based on value, not volume

MunsonImagine if hospitals were reimbursed based on the number of procedures or tests performed, with little regard for effectiveness or value.  Sounds expensive, right?  This fee-for-service model is the reality of our current health care system, and has been a significant factor in the huge growth of health care costs.  Not only does the United States spend more per capita on health can than other countries, but it also has one of the highest growth rates in health care spending.

What if there was a way to hold down the cost of care while simultaneously improving patient care and medical outcomes?  Munson Healthcare and Blue Cross Blue Shield of Michigan are launching a new value-based hospital reimbursement agreement in northern Michigan to achieve just that.  The new approach focuses reimbursement based on achievements and improvements in quality, patient outcomes, and cost efficiency.  Essentially, the focus has shifted from volume to value, or from services to outcomes.

This approach is similar to many agreements the Blues have engaged in with hospitals over the past two years across the state, including Trinity Health, St. John Providence Health System and Beaumont Health System.

As Munson Healthcare has long been an industry leader in the region, this contract is a milestone in the transformation of the Michigan health care system.  The new reimbursement arrangement is being launched at Munson Medical Center in Traverse City, Kalkaska Memorial Health Center in Kalkaska, and Paul Oliver Memorial Hospital in Frankfort. The arrangement covers a three-year period and supports closer collaboration between the hospitals and their physician partners to improve the health of the populations they serve. To accomplish this, BCBSM will provide the health system with funding for infrastructure improvements needed to better coordinate care between the hospitals and physicians.

Highlights of partnership include:

  • Collaboration between hospitals and community provider partners to develop and implement an infrastructure plan that includes an all-patient registry system. The system would enable caregivers in the hospital and in doctor’s offices to have easier access to patients’ records so that information can be combined from multiple sources to promote coordination of care, improve care quality, and help ensure the right care is given at the right time in the right setting.
  • The hospital will receive a fair base-rate increase in reimbursement from BCBSM.  Blue Cross will also reward the hospitals with a share of the savings achieved when hospitals and physicians coordinate the delivery of efficient and effective care, eliminate reuse and over use of care, and prevent re-hospitalizations.
  • Infrastructure incentives to work toward achieving seamless connectivity between the doctor, hospital, pharmacist and outpatient setting.

On the federal level, evolving from the traditional fee-for-service payment approach toward more emphasis on value-based hospital contracting has already shown success.  Within Michigan, Value Partnerships between physicians, hospitals and Blue Cross Blue Shield of Michigan are fundamentally transforming the way health care is provided and delivered.

Photo Credit: Munson Healthcare

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