Blue Cross Blue Shield of Michigan Launches Bundled Payment Program to Manage Cost, Improve Outcomes for Hip and Knee Replacement Surgeries

Meghan O'Brien

| 2 min read

DETROIT, March 21, 2018 – To manage the growing cost and improve outcomes of hip and knee replacement procedures, Blue Cross Blue Shield of Michigan has launched a bundled payment pilot program with 64 surgeons at seven Michigan healthcare systems. A bundled payment means the medical provider is paid a single fee to cover the entire course of treating the patient, in this case from the surgical procedure through 90 days of post-surgery care including physical therapy. Knee and hip replacement procedures are two of the fastest growing medical treatments nationwide. An episode of care, including the surgical procedure and rehabilitation afterwards, can cost from $28,000-$55,000, according to Blue Cross data. ““The variation in cost across hospitals and geographies is significant. We are working with surgeons and healthcare systems to manage the cost and outcome variation of these procedures, and to consider appropriate sites for care,” says Steve Anderson, vice president, Provider Contracting and Network Administration at Blue Cross. “For example, many patients may be more comfortable and rehabilitate better at home, versus a rehab facility.” Medicare and Medicaid have introduced bundled payment programs, but this program is a first for Blue Cross. Fully-insured employers with the Blue Cross PPO and the Blue Care Network HMO will have access to this pilot program. Participating providers include:
  • Henry Ford Health System
  • Huron Valley Sinai Hospital
  • Michigan Orthopaedic Surgeons
  • Oakland Regional Hospital
  • Joseph Mercy, Brighton
  • Joseph Mercy, Livingston
  • TRIARQ Health
Blue Cross aims to save 10 percent off the average cost of non-complicated knee or joint replacements. This includes the surgery itself, and the 90-day rehabilitation period afterwards. Blue Cross studied historical costs by geography to calculate a cost target per region. “The participating providers in this program account for about a third of the hip and knee procedures performed, so it’s a good-sized test program. We expect to have representative data to review after one year,” says Anderson. The program covers surgeries in the following counties:
  • Genesee County
  • Ingham County
  • Jackson County
  • Livingston County
  • Macomb County
  • Oakland County
  • Saint Clair County
  • Washtenaw County
  • Wayne County
Blue Cross Blue Shield of Michigan, a nonprofit mutual insurance company, and the Blue Cross Blue Shield of Michigan Foundation are independent licensees of the Blue Cross and Blue Shield Association. BCBSM provides and administers health benefits to more than 4.6 million members residing in Michigan in addition to employees of Michigan-headquartered companies who reside outside the state. For more company information, visit and Photo Credit: Mike Baird
MI Blues Perspectives is sponsored by Blue Cross Blue Shield of Michigan, a nonprofit, independent licensee of the Blue Cross Blue Shield Association