How Blue Cross Blue Shield of Michigan Is Leading the Shift to Affordable, Value-Based Care
Blue Daily
| 4 min read
Key Takeaways
- Under fee for service, providers are paid based on how many services they deliver, not whether patients get healthier. That approach drives unnecessary care and rising costs. Value-based care changes the equation.
- That approach drives unnecessary care and rising costs. Value-based care changes the equation.
- By encouraging early intervention and proactive management of chronic conditions, Blue Cross’ value-based programs help keep members healthier — and out of costly care settings like emergency rooms and hospitals.
- By shifting incentives toward prevention, quality and accountability, and by building strong partnerships with providers, Blue Cross is helping lead Michigan toward a more affordable, sustainable health care system.
Health care affordability is one of biggest challenges facing Michigan families and employers. One of the clearest solutions to lasting change that impacts affordability is value-based care—and Blue Cross Blue Shield of Michigan (BCBSM) is helping lead that transformation across Michigan.
During the Michigan Big Show takeover, Blue Cross leaders and physician partners explained how moving away from the traditional fee-for-service model is creating real opportunities to control costs while improving care.
Under fee for service, providers are paid based on how many services they deliver, not whether patients get healthier. That approach drives unnecessary care and rising costs. Value-based care changes the equation.
“We need to change that incentive model,” said Todd Van Tol, Executive Vice President of Health Care Value at BCBSM. “We need to pay for the outcomes we care about—patient experience, quality, preventive care, effective chronic disease management and good surgical outcomes. Let’s tie dollars to those outcomes, not just the number of services.”
Prevention as the foundation for affordability
One of the most powerful cost-control tools in value-based care is prevention. By encouraging early intervention and proactive management of chronic conditions, Blue Cross’ value-based programs help keep members healthier — and out of costly care settings like emergency rooms and hospitals.
“Value-based care flips the script,” said Dr. Kurt Lindberg, President and Medical Director of Holland Physician Hospital Organization. “You get an allotment of money to take care of people, and if they stay healthy, you keep the change. That motivates us to prevent serious events instead of waiting for someone to get very sick.”
Dr. Lindberg described how value-based incentives allow primary care practices to actively track patients with chronic conditions, reach out when they fall behind on care and coordinate services more effectively.
“We’re proactively calling people, making sure they’re okay and staying on top of their care,” Lindberg said. “We’re motivated to keep people healthy and out of the hospital.”
Leading change through partnership
Blue Cross is putting these principles into action through strategic partnerships across Michigan’s health care system. In 2024, Blue Cross paid out $1.04 for every $1 collected in premiums, underscoring the urgency of working differently to make health care more affordable.
“We were paying too much for volume instead of value, and we needed to change that paradigm,” said Tricia Keith, President and CEO of Blue Cross Blue Shield of Michigan.
Keith pointed to Blue Cross' recent multi-year agreement with Corewell Health, Michigan’s largest health system, as a model for how insurers and providers can work together to improve affordability. The agreement keeps Corewell facilities in-network through 2030 and includes a strong value-based component focused on patient outcomes.
“This agreement starts paying more for value,” Keith said. “It took real commitment from both organizations, and we’re encouraging other partners across Michigan to follow this path.”
Turning accountability into better outcomes
As part of the agreement, the organizations created a joint quality committee to identify opportunities to improve care and directly connect payment to results.
“We’re asking, ‘Where can we improve outcomes, what will it take and how do we measure it?’” Van Tol said. “That partnership changes the dynamic of how we work together.”
One early focus area is reducing avoidable hospital readmissions, which are costly for the system and disruptive for patients.
“When patients leave the hospital, transitions of care matter,” Van Tol explained. “If prescriptions, follow-up visits and support are handled well, we should see fewer readmissions.”
Other targeted measures include patient safety initiatives, such as reducing hospital falls, preventing complications after surgery and improving overall care coordination. These efforts will expand over the life of the five-year agreement.
Leading the way on affordability
By shifting incentives toward prevention, quality and accountability, and by building strong partnerships with providers, Blue Cross is helping lead Michigan toward a more affordable, sustainable health care system.
Learn more about how Blue Cross Blue Shield of Michigan is addressing health care affordability here, and listen to the full Michigan Big Show episode here.
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