Paying for Better Health: A Solution to Rising Health Care Costs
Blue Daily
| 4 min read
Key Takeaways
- Blue Cross has been a national leader in value-based care for more than 20 years through the Physician Group Incentive Program — one of the largest programs of its kind in the country.
- We also partner with hospitals to improve safety and reduce preventable complications.
- Our Patient-Centered Medical Home designation program strengthens primary care by supporting physician-led teams that coordinate care, monitor chronic conditions and intervene early.
- Through the Blue Cross’ Collaborative Care program, behavioral health support is integrated directly into primary care and OB/GYN offices.
In our health care system, the vast majority of money is spent to treat illness rather than promote wellness. One of the biggest drivers of rising health insurance costs is the “fee for service” payment model. For decades, providers have been paid more money if they prescribe more tests, procedures and treatments. These payments are made without consideration for whether those services improved a patient’s health outcomes.
How has this worked? Poorly. Our nation’s health has deteriorated and costs for health care services and health insurance have soared.
Now, Blue Cross Blue Shield of Michigan is partnering with physicians and hospitals across the state to change things. We seek to align payment with the health outcomes achieved for patients. It’s called value-based care. In value-based care payment, we reward providers for success in keeping patients healthier, preventing complications and improving outcomes. When providers succeed in improving health, it benefits everyone.
Patients experience better outcomes, and unnecessary costs that drive premiums higher can be avoided. There are several ways we’ve been leading this shift across the health care system.
Leading the shift through physician partnerships
Blue Cross has been a national leader in value-based care for more than 20 years through the Physician Group Incentive Program, or PGIP — one of the largest programs of its kind in the country. More than 20,000 physicians across Michigan participate, working together to improve care coordination, increase preventive screenings and better manage chronic conditions.
These efforts help patients avoid complications and hospital stays, which are among the most expensive forms of care.
Working with hospitals to prevent costly complications
Blue Cross is also partnering with hospitals to improve safety and reduce preventable complications. Our long-term agreement with Corewell Health includes a portion of payment that is focused on shared goals aimed at preventing serious and expensive medical events such as infections after surgery, falls and hip fractures, kidney failure and respiratory complications. Our new agreement with Henry Ford Health also establishes a partnership rooted in outcome metrics.
These complications are dangerous and costly. A single hospital stay for sepsis, a life-threatening infection, costs about $28,000 on average. Patient falls occur up to 1 million times each year in U.S. hospitals, and about 25% result in injury, often requiring additional treatment and longer stays. Complications such as kidney failure or respiratory problems can require intensive care, dialysis or extended recovery.
By focusing on prevention, early intervention and coordinated care, these partnerships help improve patient safety and avoid costs that would otherwise impact the broader health care system.
Strengthening primary care to prevent costly hospital visits
Blue Cross’ Patient-Centered Medical Home designation program strengthens primary care by supporting physician-led teams that coordinate care, monitor chronic conditions and intervene early.
These efforts promote wellness and have delivered significant results. From 2009 through 2023, Blue Cross-designated Patient-Centered Medical Home providers helped prevent approximately $814 million in medical costs by reducing emergency room visits and avoidable hospitalizations.
When patients receive timely, coordinated care, they are healthier and less likely to experience serious complications that require expensive treatment.
Integrating mental and physical health through Collaborative Care
Blue Cross believes the health of the body and mind are connected. Blue Cross’ Collaborative Care program integrates behavioral health support directly into primary care and OB/GYN offices, improving access to mental health treatment and care coordination.
Patients receive support from behavioral health care managers and consulting psychiatrists as part of their existing care team. This approach improves health outcomes while reducing costly hospitalizations. Studies show Collaborative Care delivers approximately $1.70 in savings for every dollar invested.
Improving care statewide through Collaborative Quality Initiatives
Blue Cross also supports Collaborative Quality Initiatives, statewide programs in Michigan that bring hospitals and physicians together to improve care using shared data and best practices.
More than 100 hospitals participate in over 20 initiatives focused on improving surgical outcomes, managing chronic disease and enhancing patient safety. These efforts have helped avoid approximately $4 billion in health care costs across Michigan while improving quality and outcomes.
Realigning incentives to improve health and affordability
Value-based care aligns providers and health plans around a shared goal: better health outcomes. By partnering with physicians, hospitals and care teams across Michigan, we are helping prevent complications, improve coordination and reduce avoidable hospital care.
These partnerships show that when the system rewards better outcomes instead of more services, patients receive higher-quality care and health care becomes more affordable and sustainable.
Learn more about how Blue Cross Blue Shield of Michigan is advancing affordability solutions at mibluedaily.com/affordability.
Photo credit: Getty Images
