The Future of Health Care Payment: Leveraging Partnerships to Shift Towards Value

Affordability,Health Care Value,Chief Medical Officer,Affordability

The Future of Health Care Payment: Leveraging Partnerships to Shift Towards Value

10.20.2022 | 3 min read

Amy Barczy is a former brand journalist who authored content at Blue Cross Blue Shield of Michigan. Prior to her time at Blue Cross from 2019-2024, she was a statewide news reporter for MLive.com. She has a decade of storytelling experience in local news media markets including Lansing, Grand Rapids, Holland, Ann Arbor and Port Huron.

How health care will be paid for in the future is one of the industry’s biggest challenges and areas for growth, especially as longstanding quality and affordability challenges blend with emerging market demands and disruptors.

Dr. James Grant, senior vice president and chief medical officer at Blue Cross Blue Shield of Michigan, discussed the future of health care payment models with industry leaders on a panel during the Crain’s Detroit Business Health Care Leadership Summit Thursday, Oct. 20, in Dearborn.

There’s great consensus about the need to change the traditional fee-for-service model of paying for health care, which reimburses providers based on the volume of care providers bill to patients. As an alternative to fee-for-service models, Blue Cross Blue Shield of Michigan is actively partnering with the provider community to prioritize value-based care – in which physicians agree to tie a portion of their reimbursement to meeting agreed upon targets for outcomes and the cost-of-care.

Value-based care

Grant said he considers value to be an equation: “Value is quality over cost. If the cost goes down and the quality goes up, that’s greater value. If the cost goes up and the quality goes down, that’s lesser value.”

So far, Blue Cross has been a driving force towards value-based care in Michigan. Through its Blueprint for Affordability contracting strategy, more than 50% of attributed commercial PPO members and more than 50% of attributed Medicare PPO members are in risk-based contracts. Grant said “huge leaps” are ahead for Medicare Advantage contracts in the next three to four years in moving to value-based care arrangements.

Direct contracting

There have been attempts by other entities in the market to take a different approach to managing health care costs, including employers directly contracting with health systems and providers, cutting out health payers. While some major national employers like Boeing do this, direct contracting limits the number of doctors or hospitals members can use. This fragments care, and creates inconsistencies which impact outcomes for patients, Grant said.

Private equity ventures

Seen as “disrupters” in the health care ecosystem, there’s a number of private equity-backed ventures in the health care market today. Often these ventures siphon away patients with a specific type of health coverage away from more traditional providers – who aren’t able to be selective about the patients they accept.

Additionally, many independent physicians who are struggling financially are often incentivized to sell their practices and become employed by large health systems.

Instead of working against providers, Blue Cross is a partner for providers, Grant said. Blue Cross shares data with providers in order to help them improve the health of their patients.

“Blue Cross Blue Shield of Michigan…I don’t consider us a health care plan or a health care payer. We’re a health care partner,” Grant said. “And we have to coordinate better care, work with our customers, work with our members, work with our providers – when we all coordinate together, we’re all going to do better.”

Serving today’s consumer

The health care consumer of today does not have the same relationship with their primary care provider that may have been the standard in the past. Today’s consumer is used to getting online and ordering whatever they want one day, and having it delivered to their home the next, Grant said.

“Patients have high expectations of their providers and want choice at the same time,” Grant said. “We have got to figure out how health care adapts to this new world of increasing expectations. People want things close, convenient…and they want high-quality.”