Blue Cross Blue Shield of Michigan and Michigan Medicine have reached an agreement that will allow Michigan Medicine centers to remain in-network for those covered by the insurance provider. The deal comes ahead of a June 30 deadline set by the end of the previous agreement.
The stalemate jeopardized healthcare coverage for thousands of people covered by BCBSM, who would have had to pay much higher out-of-network fees to continue to receive care from Michigan Medicine if a deal was not reached.
Tricia A. Keith, BCBSM president & CEO, said in a press release that the deal could promote affordability.
"Blue Cross is pleased to reach this long-term agreement with our partners at Michigan Medicine – ensuring continued access to the system's medical care services for our members, while advancing the affordability of their care and coverage," Keith said.
David Miller, University of Michigan executive vice president for medical affairs and Michigan Medicine chief executive officer, said the health system is appreciative that a deal has been reached.
"On behalf of our physicians, nurses and all of our team members, we are grateful to have reached an agreement that ensures continued access for our patients and for Blue Cross members across the state to the world-class care available at Michigan Medicine," Miller said.
While the exact details of the contract are not public, the negotiations were significant for both patients and the health systems that serve them. Tom Buchmueller, a University of Michigan health insurance economics expert, said both parties had a “lot to lose” if the talks fell through.
“Blue Cross Blue Shield is obviously the largest payer in the state, and so any health care system, particularly Michigan Medicine, would have lost a lot of revenue if they didn't get this contract,” Buchmueller said. “At the same time, Michigan Medicine is not only a large provider, but it's a premier academic medical center, and so health insurance plans want these high-quality providers in their network.”
Buchmueller said patients, insurers and providers are facing cost pressures due to tariffs, inflation and declining federal healthcare coverage — creating additional pressure at the negotiation table.
“Healthcare costs are incredibly high in this country, and there's just a limit to how much people are able to pay, so insurers have legitimate reason to really try to hold the line on costs,” Buchmueller said. “At the same time, providers are facing inflation themselves, and they need to be able to cover their costs.”
Buchmueller said stalemates like this one are becoming increasingly common across the country. Last year, negotiations between Johns Hopkins Medicine and UnitedHealthcare ended without a renewed contract, leaving 60,000 out-of-network for the hospital.
Julie Ishak, Michigan Medicine chief nurse and operations executive, acknowledged that economic “headwinds” facing healthcare systems made reaching an agreement vital.
Before the deal, months of gridlock between the parties prompted BCBSM to recommend that 250,000 patients receiving care from Michigan Medicine seek an alternate provider.
During negotiations, Michigan Medicine and BCBSM squabbled over reimbursement rates, the payments Michigan Medicine receives from BCBSM for medical services. Michigan Medicine claimed the insurance provider proposed a 30% decrease in reimbursement rates, while BCBSM claimed the hospital system asked for a 44% increase. Each party denied the other’s claim.
Some patients with serious or long-term health conditions would have qualified for a continuity of care agreement if a deal was not reached, allowing them to continue to receive treatment from Michigan Medicine at in-network rates for up to 90 days. Ishak said patients could disregard any notice they may have received about continuity of care, and continue to attend appointments as normal.
“We have always been keeping our patients front and center, and at the core of what we do, and what I would say to our patients is, ‘We are excited to share that nothing changes about your coverage,”’ Ishak said.
Officials said both parties will continue to meet over the coming weeks to finalize details of the new agreement.
Editor's note: The University of Michigan holds Michigan Public's broadcast license.
