State News

Blue Cross and Blue Shield of Vermont to affiliate with Michigan counterpart

By Kristen Fountain/VTDigger

Blue Cross and Blue Shield of Vermont is seeking to become part of the Blue Cross Blue Shield of Michigan “family of companies.” 

The Vermont organization’s decision to affiliate with its Detroit-based counterpart, announced Monday, May 1, would give the state’s largest provider of health insurance access to a more sophisticated array of digital technology than it could afford on its own, according to BCBS of Vermont CEO Don George.

“Through this partnership, we will access advanced technology and capabilities and new program capacity for our members and customers without having to build or purchase them ourselves,” George said in an interview. 

The affiliation allows Vermonters to take advantage of the resources available to BCBS of Michigan because of the latter’s scale. BCBS of Michigan is that state’s largest insurer and provides coverage for around 5.2 million people, around 3.9 million of them in Michigan. The Vermont insurer covers around 200,000 people. 

Both organizations are structured as nonprofits, and each of their respective governing boards recently approved the agreement to affiliate. The companies are now seeking regulatory approval for the affiliation in both states. 

BCBS of Vermont expects to provide all required materials to the Vermont Dept. of Financial Regulation within two weeks, George said. The two companies hope to close on the partnership by Oct. 1, 2023.  

George said he is confident that the department will conclude the arrangement is “in the public good in Vermont and to the benefit of Vermont subscribers.”

Upon completion of the deal, BCBS of Michigan would take over the “exclusive service area” license from the national Blue Cross Blue Shield Association for the state. But unlike other cases involving a license transfer, governance and management would remain in Vermont and funds would remain separate, George said. 

Blue Cross and Blue Shield of Vermont would keep its name and remain headquartered in Berlin with the same leadership team and workforce. All premium dollars and reserve funds would remain in state to pay claims and fund operations. 

Its board of directors would be reconstituted, though Vermont members would retain a majority. Seven of 12 current board members would stay on, with the five seats coming open to be filled with executives and board members from BCBS of Michigan, George said.

BCBS of Vermont first partnered with its Michigan counterpart to roll out its Vermont Blue Advantage plan through the Medicare Part C program, also known as Medicare Advantage, in late 2020. “We would not have been able to do that without their partnership and help,” George said.

BCBS of Vermont had also been a co-owner of NASCO, a healthcare information technology firm, with BCBS of Michigan and four other Blue insurers. In 2021, BCBS of Michigan took over sole ownership of the company, which provides tools to support a wide range of insurance functions including membership management, claims processing and customer service. 

BCBS of Michigan, through NASCO and other ventures, is investing heavily in developing digital tools, particularly mobile platforms, that are going to change how people experience health insurance, George said. 

“The core systems of health insurance today — they need to be upgraded and innovated to improve the experience of people who are using them,” George said. 

Vermonters would have access to those tools as they are implemented starting over the next three years through this affiliation, he said. 

Those improvements would allow BCBS of Vermont to engage in healthcare payment reform in an even deeper way, George said. For that reason, the affiliation would strengthen, not weaken, the organization’s longstanding commitment to improving access to affordable care for everyone in the state. 

“I am letting everyone know that this is not a distraction,” George said. “It is enabling our commitment to reform.”

The Vermont insurer decided late last year not to contract in 2023 with OneCare Vermont, the state’s only accountable care organization that can bundle provider payments from Medicare, Medicaid and private payers. 

Whether or not to engage with OneCare — part of the University of Vermont Health Network — in 2024 would remain a local management decision, George said. 

Responding to news of the deal, UVM Health Network CEO Sunny Eappen said in a statement that “It is vital that we partner in this work with BCBSVT to serve our patients, many of whom are their members. We look forward to continuing our positive relationship with BCBSVT, and are hopeful that non-profit values and ties to Vermont will continue to guide their work.”

BCBS of Vermont leadership plans to continue to be part of conversations about the future of the state’s so-called all-payer model, George said. That current model relies on an ACO such as OneCare to push forward reforms that allow insurers to pay healthcare providers based on the quality and outcomes of care, rather than solely on the number of tests or procedures completed.

“Whatever course Vermont chooses to make, or the path it chooses, we’ll be there to support them,” George said.

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