BCBS Michigan, Vermont affiliation receives green light

Photo: Martin Barraud/Getty Images

Blue Cross Blue Shield of Michigan and Blue Cross Blue Shield of Vermont have received formal approval from the Vermont Department of Financial Regulation to affiliate, which will enable both organizations to begin sharing resources and expertise to broaden health plan and service offerings available through BCBS Vermont, the companies said.

Under the affiliation, Blue Cross and Blue Shield of Vermont becomes a subsidiary of Blue Cross Blue Shield of Michigan. The agreement, approved by the respective plans' boards of directors, maintains a Vermont organization with governance, operational and policy decisions made locally. 

Don George, president and CEO of BCBS Vermont, said the ability to share expertise and technology will lead to improved solutions for members and communities in the state.

BCBS Michigan expects each organization will maintain local operations in each of their respective states.

WHAT'S THE IMPACT?

BCBS Vermont said it stood to benefit from the additional expertise, as well as operational and information technology resources. The intent is to improve overall affordability and quality while delivering a broader range of services that meet members' needs.

It will preserve BCBS Vermont's local identity while allowing both companies to focus on high-value care, the organization said.

BCBS Vermont will continue under the same name with the executive leadership team and workforce headquartered in Berlin, Vermont. The majority of the reconfigured 12-member Vermont board of directors will be comprised of BCBS Vermont subscribers. There will be no changes to Blue Cross Blue Shield of Michigan's existing headquarters, board of directors or leadership team.

Because it's an affiliation, rather than an acquisition, there will be no financial exchange between the two companies. Premiums generated from each health plan will stay in the respective states and will be wholly used to pay claims, administer plan operations and maintain member reserves. Each organization will continue to operate financially as a single state plan.

BCBS Michigan is already partnering with other Blue Cross and Blue Shield licensed companies on a number of initiatives spanning technology, health plan offerings and innovation, the companies said.

THE LARGER TREND

The development comes months after BCBS Michigan and six physician organizations across the state launched full-risk reimbursement arrangements for their Medicare Advantage PPO and Blue Care Network Medicare Advantage plans.

With those agreements, along with existing full-risk contracts, about 30% of BCBSM's total Medicare Advantage membership now receives services from physicians in full-risk reimbursement arrangements.

BCBS Vermont, meanwhile, along with the Vermont Health Plan, filed a lawsuit last August against Teva Pharmaceuticals claiming the company has used unsound marketing practices to promote and sell Copaxone, a drug used to treat multiple sclerosis.

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Email the writer: Jeff.Lagasse@himssmedia.com