Michigan Medicine and Blue Cross Blue Shield of Michigan have reached an agreement after months of negotiations that threatened to knock hundreds of thousands of Michiganders out of in-network coverage at the Ann Arbor-based health system, effective June 30.
Neither company said it will disclose final contract terms in announcing the agreement Wednesday, May 27, but pledged its leaders will continue meeting in the coming weeks to finalize details of the new five-year contract, with an aim of setting June 30 as the date of its renewal.
Reimbursement rates for Michigan Medicine were at the crux of the very public dispute, that threatened access for 300,000 people at the academic medical center of the University of Michigan.
Blue Cross, which has the biggest share of Michigan’s commercial health insurance market at roughly 70%, said affordability drove its efforts in these contract talks, as it tried to cut costs and keep premiums low at a time when Americans who purchase health insurance from the Affordable Care Act Marketplace paid thousands more in 2026 than they did the year before, and small business owners said it was a struggle to afford insurance plans for their employees.
The company said its soon-to-expire contract with Michigan Medicine already reimburses the health system and its providers at a higher rate than any other system in the state — even for routine care, such as mammograms, knee-replacement surgeries and colonoscopies. With soaring prescription drug prices coupled with the rising cost of providing health care and Michigan’s aging population increasing demand for medical services, Blue Cross said it couldn’t pay Michigan Medicine more.
Michigan Medicine’s leaders said the health system has been under-compensated for the specialized care it provides to patients with the most complex medical needs in the state, while also conducting medical research and driving innovation to develop new therapies on its Ann Arbor campus.
Michigan Medicine said it has gotten a 43% lower reimbursement for inpatient care and a 98% lower reimbursement for outpatient care from Blue Cross over the terms of the last five-year contract than other, similar academic medical programs in the Big Ten athletic conference, such as Northwestern Medicine, UCLA Health, the University of Washington’s UW Medicine and Indiana University Health.
The health system’s leaders said ensuring Michigan Medicine’s financial sustainability and supporting the unique and specialty care it provides have been pivotal to its goals in negotiations on the new deal.
“We continue to work with Blue Cross Blue Shield of Michigan to negotiate to get that fair and sustainable contract that allows us to preserve access, preserve (patients’) ability to get their care with us,” said Dr. Scott Flanders, Michigan Medicine’s chief clinical strategy officer, in a previous interview with the Detroit Free Press. “We’re working hard to achieve that result.”
A nonprofit company, Blue Cross Blue Shield of Michigan provides health insurance benefits to more than 4.7 million Michiganders and employees of Michigan-headquartered companies living out of state. Its president and CEO, Tricia Keith, said in a statement issued Wednesday that she is pleased to reach a new, long-term agreement, “ensuring continued access to the system’s medical care services for our members, while advancing the affordability of their care and coverage.”
Dr. David Miller, executive vice president for medical affairs for U-M and CEO of Michigan Medicine, said in a statement: “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.”
Michigan Medicine includes the U-M Medical School and University of Michigan Health as well as:
(This story was updated to add new information.)
Contact Kristen Shamus: kshamus@freepress.com. Subscribe to the Detroit Free Press.
This article originally appeared on Detroit Free Press: Michigan Medicine, Blue Cross reach insurance coverage deal
Reporting by Kristen Jordan Shamus, Detroit Free Press / Detroit Free Press
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