Update: On May 27, Blue Cross Blue Shield of Michigan and Michigan Medicine announced they reached an agreement on a long-term contract that will continue in-network status for Michigan Medicine’s academic medical center and affiliated facilities, clinics and physician. They will not disclose final terms of the contract.
Haley Murphy and her daughter, whose metabolic condition requires specialized care. | Courtesy of Haley Murphy
Haley Murphy is grateful to live near Michigan Medicine. The physicians there are uniquely qualified to treat her eleven-month-old daughter, who has glutaric acidemia type 1, a rare metabolic condition that prevents the body from properly breaking down certain proteins. Without careful medical management and specialized treatment, it can lead to severe brain damage and life-threatening complications, Murphy says. “The University of Michigan is the only hospital in the state with the specialized genetics and metabolic team capable of properly managing her care.”
But that affordable, high-quality care could be in jeopardy. Murphy is one of an estimated 300,000 patients who will lose Blue Cross coverage for their Michigan Medicine doctors if a contract agreement isn’t reached by June 30. (This does not apply to those employed by U-M or Michigan Medicine, or Medicare Advantage and Medicaid patients.) The dispute between the two entities is playing out in an uncharacteristically public way—on social media, patient portals, and through emails—leaving many patients feeling frantic and deeply worried about the future of their health.
“Terrified, angry, and completely overwhelmed,” is how Murphy describes her reaction. “The uncertainty surrounding this situation is devastating for families like mine. As a mother of a child with a rare and serious medical condition, the thought of losing access to the doctors and specialists who keep my daughter healthy is unimaginable. No parent should have to live in fear wondering whether their child will continue receiving lifesaving care.”
Negotiations over a new contract between Michigan Medicine and Blue Cross Blue Shield of Michigan (Blue Cross) have been ongoing for over a year, says Dr. Scott Flanders, a professor of medicine and chief clinical strategy officer for Michigan Medicine.
Blue Cross tossed out the first public-facing salvo on March 5 of this year, sending an email to patients indicating that Michigan Medicine had notified the insurer that their Southeast Michigan facilities and physicians will no longer accept Blue Cross or Blue Care Network health insurance effective July 1, 2026. “We know this news may be very upsetting to Blue Cross members who have trusted and longstanding ties to Michigan Medicine, or who are receiving care within the health system,” read the email. It went on to say that Michigan Medicine is demanding a 44 percent increase in payment. Andy Hetzel, vice president of corporate communications for Blue Cross, clarifies that would be in a new five-year contract.
This email came as a surprise to Flanders: Michigan Medicine had committed to not issue public statements during negotiations to avoid worrying patients, and asked Blue Cross to do the same. “Unfortunately, Blue Cross Blue Shield issued a communication the very next day,” he says. “Because Blue Cross Blue Shield went public, we felt the need to respond to their communication.”
The message for Blue Cross patients on the Michigan Medicine Portal said it’s asking only to extend its existing contract, and indicated Blue Cross is asking for a 30 percent cut in reimbursements to patients. “We are disappointed that Blue Cross has chosen to create public confusion,” it said, suggesting that patients who are concerned reach out to Blue Cross or their elected representatives.
That’s untrue, says Hetzel. He adds that Michigan Medicine forced their hand with a March 2 letter indicating it would terminate the existing contract on July 1 if agreement on a new contract was not reached before then. As soon as Blue Cross received that letter, “we were obligated to inform our members of that action” to give them adequate time to prepare.
“Michigan Medicine is putting their patients in the middle of these negotiations to try to leverage higher payments from Blue Cross Blue Shield of Michigan in the negotiations,” continues Hetzel. He adds that Michigan Medicine has “shown few signs of being a willing partner.” While Hetzel would not share the specifics of the payment contract, he said that they would be paid more for the same services they provide today, with payments increasing every year over the course of the contract.
Dr. Flanders takes issue with that statement. “We’ve committed to good faith negotiations all along,” sharing multiple proposals with Blue Cross and adjusting them in the hopes of getting closer to an agreement. “Unfortunately, it’s hard to resolve negotiations when only one side is working toward a deal,” Flanders says.
Cathy Marshall has two chronic conditions and relies on her trusted Michigan Medicine primary care physician to help manage them. | Mark Bialek
The whiplash back-and-forth has incited outrage, worry, and concern from patients, many of whom receive treatment for complex conditions from specialists they can’t find anywhere else.
“Families and patients should never be used as leverage in negotiations like this,” Murphy says. “Watching two powerful entities argue publicly while vulnerable patients are left fearing for their health care is cruel and deeply dehumanizing.”
Cathy Marshall, who lives in Dexter Township, is bereft at the thought of losing her beloved primary care provider of nine years. Marshall has two chronic conditions that require extensive medical care, and she says her doctor is a skilled quarterback who understands the intricacies of how her various medications interact. “That’s going to harm me not having her in the picture anymore. I’m going to have a brand-new primary care physician who won’t know me at all.” She’s already set up an appointment with a primary care provider from Trinity Health after July 1 as a precautionary measure.
Marshall, like many other patients on the federal marketplace health insurance, has a contract that doesn’t expire until the end of the year. If Blue Cross stops providing coverage for Michigan Medicine doctors in July, she’ll have to wait until open enrollment begins to go back to her long-term doctor. In the meantime, because she has an HMO, she has to find someone new to refer her to all of her specialty services. For those on the marketplace health insurance, seeing a Michigan Medicine provider would no longer be covered and those patients cannot change their plan mid-year.
“I never would have signed up for Blue Cross if I knew they wouldn’t cover Michigan Medicine doctors,” Marshall says. Now they’re considering changing the rules “and it’s just not right.”
Hetzel says Blue Cross is in the process of notifying 40,000 patients with complex medical conditions that they can extend their coverage for ninety days under a Continuity of Care provision, and others can request this as well. But Marshall argues that this only delays the inevitable.
“The 300,000 people that are in this boat are just powerless to do anything about it,” she says. “We’re stuck dealing with whatever it is they decide.”
Tina Walsh was “shocked and scared” after learning the news. She drives ninety minutes from Saginaw to see her physicians, and her nineteen-year-old daughter has chronic illnesses managed by a team of Michigan Medicine doctors. Her daughter had surgery in May with one of the very few doctors who performs the procedure she needs. Last year, Walsh was referred by her local doctors to Michigan Medicine after she developed a blood clot in her portal vein after surgery. “I just can’t get my mind around the fact that we work and get good health insurance through my employer,” says Walsh. “We have a great hospital in the state, and yet we might lose the possibility of being treated there.” She says finding other similarly trained and qualified physicians would be a monumental challenge.
After receiving the email from Blue Cross, Christy O’Connor, who lives in Newport, says, “I literally went cold.” Between her and her four children, her family sees specialists for gynecology, rheumatology, and long-term physical therapy assistance. Whenever her doctors ask her preference for a referral for her children, “I always say U of M,” she says. “There’s a reason I’m driving forty-five minutes to Ann Arbor for these special doctors. … I’m not sure what I’m going to do in a month if these contracts are not settled.”
Tina Foote, who lives in Pleasant Lake, fifty minutes from Ann Arbor, just switched to Michigan Medicine this past summer. She was recently diagnosed with heart failure and says she received dangerously subpar treatment at another medical institution. “I switched to U of M cardiology, and it has been a world of difference,” she says. “The care at U of M has been night and day. … This would be a huge loss for patients.”
Staci Kennedy, an Ann Arbor resident, has been a Michigan Medicine patient for over thirty years. She and her husband pay a high premium for BCBS PPO for the ability to see whatever doctors she needs to manage her chronic condition. “To have that taken away is sort of unthinkable,” she says. She’s fearful of the prospect of losing the primary care provider she’s seen for fifteen years. “I would be starting from square one at sixty years old. I don’t want to be starting over.”
She says people expect that insurance companies don’t always have the patient’s best interest in mind, but she’s disappointed that Michigan Medicine doesn’t seem to “recognize the importance of an insurance company like Blue Cross.”
Michigan is already facing a significant shortage of primary care providers. A Primary Care Scorecard by Milbank Memorial Fund and the Physicians Foundation found that as of 2022, the most recent year for which they had data, one out of five adults in Michigan didn’t have a primary care provider. (Nationwide, that number was three in ten.) Dr. Yalda Jabbarpour, vice president and director of the Robert Graham Center for Policy Studies in Primary Care, says this shortage is already a significant problem. “So it stands to reason that if you’re then taking away this large pool of doctors from your population, it’s going to get even worse.”
As a former senior vice president of Blue Cross, a former director of the Michigan Department of Human Services, and the founding director for the Center for Health Care Research and Transformation, Marianne Udow-Phillips has ample experience in this area. She doesn’t believe that either of these organizations “is trying to just delay things or make the other one blink first. I think this is a legitimate, challenging time for health care for both entities,” she says.
She explains that health care costs are rising, with premiums increasing as a result, making health care very difficult to afford for many consumers and purchasers like employers. Blue Cross is looking for ways to manage health care spending, she continues, and with hospital costs making up 40 percent of their total health care premiums—the biggest area of their spending—they are faced with a big challenge in reducing health care costs. At the same time, hospitals have seen a rise in labor costs and in demand for their services, putting pressure on them to expand and build more facilities. Technologies that provide new treatment options for complex diseases are also expensive, she adds. This situation is further exacerbated with the federal government imposing policies that over the next year will significantly reduce the number of people in Michigan who have Medicaid coverage, leaving more people uninsured and further “squeezing” the health care system, she explains. All this means that “hospitals are really increasing their spending.”
She says these kinds of disputes are increasing across the country because of pressure to make health care more affordable. She points to Memorial Hermann Health System and Blue Cross Blue Shield of Texas, which recently failed to reach agreement, leaving the major medical institution providers out of the Blue Cross network. She says the way this is playing out in the public isn’t unique. “Sometimes it’s more behind the scenes. Sometimes it’s more out front. In this case, it’s quite out front.”
But in most situations, Udow-Phillips says, the parties do reach agreement, and she’s optimistic that will be the case here. Flanders and Hetzel both indicate a willingness to continue negotiating in the hopes of reaching an agreement before June 30. “We want our members to be able to access care in the Michigan Medicine system,” Hetzel says, while Flanders adds that patients are “top of mind” and the goal is to find a path forward that allows Michigan Medicine providers to continue to support patients and “preserve the access to the cutting-edge capabilities that we have here at Michigan Medicine.”
But if an agreement isn’t reached, says Murphy, she’ll be forced to travel out of state to ensure her daughter receives the treatment she needs.
“As a mother who brings her baby to U of M for lifesaving specialized treatment, I am begging both sides to think about the people being affected by these decisions,” she says. “This situation is devastating, heartbreaking, and terrifying for families like mine. Please put patients before profits and politics. Make the morally right decision, come to an agreement, and end this fear and uncertainty for the countless families who depend on this care every single day.”
Disclosure: Julie Halpert teaches a journalism class at U-M.