Michigan Medical's Contract Negotiations With BCBSM Fall Apart

It now appears that many Blue Cross / Blue Shield of Michigan subscribers will become out of network at Michigan Medicine on July 1st due to a Mexican Standoff in their 2026 pricing contract negotiations:

https://bridgemi.com/michigan-health-watch/blue-cross-michigan-medicine-dispute-leaves-300000-patients-in-lurch/

Blue Cross, Michigan Medicine dispute leaves 300,000 patients in lurch
By Eli Newman - March 4, 2026

• 300,000 Blue Cross Blue Shield members may find themselves out of network with Michigan Medicine come July 1
• The insurer claims the hospital demanded a 44% price hike; Michigan Medicine counters that Blue Cross wanted a 30% cut
• The standoff comes amid turbulence in Michigan health care, including federal Medicaid cuts, rising premiums, hospital consolidation and insurer losses statewide

Contract negotiations between Blue Cross Blue Shield of Michigan and the University of Michigan Health system have stalled, which could leave about 300,000 patients out-of-network come July 1.

The state’s largest insurer, along with Blue Care Network, began notifying members Wednesday that southeast Michigan patients may need a new doctor if a new contract isn’t signed by June 30.

Medicare Advantage and Medicaid plans are not expected to be affected, nor will University of Michigan plans covering employees, faculty, staff and retirees.

Blue Cross claims Michigan Medicine is demanding a 44% price increase over the contract — a rate that “isn’t affordable” for its members.

“Health insurance premiums go higher when the cost of health care goes higher,” said Andy Hetzel, vice president of corporate communications for Blue Cross, which has 4.5 million members in the state.

“We also stand ready to continue our contract negotiations – and we are committed to finding ways to provide payment to the Michigan Medicine system that is responsible and affordable.”

The Ann Arbor health system said Blue Cross’ “claims about Michigan Medicine’s proposals are false.”

The hospital contends Blue Cross proposed an “unsustainable” 30% reduction in reimbursement for care. UM said Blue Cross’ reimbursement rate is already 22% lower than other major commercial plans in the state.

“We are advocating for an agreement that allows our nurses, physicians, and care teams to maintain the high-quality, specialized care patients depend on, while also ensuring that care is accessible and affordable for patients across the state of Michigan,” said Dr. David Miller, CEO of Michigan Medicine, in a statement.

“We want to partner with BCBSM to protect access to that care today and for years to come.”

Letters sent by Blue Cross said those qualifying as a “continuing care patient” under federal law have 90 days from the end of service before they drop out of network with Michigan Medicine.

Emergency services will vary by plan, with the insurance company asking patients to seek care at in-network hospitals for emergency room and non-emergency care.

Michigan Medicine operates 16 facilities that will be impacted by the decision, including University Hospital, C.S. Mott Children’s Hospital, Frankel Cardiovascular Center, W.K. Kellogg Eye Center and the Rogel Cancer Center. Sparrow Health in Lansing and Metro Health in Grand Rapids, which are operated by UM under new names, will remain in the network.

The stalled contract negotiations come as Michigan and states navigate turbulent tides in health care costs and coverage.

Federal cuts to Medicaid and the Affordable Care Act, rising insurance premiums, and the end of government subsidies for ACA marketplace plans have already strained coverage for millions.

Insurance companies are pulling back from operating in Michigan and the state’s hospital systems are increasingly consolidating, leading to a less competitive and pricier health care landscape for consumers.

Nearly 1 in 5 Bridge readers have identified health care as a top issue in Bridge Listens, an unscientific survey of top campaign issues in the 2026 election.

Michiganders are feeling the consequences.

UnitedHealthcare is now out-of-network for several Downriver Corewell Health facilities after a contract dispute. More sites are expected to drop off coverage later this year.

Blue Cross and Michigan Medicine have not navigated the shifting waters equally.

Blue Cross reported earlier this month a $246 million loss in 2025, with the company reporting it paid $2.6 billion more for medical and pharmacy services last year than it did in 2024. The continued five-year trend of losses was influenced by increased spending across services, according to the insurer, with more inpatient and rehabilitative care being used by its members.

Michigan Medicine reported better than expected financials in the 2025 fiscal year with an operating income of nearly $234 million.

The results have allowed the university system to expand in the state, as it projects serving millions in outpatient visits across more than 200 locations to maintain a positive margin.