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September 12, 2006

U-M Health System in talks with Blue Cross Blue Shield of Michigan to sell M-CARE health plans

Proposal to go before U-M Board of Regents Sept. 22
No interruption to members’ coverage

ANN ARBOR, MI – Twenty years after launching M-CARE to provide innovative and high-quality health plans to the community on a non-profit basis, the University of Michigan Health System is in final talks to sell M-CARE to an organization that will uphold that tradition despite turbulent times for health plan providers: Blue Cross Blue Shield of Michigan and its subsidiary, Blue Care Network of Michigan.

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For additional information on M-CARE, please read this background sheet and fact sheet

“We believe this transaction will allow the innovative, high-quality plans and programs that M-CARE has built to be incorporated into an organization that shares many similar approaches to health coverage,” says Robert Kelch, M.D., U-M executive vice president for medical affairs and UMHS CEO. “It will also allow the Health System to focus on our critical missions of providing exceptional care to patients, educating tomorrow’s health care professionals and scientists, and conducting groundbreaking research.”

The sale, which will include all of M-CARE’s HMO, PPO, HSA, Open Access, GradCare, Medicaid and Secure plans, will go before the U-M Board of Regents for consideration on Sept. 22 and will also be subject to regulatory approval. It is anticipated the sale could be finalized by the end of 2006 or in early 2007.

M-CARE LogoThe sale means M-CARE members will continue to have access to high-quality health coverage. There will be no immediate changes or interruptions to health benefits for the nearly 200,000 Michigan residents currently covered by M-CARE plans. They will continue to receive health plan coverage under the M-CARE name through the Blues for the duration of their employer’s current M-CARE contract and through renewals for 2007 coverage. After that, they will be able to select coverage from a variety of high-quality offerings from BCBSM.

For the more than 60,000 University of Michigan employees, graduate students, retirees and dependents who are currently enrolled in M-CARE plans, coverage will continue through the end of 2007. For 2008, the University is working with the Blues on a set of Blues offerings to meet its specific needs that are intended to provide the same level of benefits and choice as the University’s current M-CARE offerings. The U-M will continue to offer a competitive benefits program designed by U-M to support its benefits strategy and the health care needs of the University community.

The 400 U-M employees who work for M-CARE will be retained until the sale is finalized. Once the sale is final, many M-CARE employees will be retained by U-M, providing services to Blue Care Network under a lease agreement for a period of time through the transition. After that time, employees will be assisted in transitioning to positions at BCBSM, Blue Care Network, other areas of U-M, or the community.

U-M will apply its Reduction in Force policy and the federal Worker Adjustment and Retraining Notification Act will be followed, which provides for a notice of 60 or 90 days, depending on length of service.

As events unfold toward the sale date, Kelch says the M-CARE administration, UMHS human resources staff and BCBSM will work together to provide more specific information about employee positions and transitions. “We know that any transition of this magnitude causes concern, but we pledge to work to make it as smooth as possible for all involved,” he says.

Technically, M-CARE and its subsidiary, M-CAID, would be sold to Blue Care Network, a subsidiary of BCBSM. M-CARE’s subsidiary, Michigan Health Insurance Corp., would be sold to BCBSM.

The proposed sale to BCBSM comes at a time when the health plan business environment is changing rapidly, with an increased need for capital technology investments and rising pressure from new consumer-driven plans.

That makes this an opportune time to consider a sale to another organization whose mission, and focus on improving health care, meshes with that of the Health System, says Kelch. “While this was a very hard decision to make given the history and excellence of M-CARE, and the dedication of M-CARE employees, in the long run we feel it makes the most sense for both M-CARE and the Health System,” he says.
Kelch credits M-CARE Executive Director and CEO, Zelda Geyer-Sylvia, M.P.H., with leading a team that has built M-CARE into a much-admired organization. “She, her leadership team, and all M-CARE employees have created innovative plan designs, disease management programs, online member and provider tools and other programs that have led the industry,” he says.

One area of innovation made possible by M-CARE’s unique position as a University-owned organization has been in health care research. U-M Medical School researchers have performed numerous studies of health care delivery, quality and other issues using anonymous data drawn from M-CARE databases. This has allowed them to study many issues, from mammography and colonoscopy rates to diabetes care.

U-M faculty also have partnered with BCBSM for similar quality improvement projects that use anonymous data from hospitals and doctors across Michigan. For example, U-M and BCBSM experts lead a heart care project funded by BCBSM that has helped save lives and dollars by improving heart procedures performed at 18 Michigan hospitals.

Under the sale agreement, U-M health researchers and quality improvement experts will continue to be able to apply for access to data collected by M-CARE and BCBSM, with appropriate safeguards for confidentiality. A variety of quality improvement initiatives funded by BCBSM and coordinated by U-M Health System faculty also will continue.

The vast majority of physicians, hospitals and other health care providers that currently participate in the M-CARE provider network are also part of the Blues network. So, most M-CARE members who later transition to a Blues plan will be able to retain their current physician.

Contracts that M-CARE currently holds with hospitals, independent physician practice associations and individual physicians and other providers will still be in effect when the sale closes. This includes M-CARE’s contracts with all U-M doctors, health centers and hospitals.

The sale means employers will continue to receive high-quality health care coverage. Employers will see no change in their current benefits or premiums for 2007 renewals. In 2008, they will have access to a wide variety of quality Blues offerings with competitive benefits and rates.

Further information and updates on the proposed sale, and background information on M-CARE, is available online at That site also includes information for M-CARE employees, members, providers and other audiences.

M-CARE members may also e-mail or call M-CARE Customer Service at 734-913-2211, or 800-658-8878, Monday through Friday between 8 a.m. and 5 p.m. The deaf or hard of hearing may call 800-649-3777 for TTY/TDD service.

Members of the media who wish to be kept apprised of events relating to this matter may e-mail Kara Gavin, The BCBSM press office can be reached at 313-225-8113.

Written by Kara Gavin

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