We are asked to determine whether health care providers have the right to an evidentiary hearing either as a matter of fundamental due process or as a contested case under the Administrative Procedures Act of 1969, MCL 24.201 et seq.; MSA 3.560(101) et seq., before the Insurance Commissioner approves a change by Blue Cross and Blue Shield of Michigan in their rates of payment.
I
Plaintiffs are skilled nursing care facilities. All are proprietary institutions rendering high-quality, frequently specialized care. They trace the origin of these specialized services to 1966 when Blue Cross and Blue Shield of Michigan (BCBSM) began a convalescent and long-term illness care program (CLTC). The program was designed to provide skilled nursing care away from the hospital to patients suffering chronic illnesses. By reducing the number of hospital beds occupied by chronically ill, terminally ill or recuperating patients, it was hoped that the program would help to reduce and contain costs of care for covered subscribers.
Participation in the CLTC program required *259nursing homes to be accredited by the Joint Commission on Accreditation of Hospitals. When the program was introduced, few nursing homes met these standards; only about 7% of the nation’s nursing homes were approved by the Joint Commission. Thus, to qualify for inclusion in the program, nursing homes that had previously provided merely custodial care spent considerable funds to upgrade their facilities. Capital improvements were made and equipment purchased, and skilled professional personnel were hired and trained.
The original contracts between BCBSM and the nursing facilities established a rate of reimbursement at the lesser of the provider’s billed charges or one-half the average per diem benefit payment made for acute general care at a participating hospital in the same geographic area. This formula was used routinely from the inception of the CLTC program in 1966 until 1977. The contracts also provided that either party could terminate the arrangement without cause upon 15 days’ notice.
In early September 1977, BCBSM mailed notices to the participating nursing facilities informing them that, at the end of the month, existing contracts would be terminated and the method of reimbursement modified. The notice stated that the changes were being made in an effort to more closely relate approved rates of payment to the providers’ operating costs and, in addition, to help assure that BCBSM payments are not made when a subscriber has primary coverage under the Medicare program. The new rates were to be effective October 1, 1977. On September 30, 1977, plaintiffs were sent a rate schedule indicating that from October 1, skilled nursing facilities would be reimbursed for billed charges limited to a per diem *260amount based on the 80th percentile of Medicare rates of payment on a regional basis.
It is alleged by plaintiffs that the new rates would not cover their costs and that services to BCBSM subscribers would have to be discontinued. Unable to retain skilled professionals for only private-pay patients, the nursing homes would be forced to revert to simple custodial care institutions.
Various suits were brought in circuit court and temporary restraining orders were issued preventing implementation of the new rate formula.
On November 8, the nursing homes were notified that a public hearing would be held before the Insurance Commissioner concerning the proposed rates. By subsequent letter to the Insurance Commissioner, plaintiffs objected to the informal nature of the proceeding and requested that a contested-case hearing pursuant to the Administrative Procedures Act be held. This request was denied.
The public hearing took place on November 21. One month later, the commissioner, having reviewed the testimony presented at the hearing and the memoranda filed in support of plaintiffs’ positions, issued an order denying that the nursing homes had a right to a contested-case hearing and approving the proposed reimbursement formula. This decision was appealed to the Wayne Circuit Court. That court reversed the declaratory ruling and remanded the case to the Insurance Commission so that a contested-case hearing could be held. The injunctions prohibiting the implementation of the new rate structure were continued. The com*261missioner appealed this decision and order to the Court of Appeals.
The Court of Appeals reversed the lower court, holding that plaintiffs did not demonstrate the deprivation of any property interest which would entitle them to a contested-case hearing either as a matter of procedural due process or as mandated by the Administrative Procedures Act.
II
"The heart of the matter is that democracy implies respect for the elementary rights of men, however suspect or unworthy; a democratic government must therefore practice fairness; and fairness can rarely be obtained by secret, one-sided determination of facts decisive of rights.”1
Notice and the opportunity to be heard are fundamental concepts in the jurisprudence of our state and federal courts. No rigid rule determines which interests will be protected or unprotected; the conclusion to be drawn is that what is procedurally fair in one situation to protect the rights of individuals may be unfair in another.
In 1971, Justice Stewart announced that the United States Supreme Court "has fully and finally rejected the wooden distinction between 'rights’ and 'privileges’ that once seemed to govern the applicability of procedural due process rights.”2 In Board of Regents of State Colleges v Roth, 408 US 564; 92 S Ct 2701; 33 L Ed 2d 548 (1972), the Court held that a teacher hired for one year *262without tenure had no constitutional right to a hearing when his contract was not renewed. Looking not to the weight but to the nature of the interest asserted, the Court held that the guarantee of procedural due process attached only to secure those interests already acquired in specific benefits. The terms of Mr. Roth’s appointment which served to create and define his assertedly protected interest did not support his claimed right to a hearing before termination.
In Perry v Sindermann, 408 US 593; 92 S Ct 2694; 33 L Ed 2d 570 (1972), a teacher, hired by a state college system under a series of one-year contracts, also faced termination due to allegations of insubordination. Sindermann’s claims regarding the circumstances of his employment, the college’s de facto tenure program, and his reliance thereon were sufficient to require the opportunity for him to be heard before the decision regarding his termination was made. As Professor Davis has noted, however:
"In the very case in which the Court announced that it had 'finally’ rejected the distinction between rights and privileges, the Court held that the teacher lacked a 'right’ to renewal of the contract.
"After 1972, the Court soon found that even though it could abolish the language of 'privilege’ in its own opinions, it could not abolish the distinction between a 'right’ and lack of a 'right,’ and it could not draw a clean line between the two categories, because some interests clearly deserve legal protection, some interests clearly do not, many are in some degree deserving and in some degree undeserving, and decisions have to be made about interests that are not clearly 'rights’ and not clearly without legal protection.” 2 Davis, Administrative Law Treatise (2d ed), § 11:1, pp 342-343.
*263Protected property interests are not created by the mere use of special words or key phrases. Our role is to assure that fair procedures are afforded before an individual or entity is deprived of a protected interest and to reaffirm that arbitrary and capricious conduct by any authority will not be sanctioned. Bundo v Walled Lake, 395 Mich 679; 238 NW2d 154 (1976); Bisco’s, Inc v Liquor Control Comm, 395 Mich 706; 238 NW2d 166 (1976).
Plaintiffs contend they are entitled to an evidentiary hearing. They argue that longstanding rates of payment, once determined to be "fair and reasonable”, which materially affect the financial viability of the facility involved must not be altered without an evidentiary hearing to determine the facility’s rights to participate in contracts with BCBSM. This interest in the continuation of certain rates of payment is characterized as "property” entitled to the protection of the Due Process Clause. In reliance upon their reasonable assumptions, plaintiffs allowed the BCBSM convalescent care program to take over approximately 30% to 40% of their total operation. Plaintiffs are now dependent upon the continuation of the program for their viability as skilled nursing facilities.
Plaintiffs also argue that the statutory language which authorizes BCBSM to enter into contracts with skilled nursing facilities and imposes the requirement that the Insurance Commissioner authorize rates which are fair and reasonable entitles them to an evidentiary hearing. Such a hearing would afford the guarantees of rudimentary due process, including timely notice of the action, presentation of witnesses, evidence and arguments, the opportunity to cross-examine any adverse witness, an impartial hearing examiner and a written *264statement of findings. See Bundo v Walled Lake, supra.
MCL 550.503; MSA 24.623 addressed BCBSM’s ability to enter into contracts with hospitals and health care facilities.3 In 1973, this statute was amended to specifically authorize BCBSM to contract with nursing facilities. 1973 PA 75. The authority of the Insurance Commissioner to approve the rates charged to subscribers for hospital services was amended to cover nursing facilities as well. The "fair and reasonable” standard urged by plaintiffs as the basis for an evidentiary hearing is set forth in the section of the statute which outlines the commissioner’s authority prior to issuing a certificate of authority to do business and has been interpreted by this Court as being a "standard for exercise of the commissioner’s continuing rate approval authority”.4 MCL 550.305; MSA 24.595.
We recognize the unique position held by BCBSM. Created by special legislation, it functions as a quasi-public, tax-exempt institution. See Blue Cross & Blue Shield of Michigan v Ins Comm’r, 403 Mich 399; 270 NW2d 845 (1978). The goal of this non-profit health care corporation has been recently reaffirmed by the Legislature: "to assure * * * reasonable access to, and reasonable cost and quality of, health care services, in recognition that the health care financing system is an essential part of the general health, safety, and welfare of the people of this state”. MCL 550.1102; MSA 24.660(102). The commissioner possesses no inherent regulatory authority; his powers are prescribed *265by the Legislature. Management of BCBSM is entrusted to the board of directors. We hold that the procedures followed here by the Commissioner of Insurance adhered to this legislative scheme and were appropriate to the nature of this case.
As noted above, while the Due Process Clause does not serve to create a protected property interest, its procedural safeguard protects against arbitrary deprivation of existing interests. We find that the actions by the commissioner were not arbitrary, and that plaintiffs were afforded sufficient opportunity to assert their claimed interests before a decision was rendered.
Plaintiffs cite many federal cases in support of their position that their economic stake in the program’s continuity is a property interest entitled to procedural due process protection. See, e.g., Case v Weinberger, 523 F2d 602 (CA 2, 1975); Mercy General Hospital v Weinberger, 410 F Supp 344 (ED Mich, 1975); Langhorne Gardens, Inc v Weinberger, 371 F Supp 1216 (ED Pa, 1974); Coral Gables Convalescent Home, Inc v Richardson, 340 F Supp 646 (SD Fla, 1972). Plaintiff Allen Park Convalescent Home argues that the relationship between nursing homes and Medicare and Medicaid administrators is similar to the relationship between the nursing facilities and BCBSM inasmuch as continued participation is vital to the economic solvency of the nursing homes in both situations, and, in most cases, the nursing home has made substantial expenditures in order to qualify for reimbursement.
In Case v Weinberger, supra, the Court held that a pretermination hearing was not necessary before decertification of a nursing home which failed to meet statutory safety standards. While acknowledging that the expectation of continued *266participation is a property interest, the Court held that the governmental interest in the safety of the patients justified the procedures employed. The Court noted:
"A nursing facility’s 'need’ for patients has nothing to do with the statutory benefits structure. The facility’s need is incidental. That a particular nursing facility cannot survive without Medicaid participation was certainly not Congress’ foremost consideration in its creation of the Medicaid program. This is not to derogate Mrs. Case’s property interest in her expectation of continued participation. We must, however, place that right in proper perspective with regard to the health and safety expectations of the patients, which expectations the Secretary has a valid interest in protecting. The benefits to a nursing home from its participation in Medicaid reimbursement result from nothing more than a statutory business relationship.” (Footnote omitted.) Case v Weinberger, supra, 607.
In Mercy General Hospital v Weinberger, supra, the Michigan Department of Social Services began to recoup overpayments made to the plaintiff hospital by withholding portions of current claims for reimbursement. In deciding whether the Department of Health, Education and Welfare could properly terminate Medicaid payments without providing a prior hearing, the Court used the same balancing of interests analysis and concluded that the government’s position must prevail. "The reliance of the hospital on these funds, while great indeed, does not rise to the same level. It must also be remembered in this context that the Court is dealing with a corporation as opposed to a private individual.”5 In this particular situation, the Court concluded that post-termination review *267would be the most appropriate means to afford due process of law.
We do not believe that these cases mandate a contrary result. Without doubt, the proposed changes in rates of payment will have a serious impact on the operation of the nursing facilities just as the proposed actions in the cited federal cases affected the ability of the nursing homes to continue to function in the same manner. However, this is only one factor to consider in procedural due process analysis. Beginning with the premise that due process is a flexible concept, courts must balance the nature of the affected property interest against the governmental interest involved.
" '[C]onsideration of what procedures due process may require under any given set of circumstances must begin with a determination of the precise nature of the government function involved as well as of the private interest that has been affected by governmental action.’ Cafeteria & Restaurant Workers Union v McElroy, 367 US 886, 895; 81 S Ct 1743, 1748-1749; 6 L Ed 2d 1230, 1236 (1961). To say that the concept of due process is flexible does not mean that judges are at large to apply it to any and all relationships. Its flexibility is in its scope once it has been determined that some process is due; it is a recognition that not all situations calling for procedural safeguards call for the same kind of procedure.” Morrissey v Brewer, 408 US 471, 481; 92 S Ct 2593, 2600; 33 L Ed 2d 484, 494 (1972).
Thus, while we may recognize that some kind of a hearing is due, the nature and timing of such hearing must be determined according to the relationship of the interests involved. See Paramount Convalescent Center, Inc v Dep’t of Health Care Services, 15 Cal 3d 489; 125 Cal Rptr 265; 542 P2d 1 (1975); Klein v Califano, 586 F2d 250 (CA 3, *2681978); Lomond View Nursing Homes, Inc v Califano, 639 F2d 674 (CA 10, 1981); Anno: Termination of Medicaid Payments, 37 ALR Fed 682; Friendly, "Some Kind of Hearing”, 123 U Pa L Rev 1267 (1975).
The Legislature has not explicitly afforded an evidentiary hearing to hospitals or nursing facilities. The legislation creating BCBSM speaks of establishing a system which will provide quality health care at reasonable costs to all the people of the state. It is the citizens of Michigan who are the primary beneficiaries of the non-profit health care corporation act. The governmental interest involved is the expeditious delivery of such care to the people in an effective manner.
The proposed changes in the reimbursement formula would significantly reduce the amount of money received by the nursing facilities; all payments, however, would not be eliminated. Plaintiffs urge that their right to receipt of fair and reasonable rates is an interest protected by the guarantees of due process. We agree that procedural fairness is required before changes are made which drastically alter essential terms of the longstanding contractual relationship between plaintiffs and BCBSM. We believe, however, that this has occurred.
The critical element provided by a judicial trial or an administrative hearing is the opportunity for a party to present arguments and evidence in support of its position before a decision is rendered, the chance to respond before final action is taken. Notice and hearing are the means by which we guarantee that a party, knowing the consequences of proposed action, has a forum in which to present its position in a meaningful way.
In this instance, plaintiffs were given notice of *269the action. At the public hearing they presented witnesses in their behalf and submitted material in support of their position to the Insurance Commissioner. The nursing facilities were given the opportunity to participate in the administrative process before final action was taken. This kind of presentation allows plaintiffs to directly communicate their ideas in a timely, efficient manner. The guarantee of procedural due process does not necessarily require an adversary proceeding. In the administrative hearing, the focus is on the presentation of pertinent information, not the demeanor of the individuals involved. Due process of law, appropriate to the nature of the case and consistent with the statutory requirements, was afforded.
Ill
We agree with the conclusion of the Court of Appeals that in this case an evidentiary hearing is not mandated by the contested-case provision of the Administrative Procedures Act, MCL 24.203(3); MSA 3.560(103)(3). We reach this decision after evaluating the policy of the BCBSM enabling legislation in conjunction with the requirements of the APA.
"A hearing in a contested case permits an administrative agency to make a just decision on the rights, duties or privileges of named parties.” Bienenfeld, Michigan Administrative Law (Ann Arbor: Institute of Continuing Legal Education), p 5-1. Once a matter is determined to be a contested case, chapter 4 of the APA governs the procedures involved and imposes requirements designed to afford the guarantees of due process of law.
*270The distinct nature of the administrative hearing has been addressed by this Court.
"The relationship of the courts to administrative agencies and tribunals * * * has been one marked by judicial restraint born of several considerations.
"Foremost is the separation of powers. Administrative agencies are a part of the executive branch of government. While they often act in a quasi-judicial capacity, it is recognized that they are established to perform essentially executive functions.
"An appreciation of the theory of administrative law dictates that courts move very cautiously when called upon to interfere with the assumption of jurisdiction by an administrative agency.
"There are other practical considerations. The courts have recognized the expediency of permitting the administrative process to function to the extent of its capacity before intervening at the behest of one who conceives himself aggrieved or threatened by administrative action.
"Matters consigned to administrative determination are often technical in nature, and closely related to the carrying out of some statutorily defined public policy.
"Judicial restraint tends to permit the fullest utilization of the technical fact-finding expertise of the administrative agency and permits the fullest expression of the policy of the statute, while minimizing the burden on court resources.” Judges of 74th Judicial Dist v Bay County, 385 Mich 710, 727-728; 190 NW2d 219, 226 (1971).
The fact that there is a constitutional requirement for a hearing does not mean that a full trial-like proceeding is mandated. Indeed, the United States Supreme Court has emphasized the flexible nature of due process in administrative proceedings when the governing statute does not explicitly provide for a full hearing.6 Only when the property *271interest involved was the potential deprivation of the financial means by which to live has the Court insisted on án evidentiary hearing prior to the termination of benefits. See Goldberg v Kelly, 397 US 254; 90 S Ct 1011; 25 L Ed 2d 287 (1970).
We agree with Professor Davis that "[d]ue process can be interpreted to require a hearing to the extent and only to the extent that a party will have a chance to know and to respond to the evidence against him, without requiring a hearing 'on the record’ ”. 2 Davis, Treatise, supra, p 337. See, also, Friendly, supra; Davis, The Requirement of a Trial-Type Hearing, 70 Harv L Rev 193 (1956).
A full trial-like hearing prior to the commissioner’s approval of rates is not explicitly required by statute. The intent of the Legislature has been recently reaffirmed. "It is the public policy of this state that, in the interest of facilitating access to health care services at a fair and reasonable price, an alternate, expeditious, and effective procedure for the resolution of issues and the maintenance of administrative appeals relative to provider class plans be established and utilized * * * so as to minimize uncertainty and délays.” MCL 550.1102; MSA 24.660(102).
*272The plaintiffs’ interest is alleged to be the continuation of fair and reasonable rates of payment by BCBSM; the nursing facilities contend that a trial-like hearing is required before BCBSM can materially alter a contractual provision.
Administrative procedures must provide the affected party an opportunity to explain its position and rebut adverse evidence. Arbitrary action, bias or prejudicial conduct will not be tolerated. The distinct nature of BCBSM’s position with regard to the citizens it serves and the facilities with which it contracts make this case one of first impression. We do not believe, as argued by plaintiff Nightingale West, Inc., that the decision of the Insurance Commissioner to approve rates of payment made to these nursing facilities constitutes an act of licensing under the APA and, thus, requires that a contested-case hearing be held prior to a reduction in rates of payment. MCL 24.205, subds (1) and (2); MSA 3.560(105), subds (1) and (2).
"A 'license’ is permission by competent authority to do an act which, without such permission, would be illegal.” Bienenfeld, supra, p 7-1; MCL 24.205; MSA 3.560(105). Licensing involves the many procedures administrative agencies perform in conjunction with licenses.
BCBSM requires that nursing facilities meet certain standards in order to participate in the CLTC program. BCBSM’s status as a quasi-public corporation may entitle it to certain benefits granted by the government, but its power is an aspect of its unique position; it has not been given governmental authority to engage in licensing activities when it contracts with hospitals or nursing facilities. Nor does the Insurance Commissioner grant a license, in the traditional sense, to nursing facilities when approving rates pursuant *273to MCL 550.503. Rather, the commissioner is acknowledging that the rates established by the contracting parties are fair and reasonable charges for health care services incurred by the citizens of Michigan. Thus, while we surely continue to support the rationale underlying our decisions in Bundo v Walled Lake, supra, Bisco’s, Inc v Liquor Control Comm, supra, and other cases which have extended the procedural guarantees of due process, our holding is necessarily confined to the facts of this case.
The Administrative Procedures Act, in the absence of an explicit statutory requirement that an evidentiary hearing be held, guarantees that administrative hearings, however informal, comport with the notions of fairness embodied in the requirements of procedural due process. This hearing has done so.
The decision of the Court of Appeals is affirmed. The matter is remanded to the circuit court for further proceedings not inconsistent with this opinion.
Coleman, C.J., concurred with Fitzgerald, J.Joint Anti-Fascist Refugee Committee v McGrath, 341 US 123, 170; 71 S Ct 624; 95 L Ed 817 (1951) (Frankfurter, J., concurring).
Board of Regents of State Colleges v Roth, 408 US 564, 571; 92 S a 2701; 33 L Ed 2d 548 (1972).
MCL 550.501 et seq.; MSA 24.621 et seq., was repealed by 1980 PA 350, effective April 3, 1981. MCL 550.503; MSA 24.623 may now be found at MCL 550.1207; MSA 24.660(207).
Blue Cross & Blue Shield of Michigan v Ins Comm’r, 403 Mich 399; 270 NW2d 845 (1978).
410 F Supp 344, 348.
"These decisions underscore the truism that ' "[d]ue process,” *271unlike some legal rules, is not a technical conception with a fixed content unrelated to time, place and circumstances.’ * * * More precisely, our prior decisions indicate that identification of the specific dictates of due process generally requires consideration of three distinct factors: First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government’s interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail.” Mathews v Eldridge, 424 US 319, 334-335; 96 S a 893; 47 L Ed 2d 18 (1976).
See, also, Morrissey v Brewer, supra; Goss v Lopez, 419 US 565; 95 S Ct 729; 42 L Ed 2d 725 (1975); Arnett v Kennedy, 416 US 134; 94 S Ct 1633; 40 L Ed 2d 15 (1974); Wolff v McDonnell, 418 US 539; 94 S Ct 2963; 41 L Ed 2d 935 (1974); 2 Davis, Administrative Law Treatise, supra, §§ 10:7-10:8, pp 328-337; 4 Mezines, Stein & Gruff, Administrative Law, § 33.02, pp 33-7 — 33-21.