Children’s Minnesota Terminates Contract with Blue Cross and Blue Shield

Neither side could agree on the other’s terms for a new contract before the July 5 deadline.

Those insured by Blue Cross and Blue Shield of Minnesota will no longer have insurance coverage for most services provided by Children’s Minnesota, one of the largest pediatric health systems in the country, as of today.
The change of policy follows months of negotiations between the hospital and insurance provider. Neither was able to find agreeable terms for a new contract by the July 5 deadline.
Patients represented by Blue Cross, which covers about 3 million Minnesotans, will likely be forced to pay higher out-of-network rates for any care received at a Children’s facility.
The coverage cut-off extends to Children’s Minneapolis and St. Paul hospitals, special care nursery in Coon Rapids, its 12 primary care clinics, all specialty clinics, six rehab sites in the Twin Cities, and the ambulatory surgical center and home care services it provides in Minnetonka. Blue Cross may cover the cost for certain hospital trips to Children’s; however, the extent of the coverage will depend on a family’s out of network benefit rules, or if a special authorization has been given by Blue Cross.
About 66,000 Blue Cross customers were treated at Children’s facilities in 2016, according to the Star Tribune.
Unfair terms
Both Children’s and Blue Cross placed blame on the other in separate statements made Wednesday.
“Blue Cross gave Children’s an impossible ultimatum, knowingly threatening our ability to care for the kids and families that rely on us every day,” Bob Bonar, CEO of Children’s Minnesota, said in prepared remarks. “We’re disappointed that Blue Cross has been unwilling to find common ground given the scale and scope of vital pediatric services that we provide in this community.”
Children’s claimed the Eagan-based insurer was “demanding” a 31 percent cut in Medicaid reimbursement. The reduction, it said, would be bad for business because it currently receives about 70 cents for every dollar of cost actually incurred when treating Medicaid-insured patients.
“Accepting Blue Cross’ cut puts our organization at risk,” Children’s wrote.
Blue Cross rebuked the claim, stating the hospital system was demanding increases in reimbursements rates that were well above what other hospitals and physicians in Minnesota have been agreed to.
Garrett Black, the senior vice president of health services at Blue Cross, said the insurer had offered Children’s a contract with above-market prices for 2017 “reflecting the value Children’s provides”—but Children’s declined.
“We find it disappointing that Children’s would choose to walk away from our network instead of working with us collaboratively to negotiate a new agreement,” Black said.
Nevertheless, both Blue Cross and Children’s hinted at continuing efforts to reach a deal.
“Children’s Minnesota is committed to continuing to work at resolving differences with Blue Cross,” the hospital system said. Equally, Blue Cross said it was “still committed to resolving this negotiation, as it has done with every other provider in its network.”