No deal for Blue Cross, Children’s

July 05--Blue Cross and Blue Shield of Minnesota and Children's Minnesota did not hit a July 5 deadline for a new contract, meaning people with Blue Cross coverage could face sharply higher out-of-network rates starting Wednesday if they want care at the state's largest pediatric hospital.

Blue Cross, the largest health insurer for Minnesota residents, says about 66,000 subscribers have received care at Children's during the past year.

Most of those patient families must now decide whether they will pay more to stick with Children's, or find new health care providers that are available at in-network rates.

"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," said Garrett Black, senior vice president of health services at Blue Cross, in a statement issued just after midnight.

Children's issued a statement just after midnight saying Blue Cross members no longer have in-network coverage at the pediatric health system's hospitals in Minneapolis and St. Paul as well as at 12 primary care clinics, several specialty clinics, six rehab sites and a surgery center in Minnetonka.

"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," said Bob Bonar, the chief executive at Children's Minnesota, in a statement.

Last year, Blue Cross paid for about 32 percent of all hospital patient days at Children's -- a significant chunk of the health system's business. While that gives the insurer leverage, Children's can draw on the fact that health plans typically face pressure from subscribers to provide access to large pediatric hospitals.

In its statement, Blue Cross left open the possibility that an agreement might still be reached. "Blue Cross is still committed to resolving this negotiation, as it has done with every other provider in its network," the statement said. Similarly, Children's said it "is committed to continuing to work at resolving differences with Blue Cross."

Contract disputes between health insurers and hospitals occur periodically, but most are settled before patients experience disruptions. The break between Blue Cross and Children's is the highest profile contract termination in the Twin Cities in at least a decade.

Blue Cross said it needed Children's to agree to Medicaid payment rates that are more comparable to other hospital systems. Children's countered that the proposed rates are too low and would force significant service cuts.

The insurance company says patients can be treated at other medical centers in the region, but Children's contends other pediatric hospitals lack sufficient capacity.

During the past several weeks, Blue Cross granted coverage extensions for more than 4,000 patients in the middle of complicated treatments who could not be easily transferred to other health care providers. Those patients don't face an immediate decision about finding other health care providers, since Blue Cross is extending in-network coverage for 120 days.

Blue Cross is one of the insurance options for employees with the state of Minnesota, but the impasse doesn't immediately affect state workers. That's because health plans that administer the state program are required to maintain their networks of health care providers for the entirety of the calendar year.

The dispute is being felt among people with Medicaid coverage, which the state provides through managed care organizations including an HMO at Blue Cross. As of this month, the Blue Cross HMO provided coverage for about 184,000 kids in Medical Asssitance, which is Minnesota's name for the state-federal Medicaid program for people with lower incomes.

Not all those children receive care from Children's Minnesota, but the state's Human Services Commissioner Emily Piper issued a statement earlier this week saying: "I am deeply disappointed that the parties have been unable to resolve their contract dispute."

Twitter: @chrissnowbeck

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