Children's Minnesota and Blue Cross and Blue Shield of Minnesota have ended their contract negotiations after the insurer demanded a 31 percent cut to Medicaid reimbursement, according to the provider.
BCBS of Minnesota has also threatened the provider with no future inflationary rate increases for care to those with private insurance.
Blue Cross and Blue Shield of Minnesota in turn charged Children's Minnesota with demanding increases in reimbursement rates which exceed what other hospitals and physicians in Minnesota have been accepting. It has been able to come to terms with other providers in its network, such Gillette Children's Specialty Healthcare, it said.
Blue Cross offered Children's a contract with above-market prices for 2017, the insurer said.
The contract fall-out means Blue Cross members will no longer have insurance coverage for most services provided at Children's facilities, including hospitals in Minneapolis and St. Paul.
But Blue Cross fired back, saying Minnesota residents have other options for pediatric care including the University of Minnesota Masonic Children's Hospital, Gillette Children's Specialty Healthcare, Mayo Clinic Children's Center, Sanford Children's Hospitals and Shriners Hospitals for Children.
To accept the cuts would put Children's Minnesota at risk and jeopardize its ability to sustain vital services, the provider said.
"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 and the vitality of our organization," said Bob Bonar, CEO at Children's Minnesota.
As of July 5, Children's Minnesota is no longer an in-network provider for Blue Cross and Blue Shield of Minnesota members who are covered through employer-provided or individually purchased Blue Cross health insurance plans or the Blue Cross Blue Plus PMAP program.
Children's Minnesota and Blue Cross both said they want to resolve their differences.
However, Children's Minnesota said, "Even after months of negotiations, Blue Cross remained at double-digit reduction demands for the payments we receive for efficient, high quality pediatric care. On average, Children's currently receives from payers about 70 cents for every dollar of cost actually incurred to care for patients insured through Medicaid."
Blue Cross and Blue Shield of Minnesota said Children's Minnesota elected to leave the insurance network, even though they could have continued to treat patients at current rates while negotiating a new contract.
"Children's rejected our contract offers and has continued to push for a substantially higher price increase well above market standards," said Garrett Black, senior vice president of health services at Blue Cross. "Unfortunately, Children's has instead been focused on an expensive marketing campaign asking patients to pressure Blue Cross into allowing Children's to charge higher prices for their services."
Blue Cross members no longer have insurance coverage for most services provided at Children's facilities, including the Minneapolis and St. Paul hospitals, Special Care Nursery in Coon Rapids, 12 primary care clinics, all specialty clinics, six rehab sites in the Twin Cities and the Minnetonka Ambulatory Surgical Center and home care services.
While patients still have access to Children's emergency departments for emergency care, the provider urged families to consult with their carrier to understand the impact on their out-of-pocket costs, should a child need to be admitted to the hospital.
Additionally, Blue Cross may cover care provided at Children's Minnesota facilities, but at varying amounts based on each family's out of network benefit rules and/or only with special authorization from Blue Cross. In many cases, this means patient's out-of-pocket costs for accessing care will be higher, Children's Minnesota said.
Blue Cross said it has agreed to approve continued treatment at Children's for eligible Blue Cross members based on clinical criteria that Children's provided to Blue Cross for ongoing medical care. As a result, more than 4,000 Blue Cross members will continue their care at Children's.