Children's Minnesota dumps contract with BCBS

Minneapolis-based Children's Minnesota terminated its contract with Eagan-based Blue Cross and Blue Shield of Minnesota, a decision that could result in more than 70,000 patients losing in-network access to the hospital's services. 

Children's Minnesota said the change will be effective as early as July 5 for all BCBS health plans — including individual and employer-based commercial plans — unless the parties put a new agreement in place. If BCBS of Minnesota decides to extend the organizations' current contract, the termination date will move to the end of this year. 

The hospital said the termination is a result of six months of failed negotiations over reimbursements through Minnesota's Medicaid program, Medical Assistance. Todd Ostendorf, CFO of Children's Minnesota, said BCBS of Minnesota "is demanding an exceptionally large double-digit reduction" in Medicaid payments and "the massive reductions demanded by Blue Cross are unheard of and would be devastating to Children's and impact care provided to all patients." 

In an interview with the Star Tribune, Eric Hoag, vice president of provider relations at BCBS of Minnesota, said the decreased reimbursements were intended "to bring Children's in line with what other health systems, and what the market really is [like], on Medicaid payment rates." He said the insurer still has offered to pay "a premium to Children's, recognizing the unique services that they provide."

Mr. Ostendorf told the Star Tribune the hospital is "hopeful" the two parties can resolve the dispute and reach a new agreement that doesn't interrupt patients' care. 

More articles on payer issues:
Iowa Medicaid payers report more than $100M in losses in 2016
Anthem Blue Cross adds Medicare supplement plans in Missouri
Aetna responds to CMS' proposed market stabilization regulations

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