Blue Cross and Blue Shield of Minnesota Contract is Terminated by Children's Hospitals and Clinics

Blue Cross says Children's is demanding increases in already record-high reimbursement rates

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Blue Cross and Blue Shield of Minnesota

Mar 08, 2017, 13:44 ET

EAGAN, Minn., March 8, 2017 /PRNewswire-USNewswire/ -- Children's Hospitals and Clinics of Minnesota has announced it will terminate its contract with Blue Cross and Blue Shield of Minnesota (Blue Cross) effective July 4, 2017 unless the insurer agrees to a new contract with pay increases well above market standards.

"We are very disappointed with the decision made by Children's Hospitals and Clinics of Minnesota to leave the Blue Cross network," said Garrett Black, senior vice president of health services for Blue Cross. "At a time when Minnesotans need all areas of the health care system to collaborate on solutions for keeping medical costs affordable, Children's is focused on increasing its already strong margins. We know that many Blue Cross members value having access to Children's Hospitals and Clinics, and we hope Children's will work to avoid any unnecessary disruption to the care of our members and reconsider their decision to leave the Blue Cross network."

For inpatient hospital care for Medicaid patients – Children's largest segment -- Blue Cross currently pays Children's well above the rate that the State of Minnesota has set for its own direct Medicaid payment rates, and in some cases, double.

With unprecedented growth in Medicaid utilization levels, current reimbursement rates are not sustainable for the marketplace. The proposal Blue Cross offered to Children's is still above market rates, in recognition of the unique specialty services offered to our members by Children's.

For the 2016 plan year, the State of Minnesota opened the Medicaid program for competitive bidding by Minnesota insurers in an effort to reduce the cost the State pays for medical care in Medicaid. As a key Medicaid insurer, Blue Cross has an obligation to work with the health care provider market to emphasize the need for stronger efforts to contain managed care costs in the face of rapidly rising per-enrollee spending.

Blue Cross is urging Children's to be part of the solution on health care costs, and accept Medicaid payments that are in line with what other large hospitals with pediatric trauma capabilities have already accepted as reasonable rates.

"Children's request for a payment increase at this time is concerning to us, considering their status as the highest paid care system in Minnesota for Medicaid services," said Black. "Medicaid costs have reached critical levels and have already led to significant disruption and instability for Medicaid enrollees with the recent exit of Medica. As a state, Minnesota needs stronger efforts and greater participation from hospitals and clinics to contain health care costs in the face of rising spending."

Many families value having access to Children's Hospitals and Clinics of Minnesota as part of their health plan, and Blue Cross values and respects the high quality of care that Children's delivers every day.

"Our hope is for Children's to remain accessible to our members as a participating provider within our network," added Black. We have shared our approach with Children's and remain hopeful that they will reconsider their decision and join our efforts."

About Blue Cross and Blue Shield of Minnesota
Blue Cross and Blue Shield of Minnesota, with headquarters in the St. Paul suburb of Eagan, was chartered in 1933 as Minnesota's first health plan and continues to carry out its charter mission today: to promote a wider, more economical and timely availability of health services for the people of Minnesota. A nonprofit, taxable organization, Blue Cross is the largest health plan based in Minnesota, covering 2.9 million members in Minnesota and nationally through its health plans or plans administered by its affiliated companies. Blue Cross and Blue Shield of Minnesota is an independent licensee of the Blue Cross and Blue Shield Association, headquartered in Chicago. Go to bluecrossmn.com to learn more.