Blue Cross, Children’s Minnesota Fail To Reach Contract Agreement

Minnesota's largest pediatric care provider and the state's largest health insurer failed to reach a deal.

Credit: Tony Webster

MINNEAPOLIS – Blue Cross and Blue Shield of Minnesota and Children’s Minnesota failed to reach a deal by the July 5, 2017 contract deadline.

As of midnight July 5, Children’s Minnesota is now an out-of-network provider for Blue Cross patients. The health care provider reports this puts 66,000 patients at risk of significantly higher medical costs in order to continue receiving care at Children’s.

Back in March, Children’s announced they would be terminating their contract with Blue Cross after the insurance provider attempted a double-digit reduction in Medicaid rates. According to the Minneapolis St. Paul Business Journal, Blue Cross wanted a 31 percent reduction in rates. Children’s pushed back on the rate change, saying unless they could reach a deal before the July 5 contract expiration date, they would be ending their contract with Blue Cross.

In an attempt to get the public on their side, Children’s recently launched a website, Stand Tall For Small, taking a shot at Blue Cross. Children’s Minnesota said the rate reduction would threaten their “long-term viability.”

After months of public negotiations, the state’s largest pediatric hospital and the state’s largest health insurer could not reach a deal. In a statement issued at midnight, Blue Cross did not rule out the possibility of reaching an agreement following the contract expiration, however, the insurer blames Children’s for the lack of a deal.

“Blue Cross has a long history of negotiating in good faith and working through difficult issues even after the renewal date comes and goes. The vast majority of our negotiations with physicians and hospitals are resolved thoughtfully and reasonably. 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,” Garrett Black, senior vice president of health services at Blue Cross, said in a statement.

Blue Cross members will no longer qualify for in-network coverage at Children’s Minneapolis and St. Paul hospitals as well as the health care provider’s 12 primary care clinics, all specialty clinics and rehab centers, the Minnetonka Ambulatory Surgical Center, and home care services.

“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,” Bob Bonar, the chief executive at Children’s Minnesota, said in a statement. “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.”

Leading up to the deadline, Children’s submitted over 4,000 requests for continued care for patients with conditions too complicated to safely move treatment to another health care provider. Blue Cross has granted a 120-day in-network coverage extension for all of the continued care requests.

Contract battles between health care providers and insurance providers are not uncommon. However, the battle between Children’s and Blue Cross has become uniquely public. The Star Tribune called the contract battle the “highest profile contract termination in the Twin Cities in at least a decade.”

Christine Bauman
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