Once unthinkable, Children’s Minnesota is no longer part of the network for Blue Cross Blue Shield or BCBS of Minnesota. The pediatric health system cut ties effective on the day of Wednesday when the 2 sides couldn’t agree to a latest contract.
The split means that an estimated 66,000 subscribers who relied on Minneapolis-based Children’s Minnesota for pediatric care must go elsewhere or face higher out-of-network charges. Statements released on the day of Wednesday recommend a deal may still be reached, but Children’s opted not to extend rates while talks continued.
“The clinical team at Blue Cross has been working closely with the clinical team at Children’s—as well as other leading pediatric care providers across the state—to handle the transition of care for sufferers and their families,” BCBS of Minnesota stated in its statement.
Children’s Minnesota stated that it was given “an impossible ultimatum” that threatened its ability to give care to the highest levels, according to a statement from CEO Bob Bobnar. “We are 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.”
The dispute is about Medicaid: BCBS of Minnesota sought managed care rates on par with what it pays other hospital systems, but Children’s claims it already loses 30 cents on the dollar for every Medicaid patient and couldn’t afford to lose more.
BCBS of Minnesota has its own constraints. Its 2016 annual report demonstrated its reserves have declined from $1.26 billion in 2014 to $990 million previous year, and the insurer stopped selling policies on the marketplace under the Affordable Care Act.
The split is a sign of the times. Cutting edge academic medical centers, specifically those that treat high numbers of patients with complex medical requirements, have discovered themselves pushed out of managed care networks under constant pressure to cut costs.
A study released Thursday by the University Of Pennsylvania School Of Medicine found that narrow networks increasingly exclude cancer centers associated with the National Cancer Institute. Research by the Robert Wood Johnson Foundation has discovered a greater trend toward declining network participation from urban hospitals and highly rated hospitals, particularly in narrow networks.
Negotiations in Minnesota became a case of who would blink first, as Children’s and Blue Cross are huge players on the other’s balance sheet. BCBS of Minnesota insisted in its statement it offered Children’s a contract with “above market prices” for the year of 2017, “depicting the value that Children’s provides,” but that its offer was denied. Children’s said in its statement that Blue Cross “triggered” the dispute by demanding a 31 percent cut in Medicaid reimbursement rates, “and threatening us with no future inflationary rate increases for care to those with private insurance.”
“Even after months of negotiations, Blue Cross remains at double-digit reduction demands for the payments we get for efficient, high quality pediatric care,” Children’s stated in its statement.
The split means BCBS of Minnesota members no longer have coverage at two hospitals in the Minneapolis-St. Paul area, a specialized nursery, 12 primary care clinics, 6 rehab clinics, and all specialty sites.
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