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Children's Hospitals MN drops Blue Cross Blue Shield, affecting thousands of kids

The reimbursement rates would be "crippling" to the hospital group, it said.

Children's Hospitals in Minnesota will no longer be an in-network provider for those with Blue Cross Blue Shield health insurance.

The announcement was made by Children's Minnesota on Wednesday, saying it was ending its contract with BCBS and Blue Plus (Blue Cross) health plans after failing to come to an agreement on Medicaid and Medical Assistance (MA) reimbursement.

The nonprofit hospital group says Blue Cross is demanding "an exceptionally large" double-digit reduction in payments for care for Medicaid patients that would "financially cripple" Children's.

"With payment rates that are already well below our cost to provide care, the massive reductions demanded by Blue Cross are unheard of and would be devastating to Children's and impact care provided to all patients," said Todd Ostendorf, chief financial officer at Children's.

"Accepting the proposed rates would threaten the viability of Children's Minnesota and unfairly compromise the quality of care our patients and their families have come to expect from us," he added. "Unfortunately, the only option we felt we had was to terminate the contract and appeal to Blue Cross for reasonable reimbursement rates."

At the moment the hospitals currently get 70 cents for every dollar they spend providing care to Medicaid patients, it says.

The company also notes that it hasn't received an increase in reimbursements for MA patients for years, despite the rising cost of care.

Warning for Medicaid/MA enrollment

Children's Hospitals said children covered by BCBS plans accounted for 70,000 unique visits since 2016 across the two hospitals, 12 primary and specialty care clinics and six rehabilitation centers it runs across the state.

But Children's is now considered an out-of-network provider unless an agreement with Blue Cross is reached by July 5 this year, meaning parents could still visit in an emergency, but non-urgent care would be much more expensive.

Those currently going through the special enrollment process for MA/Medicaid plans need to be aware of this before considering their health plan options, Children's says.

Affected families will receive information about the change in the mail over the next few weeks.

GoMN News has reached out to Blue Cross for a comment.

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