A contract dispute means that thousands of patients covered by the Medica health insurance company might have to pay more next year if they want care at Children’s Hospitals and Clinics of Minnesota.
Officials with Minneapolis-based Children’s said Tuesday that they are mailing letters to some 50,000 households about the contract dispute, which could disrupt access to care if not resolved by Dec. 31.
Patients covered by Medica could still receive services at Children’s, but the pediatric health care system would only be available as an out-of-network source of care. That means Medica subscribers would face much higher out-of-pocket costs at Children’s than if the system were an in-network provider.
“While both Medica and Children’s are doing their best to come to agreement, we remain far apart at this time,” Dave Overman, president and chief operating officer at Children’s, wrote in a letter dated Nov. 4. “Usually, insurers offer lower benefits to patients using an out-of-network provider. This often results in a greater cost to the patient.”
Officials with Children’s and Medica stress different points when explaining the dispute.
Children’s says it wants to be included in more of Medica’s insurance products, including so-called “narrow network” products that use incentives to steer patients to a limited network of hospitals and clinics.
“At this point, we’re in fewer than 50 percent of Medica’s health plans,” said Bjorn Gunnerud, vice president of marketing and communications at Children’s. “We’ve not been able to make any headway in expanding that access.”
Medica counters that Children’s is demanding unreasonably high rates of increase for services, and it won’t accept the sort of contract terms in narrow network products that pass some financial risk for the cost of care to hospitals and clinics.
“Children’s continues to emphasize the importance of very high rates of increase in their reimbursement, [and] is focused on maximizing revenue,” said Dr. Mark Werner, chief clinical and innovation officer at Medica. Children’s “has really in our conversations avoided taking accountability for reducing cost.”
Medica is one of the largest health insurers in Minnesota, with about 1.35 million people under age 65 receiving benefits through the company. The insurer had about $3.3 billion in revenue during 2013.
Children’s is the state’s largest independent pediatric health care system, with hospitals in Minneapolis and St. Paul plus 12 primary and specialty care clinics. Last year, the health system posted $718.8 million in revenue.
There have been other contract disputes between health insurers and hospital systems that went public, only to settle at the last minute. Late last year, for example, Blue Cross and Blue Shield of Minnesota reached an agreement with Regions Hospital in St. Paul that maintained access to the medical center for its subscribers.
In that case, Blue Cross sent letters to about 6,000 households in November 2013 about the year-end dispute.
In his letter, Overman said Children’s was notifying families about the situation before people make choices about which plan to select during open enrollment this fall.
“Before selecting a health insurer or plan option for you and your family’s 2015 coverage, I thought you’d want to know what happens if we do not have a contract with Medica by year end,” he wrote.
Date: November 04, 2014