Differences between Children's Hospitals of Minnesota and Blue Cross Blue Shield are threatening patient care and availability of services at the group of hospitals and clinics. (Evan Ramstad, Star Tribune/The Minnesota Star Tribune)

With just over a week left to strike a deal, Minnesota's largest children's hospital and a dominant insurer in the state appear to be moving further apart as they attempt to negotiate a network contract that will determine payment rates for health care provided to thousands of very sick children.

Children's Minnesota, which has two hospitals and two dozen clinics in the metro area, is in the midst of tense contract negotiations with Blue Cross and Blue Shield of Minnesota, whose commercial and Medicaid health plans cover about 66,000 patients of the pediatric provider.

Without a deal by July 5, Blue Cross patients who go to Children's Minnesota will start getting billed for out-of-network care, which will be much costlier than the in-network bills they're used to paying.

The higher rates will force many of the patients to switch doctors or hospitals. Children's Minnesota says it has identified more than 6,000 children whose needs are especially acute and who the hospital believes could not get the same level of care elsewhere.

Although Blue Cross says it's working to make sure those patients get an in-network doctor, Children's Minnesota pediatrics chief Dr. Gigi Chawla said at a news conference Monday that it was "simply implausible" that other hospital systems could provide the same level of care.

Blue Cross, meanwhile, said that Children's Minnesota provided it with a list of about 3,700 eligible Blue Cross members with complex medical cases whose care should remain in-network; the insurer has agreed to approve continued treatment for each eligible Blue Cross member on that list.

Glenn Pomerantz, chief medical officer for Blue Cross, wrote in a blog post Monday that despite a long-standing productive relationship with Children's Minnesota, "this relationship has been under significant pressure" this year because of disagreements over the payment rates.

Pomerantz listed five other children's hospitals, including one based in North Dakota, that are enrolling new Blue Cross patients.

"I'm sure that no one at Blue Cross or Children's, especially our members and patients, wants to see these transition plans come to fruition," Pomerantz wrote. "While our organizations may have different perspectives on business matters, we know that people are counting on us to work together and make sure that no one goes without the care that they need."

The hospital maintains it would have to cut services in order to accept what it says is a 31 percent cut on payment rates for Medicaid patients that Blue Cross initially proposed.

"The care we deliver saves lives," the hospital says on a new website devoted to the contract dispute, standtallforsmall.org. "Blue Cross' actions in this dispute threaten to price very sick children out of lifesaving care they need."

Blue Cross says Children's is a highly profitable hospital whose unreasonable payment demands help fuel a system in which insurance rates keep rising faster than the cost of living.

Blue Cross Blue Shield spokesman Jim McManus on Monday said the hospital's use of the 31 percent figure was "inaccurate, entirely misleading and outdated" because it dates back to discussions in January.

"We have worked very hard to come to the table with alternative offers and continue to be rebuffed by Children's," he said in an e-mail.

Dr. Marc Gorelick, president of Children's Minnesota, acknowledged Monday that the 31 percent figure was from older negotiations, but he said the more recent proposed cuts to Medicaid patient rates are not acceptable either and would not cover the cost of care. Blue Cross says it has offered rate increases for commercially insured patients and cuts to Medicaid patient rates.

Joe Carlson • 612-673-4779