Blue Cross extends contract with Gillette Children's

As its contract standoff continues with the state's largest pediatric hospital, Blue Cross and Blue Shield of Minnesota said Wednesday it has extended for three years its contract with a different medical center for kids — St. Paul-based Gillette Children's Specialty Healthcare.

Eagan-based Blue Cross, the largest private health insurer for Minnesota residents, has been locked for months in a contract dispute with Children's Minnesota that could disrupt patients if not resolved by July 5.

Gillette Children's specializes in treating kids with orthopedic, neurological and neurosurgical needs, so the hospital's patient base is largely distinct from those treated at Children's Minnesota. The hospital also is significantly smaller than Children's Minnesota, leading at least one health care analyst to question how many Blue Cross patients could be absorbed by Gillette Children's.

"We appreciate Gillette's commitment and collaboration to address the cost pressures that the state of Minnesota is experiencing with the Medicaid program," said Garrett Black, senior vice president of health services for Blue Cross, in a news release issued late Wednesday.

Blue Cross has cited cost pressures in Medicaid as a reason for seeking lower payment rates at Children's Minnesota. The pediatric hospital argues the reimbursement terms proposed by Blue Cross would threaten its future and force cuts to important services and programs.

At a news conference earlier this week, the pediatrics chief at Children's Minnesota said it was "simply implausible" that other hospital systems could provide the same level of care.

While Gillette Children's might admit some new Blue Cross patients if the contract dispute is not resolved, the St. Paul-based health care system is not adding any services in response to the standoff, said spokesman Nick Hanson.

In 2015, Gillette Children's had 60 inpatient beds compared with 411 inpatient beds at Children's Minnesota, said Allan Baumgarten, an independent health care analyst in St. Louis Park. Baumgarten said he doubts there's much surplus capacity at Gillette Children's or at the University of Minnesota Masonic Children's Hospital in Minneapolis.

While the contract dispute between Blue Cross and Children's has become increasingly public in recent days, Baumgarten said he questions whether it will result in patient disruption.

"I'm still confident that these two need each other," he said, "and will reach an agreement."

Christopher Snowbeck • 612-673-4744

Twitter: @chrissnowbeck