Blue Cross, Mayo Clinic agree to new contract

Blue Cross and Blue Shield of Minnesota and Mayo Clinic have come to terms on a new five-year contract that includes a pledge for "collaborative governance" to provide a better way for deciding when new health care technologies get coverage.

Contracts between insurers and hospitals usually make headlines only if the parties can't come to an agreement. But in the case of Blue Cross and Mayo, officials said the contract is noteworthy because of the aspiration for shared decisionmaking on emerging technologies plus a contract duration that spans more years than most agreements.

The contract also affects a large number of patients. Eagan-based Blue Cross, which is the state's largest health plan, said it spends more than $1 billion per year on health care at the Rochester-based clinic.

"It's a long-term contract," said Dennis Dahlen, the Mayo Clinic chief financial officer. "Since this is Mayo Clinic's largest business relationship, a five-year long-term arrangement is very helpful to our business planning."

Garrett Black, a senior vice president at Blue Cross, added: "Our vision for the partnership is that we're going to work together to bring innovative and value-based solutions to the market."

Last summer, Blue Cross and Children's Minnesota failed to agree on a new contract before an existing agreement expired. The rupture put into question how patients might access to the hospital, although a new contract ultimately was struck within a few days.

In late 2016, Medicare patients were worried by a contract dispute between Blue Cross and Minneapolis-based Fairview Health Services that ultimately was settled before the existing contract expired.

The new agreement between Blue Cross and Mayo Clinic takes effect in January. It means all Mayo Clinic locations statewide will remain in the Blue Cross network of doctors and hospitals through 2023.

"On an annual basis, payments between Blue Cross and Mayo will vary based on the number of members who use Mayo and also the intensity of services that are provided to those members," Black said. "The number goes up and down, but it's in excess of a billion [dollar] contract on an annual basis."

The contract will not change Blue Cross's health care provider network in the individual market, however, where the insurer's health plans before 2017 were the only way for people in much of Minnesota to get in-network access to Mayo Clinic. In the individual market, Blue Cross will continue to pursue a strategy focused on accountable care organizations (ACO) where patients have their care coordinated primarily by a regional health system.

Blue Cross's ACO for individuals in the Twin Cities area features Allina Health System. A Star Tribune review of data from the state's MNsure health insurance exchange shows that with the Twin Cities ACO, a 40-year-old nonsmoker can pay anywhere from $383 to $502 per month for coverage.

The company's ACO in Rochester features Mayo Clinic and sells coverage to a 40-year-old nonsmoker at a price that's more than 60 percent higher — anywhere from $627 to $823 per month. The differences in price seem to fit with a long-standing concern among employers and insurers that the cost of care at the Mayo Clinic results in above-average health care costs in the Rochester area, but Black pushed back against the idea.

"The payment rates that we have negotiated I think are some of the most reasonable we've seen from providers in terms of how those rates grow over time," Black said. "Mayo is one of the most affordable providers in our network when it comes to managing serious and complex illness."

Dahlen said the population of patients in and around Rochester "does reflect a more serious risk profile." The goal with the new contract, he added, is to lower the trend with cost increases.

Under the new contract, access to Mayo Clinic experts should help Blue Cross subscribers avoid costs that come with misdiagnoses or unnecessary treatment plans, the groups said in a news release. The new agreement also features expanded coverage for proton beam radiation therapy and certain oncology treatments.

Not all the details have been worked out on the collaborative governance when it comes to making coverage decisions, Dahlen said, but one hope is to streamline the "prior authorization" rules and process that Mayo Clinic providers must travel sometimes to get payments for treatments.

"This collaborative relationship provides opportunities to care for and manage patients in a more comprehensive manner with better outcomes through jointly developed innovative programs and care models," Dahlen said in a statement.

Christopher Snowbeck • 612-673-4744 Twitter: @chrissnowbeck