Children's Hospitals & Clinics of Minnesota and the Medica health insurance company have resolved a contract dispute that could have blocked thousands of subscribers from having lowest-cost access to the pediatric medical center.

Terms of the settlement were not disclosed.

"The settlement ends a period of uncertainty for Children's patient families insured by Medica," the hospital said in a statement issued Friday. "They will now have continued access to Children's two hospitals, 12 primary and specialty care clinics and six rehab sites across the Twin Cities at in-network rates in 2015."

Minnetonka-based Medica issued a statement Friday saying: "The agreement will allow us to extend our relationship in a way that works for both parties and, most importantly, prevents any disruption for our members and their patients."

Earlier this month, Minneapolis-based Children's mailed letters to some 50,000 households about the contract dispute. Had it not been resolved, Children's would have been an out-of-network source of care for patients covered by Medica, meaning subscribers would have faced much higher out-of-pocket costs for care at Children's.

At the time, Children's said it wanted to be included in more of Medica's health insurance products, including so-called "narrow network" products that use incentives to steer patients to a limited network of hospitals and clinics. Medica countered that Children's was demanding unreasonably high rates of increase for services, and wouldn'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.

Medica is one of the largest health insurers in Minnesota, with about 1.35 million people under the age of 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. Last year, the health system posted $718.8 million in revenue.

Christopher Snowbeck • 612-673-4744

Twitter: @chrissnowbeck