Blue Cross delays Minnesota payment plan switch

After coming under fire from rural hospitals and meeting with top state officials, Blue Cross and Blue Shield of Minnesota said Wednesday it will extend the implementation of a new reimbursement plan until Jan. 1, 2014, and take other steps to ease the transition.

The changes, which had been scheduled to take effect Wednesday, will reduce payments for patient care at about 50 small hospitals by hundreds of thousands of dollars.

"As the only truly statewide health plan, Blue Cross understands the importance of maintaining a viable network of critical access hospitals throughout Minnesota," the Eagan-based insurance company said in a statement. "Blue Cross is striving to be thoughtful and responsive to the operational and financial planning challenges of these hospitals."

Blue Cross and Blue Shield is Minnesota's largest health plan and a dominant player in many areas outside the Twin Cities. It is making the change from what it calls "an outdated, transactional, fee-for-service system" to one that will reduce wide differences in what it pays to hospitals for similar care as a way to help contain rising medical costs.

For example, payment for an appendectomy can range from $2,500 to more than $25,000, Blue Cross said, and a newborn delivery can cost $1,500 to more than $10,000.

The new system "is proven to be a more transparent, predictable and fairer way to pay for care," the company's statement said.

Blue Cross said it also would offer additional training, help pay for the necessary software licenses and provide a "safety net" for hospitals with insufficient operating margins. The safety net would apply to medical costs for patients covered by Blue Cross health plans through their workplace.

"I had a direct phone call this morning from Blue Cross and Blue Shield," Gerlach said, "and I sense a change in their approach to how they'll deal with this. Maybe that'll open up some communications."

The issue attracted attention from Gov. Mark Dayton as well as Health Commissioner Ed Ehlinger and Attorney General Lori Swanson.

Swanson and Blue Cross CEO Michael Guyette met on Monday, after Swanson had expressed concerns about the proposed changes, particularly among independent critical access hospitals, which often are owned by municipalities.

"Critical access" hospitals are regulated by the state and federal governments and are given special designation to maintain health services in rural areas. They are reimbursed at a higher rate by the federal Medicare program because they see fewer patients.

Swanson's spokesman, Ben Wogsland, said the attorney general was "appreciative that Mr. Guyette took such quick action after the meeting."