Contract dispute between Blue Cross of Minnesota, Aspirus could disrupt care for 60,000 in Duluth

Minnesota’s largest nonprofit health insurer says a major hospital in Duluth wants unreasonably high price increases for care that is already more expensive than average, and thousands of patients may lose hospital access as a result.

But the hospital says the insurer’s rates are lower than average, unsustainable and inadequate for covering the cost of care it’s providing. The impasse over health care payment rates comes as some insurers are projecting significant rate increases for 2026.

Blue Cross and Blue Shield of Minnesota says Aspirus Health, which runs the second-largest hospital in Duluth, is terminating its contract with the large Eagan-based health insurer. That would mean about 60,000 patients would lose in-network access to Aspirus facilities in northeast Minnesota next year, although negotiations are ongoing.

When health care providers are out-of-network, patients might still be able to seek care at those facilities, but they typically would be asked to pay significantly higher out-of-pocket costs.

Wisconsin-based Aspirus Health operates St. Luke’s Hospital in Duluth and Lake View Hospital in Two Harbors.

The health system says it’s navigating rising costs, including labor expenses, plus the prospect of reduced funding down the road due to Medicaid cuts, so it needs to shore up financial support from health insurers including Minnesota’s Blue Cross plan.

In a statement, Aspirus Health argued that Blue Cross of Minnesota pays it far lower rates than it does other health care providers in the market — a gap it called “unfair and unsustainable.”

Blue Cross of Minnesota says the dispute could impact access to care for about 60,000 subscribers across all types of coverage, including privately operated government programs like Medicare and people who get insurance through their employer.

The health insurer said in a statement it “is disappointed that Aspirus St. Luke’s has terminated its contract in an attempt to secure significantly higher rates of payment for services provided to our members. ... their total cost of care is already higher than the state average.”

Blue Cross added: “Contracts are routinely negotiated and typically resolved prior to the renewal deadline. A new contract may be signed at any time.”

Contract disputes happen periodically between health insurers and health care providers. They often result in agreements before patients experience disruptions, but not always.

Last year, several health systems operating in Minnesota failed to reach in-network agreements with Medicare Advantage plans offered by Kentucky-based Humana. Prominent disputes between two health systems and Eden Prairie-based UnitedHealth Group, however, were settled without patient impacts.