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TheStreet Open House

Blue Cross Reimbursement Change Will Plunge Rural Hospitals Into The Red

Patient access to care in jeopardy

ST. PAUL, Minn., April 24, 2013 /PRNewswire-USNewswire/ -- The Minnesota Hospital Association (MHA) is opposing a payment change plan by Blue Cross and Blue Shield of Minnesota (BCBS) scheduled to take effect May 1 that will slash payments to hospitals and have a particularly devastating effect on rural health care.

(Logo: http://photos.prnewswire.com/prnh/20130307/MM73437LOGO )

MHA President and CEO Lawrence Massa described the payment change as converting BCBS payments from a negotiated discount from a hospital's charges — a payment methodology that has been used for small hospitals for decades — to a below-cost or marginally above-cost rate unilaterally set by BCBS. 

MHA has heard from dozens of hospitals scheduled to have their payments cut on May 1 that the impacts will be "in the hundreds of thousands to millions of dollars." Massa said that for many of these small hospitals in rural communities, the payment cuts will "put them into deep, deep red ink."

"To dramatically disrupt long-standing reimbursements to hospitals will, if implemented, jeopardize patients' access to care, especially in rural communities served by smaller hospitals, such as ours," said Kimber Wraalstad, administrator of the Cook County North Shore Hospital in Grand Marais, a critical access hospital. "Because of Blue Cross' unilateral change to the reimbursement methodology and rates, we may have no choice but to terminate our contract with Blue Cross."

"As a result of the Blues' plan, we are looking for what changes we need to make to absorb the unexpected and significant cuts from the largest insurer in the state," said Joel Beiswenger, president and CEO of Tri-County Health Care in Wadena, also a critical access hospital. 

Massa said that BCBS began contacting a portion of hospitals earlier this year about the payment changes. "Instead of contacting all hospitals and warning them about this change at once," Massa said, "Blue Cross is communicating with only 25 or 30 percent of hospitals at a time, perhaps to avoid the inevitable statewide backlash that would be unleashed."

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