Blue Cross Blue Shield delays start of controversial payment system

Minnesota's largest health plan will delay the start of controversial payment system for hospitals until Jan. 1.

Blue Cross and Blue Shield of Minnesota were criticized last week by a Minnesota hospital trade group accusing the health plan of slashing payments to rural hospitals.

Blue Cross now said it is adjusting the start date for the new payment system in response to "operational and financial planning challenges" of critical access hospitals, which are located in rural areas.

The Minnesota hospital association last week accused the insurer of unilaterally reducing reimbursement rates to break-even or below break-even levels. The payment changes would have gone into effect for some hospitals as early as this week.

The new payment system is necessary, according to Blue Cross, because it is more transparent, predictable and moves away from the so-called fee for service, which many experts blame for driving up health care costs.

An emailed statement from the Minnesota Hospital Association reads "(Blue Cross Blue Shield of Minnesota) has assured MHA that it will engage hospitals on a one-on-one basis to work through the transition to the new payment model. MHA and BCBS both recognize the need to move our health care system away from volume-driven, fee-for-service payments and toward payment methodologies that emphasize the value of care patients receive and reward providers for delivering the high quality care as efficiently as possible."