The contract between Children's Hospital and CareFirst Blue Cross and Blue Shield, scheduled to end Dec. 31, includes 300 of the hospital's pediatric specialty physicians. The Dec. 4 Federal Diary incorrectly indicated that all doctors who practice at Children's will remain in the Blue Cross network. (Published 12/5/02)

Federal families caught up in a contract dispute between Blue Cross and Blue Shield and Children's Hospital will be provided with "a transition period to allow for continuity of care after the contract expires," the Office of Personnel Management has announced.

OPM's notice appears to signal that prospects for a resolution of the dispute -- which centers on payment rates -- are bleak.

The contract between CareFirst Blue Cross and Blue Shield and Children's is scheduled to expire Dec. 31. But parents who rely on the hospital face a more immediate deadline -- the end of the "open season" for the 2003 Federal Employees Health Benefits Program.

Like other federal employees and retirees, the parents have until Monday to select or switch FEHBP plans for health insurance coverage next year.

The contract dispute has angered many parents, who must decide whether to choose another insurance company in the Children's network or keep their Blue Cross coverage and move to another hospital in the Blue Cross network.

Although CareFirst says it is willing to keep negotiating, the company will inform participating physicians, practitioners and enrollees -- in letters being sent out today -- that Children's will no longer be part of its preferred-provider network, effective Jan. 1.

CareFirst has more than 3.2 million enrollees in the District, Maryland, Delaware and parts of Northern Virginia. About 550,000 of the subscribers are covered through FEHBP, which is administered by OPM. Federal enrollees can choose from two nationwide plans, Blue Cross standard option and Blue Cross basic option, and CareFirst Blue Choice, an HMO.

Jeff Valentine, director of corporate communications for CareFirst, said the insurance company has set up a team to work with FEHBP enrollees, doctors and Children's Hospital "on what is best for each patient."

Patients admitted to Children's Hospital before midnight Dec. 31 and staying in the hospital after Jan. 1 will be covered as if they were still in a network hospital, Valentine said.

Patients who leave the hospital and return for subsequent treatment will be evaluated on a case-by-case basis, he said. Patients with an illness that only Children's can address will be able to return to the hospital at in-network rates, Valentine said.

After Jan. 1, most Blue Cross federal enrollees who are new patients at Children's will be required to pay the difference between using a network hospital and an out-of-network hospital.

That would be costly for most families. For example, persons covered by the Blue Cross standard option would have to pay $350, 30 percent of what Blue Cross would pay the hospital, and other charges. CareFirst HMO enrollees would pay the total cost of admission and care at Children's.

Valentine pointed out that physicians who practice at Children's will remain in the Blue Cross network, which he called an important consideration for many families.

CareFirst covered about 1,200 admissions to Children's in 2001, Valentine said. The hospital estimates that it saw 22,000 patients insured by CareFirst in the last year.

Peter Holbrook, chief medical officer at Children's, said a tentative date has been set to discuss medical issues with CareFirst. "We will continue to try and care for our patients as much as possible," Holbrook said.

The dispute has drawn the attention of Washington area lawmakers, such as Reps. Thomas M. Davis III (R-Va.) and James P. Moran Jr. (D-Va.). Just before Thanksgiving, they wrote the presidents of CareFirst and Children's to express their concern "about the impact this decision may have on health care delivery services for many of our constituents."

"This is a very serious situation for a lot of families," Moran said yesterday.

Abby L. Block, OPM's assistant director for insurance programs, said that "we understand that a situation such as this can cause a great deal of anxiety, particularly when people are making decisions about their future coverage during the open enrollment period."

In her statement, issued late Monday, Block noted that "agreements between health plans and providers are outside the scope of our authority."

Federal Diary Live Carroll E. Midgett, chief operating manager of the American Postal Workers Union Health Plan, will take questions on the 2003 FEHBP open season at noon today on www.washingtonpost.com. Please join us.

Stephen Barr's e-mail address is barrs@washpost.com.