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Children’s Hospital, Aetna to end contract next month

Boston Children’s Hospital and Aetna Inc., one of the country’s largest health insurers, plan to end their contract next month because of a dispute about payment rates.

Unless the two sides find a compromise, their contract will expire Feb. 15, meaning Aetna members will be hit with huge out-of-pocket costs if they receive care from Children’s Hospital doctors. For hospital stays, the out-of-pocket costs could easily be in the thousands of dollars.

Aetna and Children’s both said they are still trying to hash out a deal before the contract ends and disrupts coverage for patients.

But a spokesman for Hartford-based Aetna said Children’s is asking for steep rate increases after its acquisition last year of hundreds of new physicians in New York, New Jersey, and Connecticut.

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“They’re insisting on substantial rate increases for those groups,” said Walt Cherniak, the Aetna spokesman. “That is the basis of our disagreement. We cannot accept the increases that they’re looking for.”

Aetna provides medical insurance to 23.5 million people nationally, including about 200,000 in Massachusetts, or about 5 percent of the commercial insurance market in the state.

Last year, Children’s Hospital acquired Children’s and Women’s Physicians of Westchester LLP, a for-profit group of 276 doctors. The deal was designed to advance the hospital’s strategy of becoming a regional and national health care system that draws patients from well beyond Boston.

Children’s spokesman Rob Graham said the nonprofit hospital system is seeking rates for the New York doctors that “reduce the reimbursement gap” between its New York physicians and other comparable doctors groups.

“We appreciate that any uncertainty around insurance coverage for providers of choice is stressful for our patients and their families,” Graham added in a statement.

Children’s Hospital is known for providing care to some of the sickest children from Massachusetts and around the world, but it is also one of the state’s priciest health care providers. A report this week from the Health Policy Commission, a state agency that tracks health care spending, identified the Children’s doctors network as the highest paid in Massachusetts.

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Last year, BMC HealthNet Plan, an insurer that primarily serves people on low incomes, cut its contract with Children’s after saying it could not afford the hospital’s rates.


Priyanka Dayal McCluskey can be reached at priyanka.mccluskey@globe.com. Follow her on Twitter @priyanka_dayal.