The Welsh Government said the decision was unacceptable
An English hospital is refusing to treat Welsh patients unless it is an emergency.
Doctors and nurses have been told they cannot accept residents from across the border due to an ongoing payment dispute.
Only emergencies, maternity cases and patients previously referred to the hospital will be exempt from the new rule.
The move comes after a row erupted between the trust which runs the Countess of Chester Hospital and the Welsh government.
The change – which means GPs in Wales will no longer be able to refer patients for treatment at the hospital over the border – has been implemented with immediate effect.
Around in five of patients treated by the hospital live in Wales.
Hospital chief executive Susan Gilby said: "Unfortunately, the trust is currently unable to accept any new elective work relating to patients living in Wales.
"This is a difficult decision that has been taken with great reluctance.
"Unfortunately, this is a step we have to take as a result of unresolved funding issues."
Ms Gilby said contract negotiations were continuing and the trust was working with Betsi Cadwaladr University Health Board in north Wales to resolve the issue.
A Welsh Government spokesperson said: "Along with NHS Wales representatives, Welsh Government has agreed a process of engagement with the Department of Health and Social Care officials and representatives from the English NHS to discuss cross-border payment arrangements."
"In the context of ongoing engagement, any actions taken by English providers to limit access for Welsh patients on financial grounds are unacceptable and not in the spirit of reaching a cross-border agreement with English NHS representatives."
Wrexham Maelor Hospital and Ysbyty Glan Clwyd are the next closest hospitals for patients in the area.
The trust’s chairman, Sir Duncan Nichol, previously said caring for patients from Wales was "hard to countenance" claiming that the current contract did not covering its costs.