Three months after Blue Cross of Northeastern Pennsylvania agreed to pursue a stronger affiliation with health insurance behemoth Highmark Inc., the two insurers on Tuesday revealed their plan to join forces.
Under the agreement submitted to the state Insurance Department for approval, Pittsburgh-based Highmark would add the estimated 550,000 Blue Cross of NEPA members across the 13-county service area. Highmark’s health insurance plans serve 5.2 million people in Pennsylvania, Delaware and West Virginia, a joint release said.
Combined, the two Blue Cross Blue Shield-affiliated nonprofits would have nearly 5 million members across 62 of Pennsylvania’s 67 counties.
“(It) will allow us to create greater efficiencies and offer new products and services to meet the changing health care needs of our members, customers, providers,” Blue Cross of NEPA President and CEO Denise S. Cesare said in a news release.
The agreement stipulates that Highmark maintains regional operations, creates new employment opportunities and makes an effort to maintain staffing levels within the 13 counties across north-central and Northeast Pennsylvania.
For example, one provision protects Blue Cross of NEPA employees for up to 18 months following the transaction, Blue Cross of NEPA’s Senior Vice President and Chief Administrative Officer Brian Rinker said. Another provision includes a commitment to keep a certain level of jobs for a four-year period, he said.
Wilkes-Barre-based Blue Cross of NEPA has about 750 employees.
“(Highmark) has done this in other markets, in Delaware and West Virginia,” Mr. Rinker said. “And we talked to those plans because we were concerned what was going to happen post-transaction. And both of those have very strong employment levels and regional operations, and they are doing quite well.”
The state Insurance Department received the Form A filing, submitted by Highmark, on Tuesday. It will be available today at www.insurance.pa.gov, by clicking on the “Blue Cross/Blue Shield Plans” icon, a separate news release said.
The department will evaluate the proposal against certain standards, including “whether the transaction will lessen competition, produce new efficiencies or be hazardous to the insurance-buying public,” the release said.
People can comment on the filing once it is posted on the website. A public hearing will likely be held in Northeast Pennsylvania, state Insurance Department spokeswoman Melissa Fox said.
“The highest priority in our review of this application is to see that consumers will be protected and the impacted health insurers remain financially strong and the market competitive,” Insurance Commissioner Michael Consedine said in the release.
The process could take between 12 to 15 months, Mr. Rinker said.
Assuming the agreement is approved, Justin Matus, Ph.D., said it’s likely there will be consolidation of services, leaving the potential for a decrease in jobs.
“I’d be lying if I tried to tout this as an all-good news story,” said Dr. Matus, an associate dean at Wilkes University’s Jay S. Sidhu School of Business and Leadership. “There are a lot of potential positives, but certainly some potential negatives – not the least of which is jobs.”
Ideally, he said, the agreement would lead to lower health insurance rates. But it could also mean consumers have fewer options in terms of health insurance coverage.
Chuck Moran, director of media relations for the Pennsylvania Medical Society, said it could be a seamless transition because both insurers already work with each other. But questions remain over how they will use the market power – something he doesn’t expect to be answered any time soon.
“There’s probably more questions than answers at this point, in terms of what it means for physicians and patients,” he said.
Though Mr. Rinker said the agreement likely will not lead to lower premiums, he believes it will provide consumers with enhanced products and services.
Another goal, he said, is to develop a model that rewards a providers performance and not volume, straying from a system where insurers pay more to providers who perform more surgeries or see more patients.
“Highmark brings the resources … so we can do that better and faster,” he said. “There’s a lot of (information technology) investments, so the information is good on both ends.”
Also as part of the deal, Blue Cross of NEPA will provide as much as $100 million through a charitable foundation to benefit health and wellness and economic development across the region.
Date: February 19, 2014