Highmark claiming high retention figures

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It was a big deal when the city of Pittsburgh decided last summer to allow its employees a choice of health insurers for the coming year, giving them a health plan option other than Highmark for the first time since 2007.

But when presented with that choice, 95 percent of city employees still went with Highmark this year rather than HealthAmerica, according to figures supplied by Highmark.

That retention rate, according to Highmark CEO William Winkenwerder Jr., illustrates the insurer's strong position in the Pittsburgh and Western Pennsylvania markets as it girds for another year of battle with UPMC and other national health insurance carriers.

CEO: Highmark well-positioned for future

Dr. William Winkenwerder, president and CEO, talks about the impact of the Affordable Care Act and other factors helping to grow enrollment in Highmark health-care plans. (Video by Bob Donaldson; 2/11/2014)

Another indicator of health, Dr. Winkenwerder said during a state-of-the-union-style address given to Pittsburgh news media Monday afternoon, is enrollment in the insurer's Community Blue plans, which now stands at 183,000 covered lives. The lower-cost plan, offered to both employer groups and individual buyers, doesn't offer full access to the UPMC hospital network.

"It's no surprise that people are flocking to Community Blue" because of cost and quality, Dr. Winkenwerder said Monday. About half of the new enrollees, he said, come by way of the new federal health insurance exchange created under the Affordable Care Act. Highmark has gained 110,000 new members through the exchange since October, and more than 80 percent of those have selected Community Blue plans.

Unsaid was how many of those covered lives work at Highmark or its new hospital system, the Allegheny Health Network. But with 37,500 total employees, plus kin, it's a substantial percentage since that plan is what the insurer offers its workers.

Still, new Community Blue enrollment, particularly through the Healthcare.gov exchange, has been encouraging.

"In some of the days back in December, our enrollment was representing over 10 percent of the national enrolling day after day," Dr. Winkenwerder said.

Relative to its own national market share, Highmark's health exchange sales outpaced its competitors, he said.

Highmark's offerings on the national health insurance marketplace are far below market, among the cheapest in the country, a clear factor in the popularity of its Community Blue products.

"We do not intend to lose money," Dr. Winkenwerder said. "We believe the products have been appropriately priced, [and] that we'll be able to manage their costs."

The insurer also reported its Western Pennsylvania market share -- that is, the percentage of non-Medicare, non-Medicaid commercial plans sold in the market -- at 63 percent as of this month, unchanged from a year ago.

It did not offer more specific regional or county-by-county market share numbers.

UPMC says Highmark's penetration has been declining in the Pittsburgh region for years, and a third-party analyst, HealthLeaders Media, puts Highmark's 2013 Allegheny County market share at 43 percent and its southwestern Pennsylvania share of the pie at bit above that.

"Given Highmark's lack of financial transparency and accountability, UPMC disputes the veracity of all Highmark reports," UPMC spokesman Paul Wood said.

"However, if Highmark believes it to be true, then Highmark has no need for a UPMC contract," he said. "Highmark needs to embrace this and just move on."

The reimbursement contract between the two health giants, which gives Highmark insurance customers access to the full UPMC health network, expires at the end of this year. UPMC said it doesn't want to negotiate a new one, but Highmark says it does.

Dr. Winkenwerder reiterated that stance Monday, saying that while he has had no contact with UPMC since coming on board two years ago, he hopes a deal is still possible.

"We believe people should have the choice [for] UPMC physicians and hospitals" while keeping a Highmark plan, he said. "We believe they should be open to all plans ... their facilities are charitable institutions, [funded] with taxpayer dollars and with charitable contributions, and with premiums from Highmark members."

Other topics of discussion:

*--Highmark is expecting to be a $17 billion company, or close to it, when it gives its annual financial report later this year. Its 2012 revenues were just about $15 billion.

*--On the possibility of buying new hospitals or major practices for its Allegheny Health Network, Dr. Winkenwerder said that in Pennsylvania and West Virginia, "it is likely that [we] will be more focused on partnership rather than ownership of assets."

*--Highmark's new business solutions subsidiary will focus on selling information technology platform access and other support functions to other insurers, primarily other Blue Cross Blue Shield insurers.

*--On UPMC's insistence that it would rather cut off all Highmark policyholders -- and the $2 billion worth of annual gross patient revenue that comes with them -- than negotiate a new contract with Highmark that might put UPMC facilities in a higher-cost plan, Dr. Winkenwerder called the stance "completely ridiculous. ... We believe that there would be financial harm to them [and] dislocation to patients" if UPMC locks out Highmark commercial members starting next year.

"We don't see the point in all that," he said. "We would like to work together."

Asked if Highmark's 95 percent retention rate among city workers seemed plausible, Joe King, head of International Association of Fire Fighters Local 1, said that he wasn't privy to specific percentages. But he acknowledged few of his members had switched plans.

"We had anticipated more, [but] people are reluctant to make a change," he said.

Mr. King also suggested that the retention rate figure is misleading because this year Highmark customers still have access to all UPMC hospitals, and there's no pressing reason to switch plans.

If Highmark and UPMC can't work things out, "I guarantee you there will a tremendous amount of people switching" plans in October, during the city's next open enrollment session, he said.

A spokesman for insurance provider Aetna, which owns HealthAmerica, could neither confirm nor dispute the Highmark figures.

Bill Toland: btoland@post-gazette.com or 412-263-2625.

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