Despite some membership losses, the country's fourth largest Blue Cross insurer is boasting fairly strong customer retention as a sign of viability for its integrated network strategy.
In its latest tally, Highmark's total membership across Pennsylvania, West Virginia and Delaware remains relatively unchanged since last year, at 5.3 million.
But in Highmark's main market of metropolitan Pittsburgh, the Blue Cross Blue Shield insurer did report some customer losses, particularly seniors on Medicare Advantage and employers who apparently wanted to keep in-network access to the University of Pittsburgh Medical Center, after a state-brokered split left the UPMC system out-of-network for most of Highmark's membership.
Now and into the foreseeable future, most western Pennsylvania healthcare consumers are essentially choosing their health plan based on access to either UPMC -- via UPMC Health Plan or the likes of Aetna, Cigna and United Healthcare -- or Highmark's own health system, the Allegheny Health Network.
A month after the split took effect, Highmark has 1.14 million commercial members in the 29-counties of western Pennsylvania market, down from 1.29 million last year. The insurer lost about 20,000 Medicare Advantage members and 150,000 employer-based subscribers. Aetna, meanwhile, added about 150,000 new members in greater Pittsburgh, while UPMC Health Plan signed on 42,000 commercial members, as the Tribune Review noted.
But Highmark has seen growth elsewhere and is happy with its retention. The insurer added 23,000 new members in western Pennsylvania, and enrolled 269,000 in exchange plans across Pennsylvania, half of the state's public exchange enrollment as of January 30.
Highmark also enrolled 43,000 West Virginians and 29,000 Delawareans in exchange plans, and is preparing to add 272,000 new members through a pending acquisition of Blue Cross of Northeastern Pennsylvania (creeping into a regional market that is north of Independence Blue Cross and northeast of Capital Blue Cross).
All in all, Highmark is faring well in its traditional business of insurance, said Deborah Rice-Johnson, president of Highmark Health Plan.
"Despite the unprecedented marketplace challenges we faced in 2014, our enrollment totals show that our health plan remains strong and stable," she said.
One health plan product line, Community Blue, "really stands out as a success," Rice-Johnson said. That lower-premium, select network plan was introduced just as Highmark moved to acquire the formerly-named West Penn Allegheny Health System in 2012, and was a main contributor to UPMC's determination not to renew a contract with the insurer.
Today, Community Blue enrollment stands at about 420,000 commercial and Medicare Advantage members and features a lot of providers from the seven hospital Allegheny Health Network.
"It provides the best example of how consumers, when given the choice to select the care, place and price that is right for them, chose the value of Highmark," argues Rice-Johnson. "Community Blue gives members the ability to maintain a broad choice of doctors and hospitals, while achieving high-quality, lower-cost healthcare."
The Community Blue plan is exactly the kind of "tiered network "consumer-focused" health plan that Highmark officials said would become mainstays in the new greater Pittsburgh healthcare market.
Last summer, as regulators and executives were crafting the details of consent decree, under which only certain Highmark members will have in-network access to UPMC providers, UPMC CFO Robert DeMichiei decreed that "in western Pennsylvania, it's the most important turning point, ever."
Now, the new era is here. UPMC, a $10 billion global health enterprise with the region's dominant hospital system and a sizable health plan, is banking on blending its reputation for advanced medicine with the integrated payer-provider model ala Kaiser Permanente.
Highmark, meanwhile, is the first large insurer in at least a decade to own a major health system. UPMC remains highly profitable, but the Allegheny Health Network's financial sustainability is not a given. That's partly why Highmark is diversifying into consumer health spaces like the apparently underappreciated market for a good night's sleep.
The five hospitals of the West Penn Allegheny Health System posted its first quarterly operating profit since Highmark's acquisition in 2013, according to a recent state mandated disclosure, and the goal is to post a yearly operating profit for 2015. Later this winter Highmark will disclose how the entire Allegheny Health Network system is doing financially.