Pa. loosens Highmark restrictions
For four years, Highmark Inc. had been required to get state regulators’ approval before making significant investments in its fledgling Allegheny Health Network so it could gain its financial footing and compete with crosstown rival UPMC.
The state Insurance Department wanted the information, in part, to be sure the Pittsburgh insurer wasn't endangering its ability to cover customers' needs. But the reports also meant that the public and rivals had a regular update on Highmark's priorities.
On Friday, the state granted Highmark's request to ease up on those requirements.
Department officials said, in an announcement, that they were taking the action in response to a request by the insurer to “allow Highmark Inc. to respond more quickly to changes in the health care landscape, and thus provide more health care options to consumers.”
“I emphasize that the change I am announcing today will still require Highmark Inc., at all times, to maintain sufficient risk-based capital to pay all claims submitted by its health insurance customers,” said Insurance Commissioner Teresa Miller in the release.
“Gov. Wolf has set consumer protection as the top priority for the Insurance Department, and making sure Highmark Inc. can pay its customers’ claims is the number one
consumer protection we will enforce.”
Highmark officials welcomed the news.
The department’s decision should allow more flexibility in making strategic investments in AHN and in Highmark Health's supporting efforts “all of which are aimed at providing ready access to high quality valuebased health care,” said Deborah Rice-Johnson, president of Highmark Health Plan, in a statement.
She said the decision also makesit easier to pursue new strategies such as AHN’s recently announced collaboration with Johns Hopkins KimmelCancer Center.
In June, Highmark Health announced plans to invest more than $200 million to improve cancer services. That includes plans for AHN to establish a new academic cancer institute at its flagship Allegheny General Hospital campus on the North Side. The health system also plans to expand its network of communitybased cancer treatment centers.
Beginning in 2013, the insurance department required Highmark to get its approval before making any fund transfer of $250 million or more in a 12-month period and it had to notify state officials of transfers of $100 million or more.
The requirements were meant to “mitigate potential adverse competitive effects” in the insurance and healthcare delivery markets.
In deciding to modify the reporting requirements, the department cited an analysis by Chicago-based consultant Compass Lexecon LLC that found the public had benefitted from Highmark’s investments in Allegheny Health Network.
In a key finding, the report authors wrote, “We find that competition has been strengthened in each of these market segments as a result of Highmark’s affiliation with AHN.”
Under the newly approved modification of that order, Highmark Inc. can make expenditures within the AHN system without approval or notification as long as the amount does not exceed 10 percent of Highmark Inc.’s surplus — currently $3.9 billion.
Other expenditures also can be made without prior approval by the state as long as Highmark is still able to cover customers’ submitted claims.
Highmark had moved to build its own health provider network by acquiring the West Penn Allegheny Health Network — which now comprises the core of AHN — after talks broke down during negotiations with Pittsburgh-based UPMC health system to renew their contract.
UPMC subsequently said it now considers Highmark and AHN its competitors, and it will not contract with them.
State-brokered consent decrees in 2014 set out steps for a gradual winding down of the agreement in which Highmark members could have in-network access to UPMCphysicians and hospitals. Those decrees expire June 30, 2019.