Highmark Updates Takeover Request to State Insurance Dept.

Aug 28, 2012

Highmark has sent the Pennsylvania Insurance Department an updated version of its request to take over local healthcare providers.  The new plan increases the cost estimate to $1 billion due to the addition of another hospital takeover option and new physician agreements.

Highmark now wants to include Jefferson Regional Medical Center (JRMC) under an umbrella group called UPE, at a cost of $120 million. The takeover would come in addition to the purchase of West Penn Allegheny Health System (WPAHS) for $475 million.  JRMC operates Jefferson Hospital in the South Hills, while WPAHS maintains several hospitals in Pittsburgh, Canonsburg, Monroeville, and Natrona Heights.

All told, Highmark now would spend roughly $1 billion -- up from an original estimate of $750 million -- on those deals and other "provider network expansion" and "infrastructure development." The insurer wrote that it has forged new agreements with more than 100 physicians in small practices, as well as deals with Premier Medical Associates and Orthopedic Associates of Pittsburgh.

In the new filing, Highmark also notes its contract with UPMC has been extended through 2014, though the insurer argues that the extension does not diminish the need for its healthcare provider takeover. The filing also mentions the replacement of former CEO Kenneth Melani with new president William Winkenwerder.

Insurance Department spokeswoman Melissa Fox said the amended filing is open for public comment.

"What happens is when someone submits a comment, positive or negative, that comment is sent to Highmark and they must respond to that public comment," said Fox.

She said the Insurance Department acknowledges that the proposed takeover is a large transaction that needs "swift" action.

"There is no set timetable to have our review completed, but we do understand that we do need to move swiftly, but we are not going to move too swiftly in order to compromise what's best for the consumers of Pennsylvania," said Fox.

Highmark declined to comment on the new filing.