Highmark has staked its claim as the largest health insurer in the Keystone state. A licensee of the Blue Cross and Blue Shield Association, the not-for-profit firm covers some 4.9 million people in its core service areas in central and western Pennsylvania and the Lehigh Valley. It serves additional customers in West Virginia, Delaware, and other areas of Pennsylvania through its subsidiaries and affiliates, and it provides administrative and network-access services nationally. In addition, Highmark sells Medicare Advantage and prescription drug plans to seniors. Other subsidiaries (not operating under a BCBS license) provide dental insurance, vision care, and other products and services nationwide.
The company's core Pennsylvania service areas are served through wholly owned subsidiaries Highmark Blue Cross Blue Shield and Highmark Blue Shield. It reaches nearby states through its Highmark Blue Cross Blue Shield West Virginia and Highmark Blue Cross Blue Shield Delaware subsidiaries.
Medicare Advantage services are offered in West Virginia through its Highmark Health Insurance business. Highmark also manages the health benefits of self-insured employers, provides third-party administrative and claims processing services to other BCBS plans, and offers services in adjacent regions through partnerships with nearby insurance providers.
The company maintains multiple collaborative agreements with neighboring Blues Independence Blue Cross and Hosptial Service Association of Northeastern Pennsylvania. Another affiliate, Gateway Health Plan, is a partnership with Mercy Health System that provides Medicaid HMO coverage in Pennsylvania.
Highmark has been working to expand its core health insurance operations through a number of measures, including increasing involvement in government health programs such as Medicare and strengthening partnerships with other insurance companies. For instance, at the close of 2011 Highmark broadened its operations geographically by forming an affiliation with Blue Cross Blue Shield of Delaware, which noted the shift by changing its name to Highmark Blue Cross Blue Shield Delaware. Through the affiliation agreement, BCBSD operates as part of the Highmark network, benefiting from access to Highmark's administrative, claims management, and wellness program technologies, though it remains an independent legal entity headquartered in Delaware.
Highmark is also increasing its health plan offerings by adding affordable and flexible options for individual consumers and small businesses, especially as federal health reform efforts push for greater coverage in these markets. To encourage patient responsibility and improve customer care, Highmark opened several retail stores in 2009 (and added more locations in 2010 and 2011); the stores provide health assessment services, coverage and billing assistance, and wellness classes.
Highmark provides an impressive array of specialty services through its non-Blue subsidiaries, and the company is experiencing strong growth in its dental and vision care businesses. In the optical arena, subsidiaries include managed vision care organization Davis Vision (with 55 million members), the Visionworks of America chain of retail vision care centers, and eyewear manufacturer Viva Optique.
Another unit, HM Insurance Group, offers employer health risk solutions such as stop-loss insurance and a limited benefit medical plan, while United Concordia Companies provides dental coverage to around 8 million members across the US.
To diversify even further, the company made a bold (an unusual) move to enter the acute health care market when it announced plans to acquire regional hospital operator West Penn Allegheny Health System (WPAHS) in 2011; however, the transaction was thrown into doubt in 2012. The companies took their first steps towards affiliating in mid-2011 when Highmark invested $50 million in two of WPAHS' ailing Pittsburgh facilities. A definitive agreement was signed later that year, with terms including a further investment of some $400 million by Highmark in the WPAHS system over a three-year timeframe, as well as a $75 million investment in the WPAHS educational programs. However, in September 2012 WPAHS moved to exit the agreement, stating that Highmark had broken the terms by requesting that WPAHS file for bankruptcy. Highmark then filed suit to keep the deal on track.
As part of the agreement, Highmark and WPAHS submitted plans to the Pennsylvania Insurance Department to form a new not-for-profit corporation that would serve as a parent organization for the two entities. If successful, the merger could mark a new trend among health-related companies as the industry struggles to find new ways to control rising medical costs in the face of health reform.
In addition, to further its efforts to improve quality of care, lower costs, and increase communications and collaboration between clinicians and patients, Highmark and fellow Blues companies Independence Blue Cross and Horizon Blue Cross Blue Shield of New Jersey partnered with health information technology provider Lumeris in 2012 and acquired NaviNet, which provides a real-time communication network for physicians, hospitals, and health insurers. NaviNet connects 75% of doctors in the US and in 70,000 physicians and hospitals throughout the Blues' service areas.
To focus on its core health plan and provider strategies, in late 2011 Highmark decided to divest its Highmark Medicare Services unit, which provided Medicare claims processing and administration services for Medicare Part A and Part B plans in several states. The unit was acquired by the Diversified Services Options unit of Blue Cross and Blue Shield of Florida. – less