Western Pa. insurers take steps to prep for health care marketplace

| Saturday, Feb. 23, 2013, 8:40 p.m.

Health insurance companies in Western Pennsylvania are gearing up for the largest open enrollment period in history, which begins in less than eight months.

An estimated half-million people in the region who don't have coverage or who buy it themselves are expected to log onto an online marketplace to shop for health insurance starting on Oct. 1.

That flood of potential customers — mandated by President Obama's signature law, the Affordable Care Act — represents a boom for insurers that will offer health plans through the marketplaces known as health insurance exchanges. The health law requires that most Americans buy insurance starting next year if an employer doesn't provide it.

“We expect there to be a fair amount of competition” between insurance companies, said Diane Holder, CEO of UPMC Health Plan, the insurance subsidiary of the region's largest health system.

Holder said UPMC Health Plan, the second-largest health insurer in Western Pennsylvania, is preparing insurance products to offer on the exchange.

“The insurance companies are just scrambling to try to get ready for 2014,” said Tom Tomczyk, principal in the health care practice of Buck Consultants, Downtown. “I think they're scrambling because they're trying to figure out how to best manage the plans to make them cost effective.”

Highmark Inc., the region's largest health insurer, is readying its health plans to offer to individuals and small businesses on Pennsylvania's exchange, which the federal government will run.

At the same time, Highmark is preparing for changes under the Affordable Care Act that will affect payments to hospitals and other medical providers.

Starting in 2015, government reimbursements to physicians will be tied to quality of patient care, not quantity of visits, tests or other procedures a doctor performs.

“We are preparing to do just those things across our network,” Highmark CEO William Winkenwerder said of the company's reimbursements to hospitals and physicians.

Though details need to be worked out, the basic idea is an integrated medical network, such as UPMC or the one Highmark is trying to build with its proposed acquisition of West Penn Allegheny Health System and other hospitals and doctor groups, would be paid a flat fee for providing care to a population, Winkenwerder said.

“It can work very well but it requires very good data and a lot of attention to cost,” he said.

Holder said UPMC's hospitals and doctors are ready for that change.

“We're confident that we will be in a terrific position” to deal with a focus on quality care, she said.

In addition to those changes, the Affordable Care Act is driving the high number of mergers in the insurance and hospital industries.

To provide insurance to a larger pool of people, insurers are buying other insurers, such as a deal announced last year in which Aetna Inc. will acquire Coventry Health Care Inc., which operates in Pennsylvania as HealthAmerica.

And, as seen in the ongoing battle between Highmark and UPMC, large hospital systems are competing to acquire smaller community hospitals and independent physician practices to make sure they have components to provide care for a large population.

“We have to acquire and assemble enough assets,” Winkenwerder said, referring to building Highmark's provider network. “But we don't want to continue down the path of a high-cost system.”

Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or anixon@tribweb.com.

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