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Highmark hikes seniors' rates up to 110%

| Thursday, Oct. 2, 2014, 10:48 p.m.

Seniors are getting a shock by how much more they will have to pay Highmark Inc. for insurance coverage next year, learning in some cases that their monthly premium for Medicare coverage will more than double.

The biggest health insurer in the state blames cuts in government funding to the Medicare program for rate hikes of 25 percent to 110 percent in its Freedom Blue and Security Blue Medicare Advantage plans, which cover hundreds of thousands of seniors.

Higher prices are likely to push members out of Highmark products at a time when the insurer has been losing market share to competitors, including UPMC Health Plan, which cut premiums on some of its plans for 2015.

Charles Stull, a 74-year-old retired teacher from Mt. Lebanon, received a notice Tuesday informing him that the premium for the Freedom Blue PPO plan he and his wife buy will rise 25 percent next year to $733 a month, from $587 a month.

“I was shocked,” Stull said. “I'm thinking that I'm going to have to switch.”

Stull has several options to choose from, he said. But he will have to pick carefully to ensure an infusion treatment he receives at St. Clair Hospital for Crohn's disease is covered by another health plan.

Premiums for Security Blue ValueRx, an HMO plan that's one of the Medicare Advantage offerings are more than doubling, from $20 a month to $52 a month, according to the Centers for Medicare & Medicaid Services. Medicare Advantage is government-funded coverage for seniors that's offered through private insurers.

Art Walker, a 78-year-old from Baldwin, also is planning to drop his Freedom Blue coverage because of Highmark's rate hike. But he's worried about whether a different plan will provide coverage in Florida, where he and his wife live for several months during the winter.

“I don't want my options limited at my age,” Walker said. “I don't want to be limited where I can go for my doctors.”

Highmark spokesman Aaron Billger said the insurer is raising premiums on all its Freedom Blue and Security Blue plans, which have 339,000 members in Pennsylvania. About two-thirds of those members are in Freedom Blue.

“The biggest driver is reduced government funding as a result of the Affordable Care Act,” Billger said.

The insurer lost some funding for Freedom Blue because the plan's quality rating was cut by the Medicare program last year, to 3 12 stars from 4 stars.

“Reimbursements are linked to star rating,” said Billger, who noted that Freedom Blue's rating for 2015 was raised back to 4 stars. Security Blue is rated 4 stars.

Insurers complain about losing Medicare Advantage funding, but they don't mention that the government pays them an average 14 percent more than traditional Medicare, said David Lipschutz, senior policy attorney for the Center for Medicare Advocacy, a nonprofit in New York.

“One of the factors that plays into the changes in annual benefits is efforts under the Affordable Care Act to rein in overpayments to Medicare Advantage plans,” Lipschutz said. “They are paid at much higher rates than traditional Medicare.”

Over the past several years, Highmark has faced increasing competition for seniors from UPMC Health Plan and others, and its market share in Western Pennsylvania dropped from 61.1 percent in 2010 to 48.6 percent this year, according to federal data.

UPMC Health Plan, meanwhile, is cutting premium prices of four of its six Medicare Advantage plans, which it markets under the name UPMC for Life.

The second-largest health insurer in Western Pennsylvania is lowering rates between 0.4 percent and 51 percent, depending on the plan. It also is raising the premium on one plan by 11 percent. And it offers a $0 premium plan.

“UPMC for Life continues to grow because it has so much to offer to the Medicare beneficiaries of Western Pennsylvania,” said Diane Holder, president of UPMC Health Plan.

To compensate for higher rates on its existing plans, Highmark introduced a limited-network plan for next year with a $0 premium.

In exchange for zero premium, Community Blue Medicare HMO members will have in-network access only to select community hospitals in a 23-county region of Western Pennsylvania.

In Allegheny County, for instance, seniors can access only the Allegheny Health Network hospitals, Ohio Valley General in McKees Rocks and Heritage Valley-Sewickley. All hospitals in Westmoreland and Butler counties are out-of-network.

Medicare's one-month open enrollment period starts Oct. 15.

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

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