Administrator warns about insurance merger

By Jane M. Von Bergen

They didn’t use a medical analogy, but they could have.

If Highmark Inc. and Independence Blue Cross are allowed to merge, will their best practices be “catching,” leading to cost savings and better service, as their executives predict?

Or will they infect each other with their worst tendencies?

That was David O’Donnell’s point of view, expressed yesterday in the third day of hearings on a proposed merger that would create the state’s largest health insurer. Testimony continues today at the Sheraton Center City.

O’Donnell, an administrator for a group of Berks County eye doctors, negotiates with both Highmark and Independence Blue Cross.

“Quite frankly, I’m tired of fighting for valid medically necessary services to get paid,” he said.

He described an incident where Independence Blue Cross paid for a corneal transplant, but not the cornea. “We don’t have a very good working relationship,” he said, although he works well with Pittsburgh’s Highmark Inc.

An administrator of a cancer practice in Berks County echoed his point of view. Half the time, it takes Independence Blue Cross more than 120 days to pay reimbursements for claims, said Robert Orzechowski, an administrator with Berks Hematology Oncology Associates.

Highmark and other insurers pay within a month.

“We do battle with cancer,” Orzechowski said. “We don’t want to do battle with payers.”

But others thought the opposite might occur. Chief executives from the University of Pennsylvania Health System, Temple University Health System, Children’s Hospital, and Holy Redeemer Health System all testified that a merger, subject to some protective considerations, might provide enough scale to make real change in the state’s complicated health delivery system.

“Not seizing this opportunity will result in business as usual,” which is not acceptable, said Michael Laign, chief executive of Holy Redeemer Health System.

Their comments of measured support for the merger were in opposition to those from Carolyn Scanlan, chief executive of the Hospital and Healthsystem Association of Pennsylvania.

The market, she said, is already “skewed toward Highmark and Independence Blue Cross’ advantage.”

State Sen. Anthony Williams (D., Phila.) advocated the merger, saying the companies must be allowed to grow so they can generate economic benefits for Pennsylvania, instead of being acquired by outsiders.

“If we stick our head in the sand, these jobs might go away,” he said, speaking of the 18,000 people the companies employ in Pennsylvania.

In a testy exchange yesterday morning, Lance Haver, the city’s director of consumer affairs, pushed Pennsylvania Insurance Commissioner Joel Ario on the issue of having a consumer advocate to represent the public in the context of the merger.

“No one should serve as both the advocate and the judge,” Haver told Ario, who had been a consumer advocate earlier in his career.

Haver asked Ario pointed questions about the process and asked for immediate answers. “This is not a cross-examination,” Ario retorted, though he promised to get answers to Haver’s questions.

Earlier, Ario stunned the Blues’ chief executives with a question about use of the coveted “Blues” brand.

What would happen, he asked, if the merger would be allowed on the condition that another company would be allowed to compete in the market under the Blue Cross Blue Shield network name?

“The brand is our most significant asset,” Independence chief executive Joseph A. Frick replied. “I can’t imagine at what price our board would consider giving up such a valuable investment.”

Competition has been a key factor in the merger debate.

“From my perspective, you would have the scale” you want, Ario noted.

Frick said that Independence Blue Cross had a 70-year history of marketing the Blue brand locally.

“Anything related to the brand is a nonstarter for Independence Blue Cross,” Frick said.

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