Highmark to increase premiums, limit access to health care in new plans

Oct. 02--Highmark Inc. is raising premiums on a range of its health plans next year, and some of its 4.2 million plan members could have a narrower choice of doctors and hospitals as the state's largest health insurer responds to rising costs and the end of its contract with UPMC.

The increase in premiums and limited network access in plans for individuals, companies and seniors mirror trends in the health insurance industry. But it is significant because of Highmark's dominance in Western Pennsylvania and on the federal health insurance marketplace here.

Highmark spokesman Aaron Billger blamed rising prices in 2015 on the growing cost of medical services. Health care inflation was tame in recent years but is projected to accelerate as more people gain coverage and the economy recovers from the recession.

"The cost of providing care is the biggest impact on premiums," Billger said. "As health care continues to evolve, so does the cost of providing it."

The end of its contract with hospital giant UPMC has forced some of the cost increases and plan changes. The Blue Cross Blue Shield insurer has to revamp its individual and commercial products for 2015 to reflect reduced in-network access to many UPMC hospitals in Pittsburgh.

Though its Medicare Advantage plans aren't affected by UPMC's contract termination, Highmark chose to give seniors a low-cost option for next year that excludes UPMC and many other smaller health systems in Western Pennsylvania.

Similarly, Highmark is giving individual and group customers a broad range of premium prices. Because the Affordable Care Act requires insurers to offer robust minimum benefits, one of the few ways to lower costs is to reduce access to hospitals and doctors.

Details provided

Insurers across the country are increasingly limiting networks. Management consulting firm McKinsey & Co. last year found that 70 percent of plans sold in 20 large urban markets used these so-called narrow networks.

Details of Highmark's new products were released Wednesday by the insurer as companies are making decisions about employee health plans for next year and as individuals prepare for open enrollment.

Billger said he could not provide examples of price increases because the insurer's rates have not been approved by regulators.

Premiums for plans sold on the federal exchange in Pennsylvania won't be released until later this month. But insurance costs paid by individuals and employers across the nation are rising.

Rates are expected to be higher on state-run exchanges and on Healthcare.gov when open enrollment starts Nov. 15. Among the 27 states and the District of Columbia that have released data on premiums, the average increase will be 7.5 percent, according to an analysis by PricewaterhouseCoopers.

Annual price increases for employers have moderated, but health plan rates are expected to begin rising quickly again in coming years. The average premium for a family was $16,834 this year, up 3 percent from last year, according to Kaiser Family Foundation.

Economists at the Centers for Medicare & Medicaid Services last month predicted that health care spending in the United States will rise by an average of 6.1 percent a year from 2016 to 2023.

Insurance carriers such as Highmark and others are responding to rising costs by limiting in-network access to hospital systems where they can negotiate the best prices. Limited networks have enabled insurers to offer subscribers options to reduce premiums.

For example, Highmark is rolling out a new product, Community Blue HMO, for employer groups that will offer its lowest rates but includes only providers in the 29-county Western Pennsylvania region. It excludes UPMC.

"Our customers asked for it," said Robin Bugni, vice president of product management and development for Highmark.

It's also giving seniors low-cost choices. In addition to its broad network plans for seniors, Security Blue and Freedom Blue, Highmark will begin selling a Medicare Advantage plan in Western Pennsylvania called Community Blue Medicare HMO that comes with a $0 premium option.

Highmark is the largest provider of Medicare Advantage plans in Western Pennsylvania with about 150,000 members.

Options for Medicare

Under Medicare Advantage, an alternative to traditional Medicare, the federal government contracts with private insurance companies to administer Medicare benefits to seniors.

The private plans are especially popular in Pittsburgh. According to data from the Kaiser Family Foundation, a nonprofit research organization, 62 percent of Medicare beneficiaries in Allegheny County are enrolled in the private plans. By comparison, 30 percent of beneficiaries nationwide are.

In exchange for zero premium, however, 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 are out-of-network in the HMO plan.

"Our goal in creating a Community Blue product for seniors is to provide choices for those seeking high-quality, lower-cost coverage," said Barbara Gray, Highmark's senior vice president of senior markets.

In previous years, the broad-network Security Blue and Freedom Blue had $0 premium plans, but those are no longer offered, Billger said.

Open enrollment for Medicare Advantage plans starts Oct. 15.

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

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