Insurance Commissioner Reduces Required Insurance Department Notification, Approval of Fund Transfers, Investments by Highmark Inc., to Bolster Consumer Health Care Options

HARRISBURG, Pa., July 28 -- The Pennsylvania Insurance Department issued the following news release:

Insurance Commissioner Teresa Miller today approved substantial elements of a request to reduce requirements for Insurance Department approval or notification before Highmark Inc. or its affiliates transfer funds to Allegheny Health Network (AHN), or make investments in or transfer funds to other entities. This action will allow Highmark Inc. to respond more quickly to changes in the health care landscape, and thus provide more health care options to consumers.

"I emphasize that the change I am announcing today will still require Highmark Inc., at all times, to maintain sufficient risk-based capital to pay all claims submitted by its health insurance customers," Commissioner Miller said. "Governor Wolf has set consumer protection as the top priority for the Insurance Department, and making sure Highmark Inc. can pay its customers' claims is the number-one consumer protection we will enforce."

Risk-based capital is the measure by which the Insurance Department assesses an insurer's financial stability.

In March, Highmark Health, the parent company of Highmark Inc., requested a modification to the Insurance Department's 2013 Order (Order No. ID-RC-13-06) approving Highmark's creation of AHN, which required Insurance Department approval of financial commitments or donations from Highmark Inc. and its affiliates not only to entities within Highmark Health's integrated delivery and financing system, but also to third parties that have no affiliation with this system. Insurance Department approval was required for any fund transfer of $250 million or more within the immediately preceding 12-month period, and department notification was required for transfers of $100 million or more. In keeping with Governor Wolf's priority of transparency, the Insurance Department accepted public comment on this proposal for 30 days, receiving nearly two dozen comments.

The Order Modification approved by the commissioner permits Highmark Inc. to make expenditures within the AHN system without Insurance Department notification or approval, as long as the amount of these expenditures does not exceed ten percent of Highmark Inc.'s surplus. For investments outside the system, expenditures can be made without department approval as long as Highmark Inc.'s risk-based capital does not drop below the level set by the Insurance Department to ensure that Highmark Inc. can pay all claims submitted by its health insurance customers.

"It is important to note that this change allows Highmark Health to implement its strategic plan for AHN for 2017 through 2020, as submitted to the Insurance Department, without requiring additional Insurance Department notification or approval," Commissioner Miller said.

"Funding for investments to improve AHN's ability to serve health care consumers and thus provide more consumer choice in the company's service area is a key reason I have approved this Order modification," Commissioner Miller said. "Specifically, AHN's strategic plans seeks to address gaps in coverage for specific services, notably cancer treatment, through investments in facilities and with other health care partners. These investments will now be easier for Highmark to make and will benefit consumers in western Pennsylvania. This Order modification also allows Highmark Inc. to invest elsewhere in Pennsylvania to bolster competition and benefit consumers as the health care landscape continues to change."

In addition to the strategic plan for AHN for 2017 through 2020, Commissioner Miller noted Highmark has already made significant investments in facilities in western Pennsylvania that are benefitting consumers through providing more competition, and thus more options, for various services. This demonstrated commitment to improve health care services in various communities it serves is part of the reason for approving the requested changes to give Highmark greater flexibility and the ability to make future investments more quickly.

To help evaluate this request, the Insurance Department asked its consultant Compass Lexecon to conduct an updated review of the progress made over the past four years in the development of AHN. The Compass Lexecon report supports the commissioner's conclusion that AHN has invested to benefit health care consumers.

Specifically, the report notes AHN investments to improve facilities and services at Allegheny Valley, Canonsburg, and Allegheny General hospitals. The report also cites investments addressing gaps in geographic coverage and specialized services. In oncology services, Highmark has partnered with Johns Hopkins Kimmel Cancer Center, giving AHN patients improved access to clinical trials. AHN has also opened a cancer institute at Jefferson Hospital and 10 other sites for its Oncology Rehabilitation Program. These actions have resulted in some Highmark insurance customers moving from competing facilities to AHN facilities for oncology services.

In women's services, AHN has focused on developing specific programs at West Penn Hospital, such as young women's breast cancer, high-risk post-partum services, and in vitro fertilization. AHN also opened a Women's and Infant's Center at Jefferson Hospital and expanded and renovated the West Penn Hospital labor and delivery units. In behavioral health and psychiatry, Highmark plans a partnership with Quartet to increase access to mental health resources for Highmark members who have undiagnosed mental health conditions and provide additional support for members who have a mental health diagnosis but are not in treatment or are in need of more services.

"Viable competition among both insurers and health care providers and facilities is key for consumers to have the choices needed to best meet their health care needs, and do so at the best price. Approving this change to allow Highmark Inc. and AHN to invest strategically in improving the health care options for Pennsylvania citizens will help achieve these goals," Commissioner Miller said.

Complete background on the AHN system is available here: http://www.insurance.pa.gov/Companies/IndustryActivity/CorporateTransactionsofPublicInterest/HighmarkWestPennAlleghenyHealthSystem/Pages/Order-Implementation-and-Public-Filings.aspx