Highmark May Gain Additional Leverage With Blues Merger

A merger agreement between Blue Cross of Northeastern Pennsylvania (BCNEPA) and Highmark Inc. could bring together two of Pennsylvania’s leading not-for-profit health insurance companies and become a factor in the long-running dispute between Highmark and UPMC, the region's largest health system.

The disagreement between Highmark and UPMC dates back to Highmark’s purchase of UPMC’s rival, the West Penn Allegheny Health System. The current UPMC-Highmark contract expires at the end of 2014 and UPMC leadership is not keen to sign another agreement with Highmark, which they consider a competing health system as well as an insurer.

However, if the Pennsylvania Insurance Department approves Highmark’s application to merge with BCNEPA, then nearly 5 million people in 62 of Pennsylvania's 67 counties, as well as in Delaware and West Virginia, will be insured through Highmark, and that is a large population for UPMC to risk losing as an “out-of-network” health system.

Under the terms of the merger agreement signed by the boards of BCNEPA and Highmark, BCNEPA's local operations will be merged with Highmark, and Highmark will become the Blue Cross and Blue Shield Association affiliate for BCNEPA's 13-county service area.

In the press release put out by Highmark, both Denise S. Cesare, president and CEO of Blue Cross of Northeastern Pennsylvania and William Winkenwerder Jr., M.D., president and CEO of Highmark Health, the parent company of Highmark Inc., touted the benefits of the merger to their plan members and to the region as a whole.

"Bringing together BCNEPA and Highmark will be good for northeastern and north central Pennsylvania residents and the communities in which BCNEPA operates," Dr. Winkenwerder asserted.