Payors in the News: 10 Recent Developments

Here are ten recent developments about payors and their relationships with hospitals, beginning with the most recent.

1. A large number of Pittsburgh-area physicians still want UPMC to resume contract negotiations with Highmark despite a proposed merger with the hospital system's rival, West Penn Allegheny Health System.

2. Through an agreement with Philadelphia-based Independence Blue Cross, Abington (Pa.) Health is the third provider in the region to join the payor's hospital-physician incentive program. The program, called the Integrated Provider Performance Incentive Plan, is aligned with federal accountable care guidelines.

3. Blue Cross Blue Shield of Massachusetts will repay its 1 million customers the $4.26 million it paid former CEO Cleve Killingsworth in severance in 2010. The $4.26 million severance was part of a total $11 million package the company paid its former leader. Mr. Killingsworth's pay for his five years at the helm of Blue Cross was based on self-evaluations that contained essentially no critical comments, though the company started to lose millions of dollars.

4. Blue Cross and Blue Shield of Nebraska is providing money to improve patient outcomes at two hospitals in Omaha. Creighton University Medical Center and Methodist Hospital will each receive $35,000 from the payor. The funds will cover licensing fees for the hospitals to participate in an improvement program through the American College of Surgeons that helps identify pre-operative risk factors and reduce mortality rates.

5. Miami-based MCCI Medical Group is planning to open four primary care clinics in the Jacksonville, Fla., area this month to serve Humana patients. Humana is ending its Gold Plus contract with University of Florida primary care physicians on Aug. 31, forcing the approximately 7,200 Gold Plus HMO members to find new physicians.

6. Highmark plans to acquire Pittsburgh-based West Penn Allegheny Health System for approximately $500 million. WPAHS will become a subsidiary of Highmark, which will assume approximately $1 billion in liabilities from the health system.

7. Health Care Service, parent company of Blue Cross & Blue Shield of Illinois, had a profit of $1.1 billion last year, approximately double its 2009 profits. Meanwhile, health insurance companies are facing criticism for its premium increases. Blue Cross is increasing rates by an estimated 3-10 percent for employer-sponsored group plans this year, which follows an estimated 20 percent increase last fall.

8. Aetna is able to resume marketing and enrollment for its Medicare products, as the Centers for Medicare & Medicaid Services has lifted its sanctions. CMS originally sanctioned Aetna due to improper administration of the Medicare drug benefit in the plan's national standalone prescription drug plan and its 25 Medicare Advantage prescription drug contracts.

9. A federal judge has denied a request from Blue Cross Blue Shield of Michigan to dismiss a suit filed by federal and state governments, alleging the payor's use of certain hospital contracts stifles competition. The state and U.S. government claim BCBS contracts with more than half of Michigan's hospitals prevent them from charging other insurance companies lower prices.

10. Philadelphia's Independence Blue Cross is replacing its old pay-for-performance program with a new reimbursement model that includes bigger incentive payments to healthcare providers who improve quality while also reducing costs. The Provider Performance Incentive Program calls for the payor to contract with a joint provider organization, comprised of a hospital and physicians.

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