News in brief - June 12, 2000

Blues mull for-profit coersions - Mass. approves Harvard Pilgrim rehab - Large corps. move to defined benefits - Insurer, consumers reach settlement

Blues mull for-profit coersions

Highmark Blue Cross Blue Shield has decided to remain a non-profit company, the insurer announced last month. Pittsburgh-based Highmark, which insures 2.7 million in Western Pennsylvania, had stated last year that it was interested in converting to a for-profit as a way to raise capital for future acquisitions.

New York-based Empire Blue Cross Blue Shield, meanwhile, has received approval from New York Attorney General Eliot Spitzer to convert to a for-profit company. Empire has agreed to establish a charitable foundation as a condition of state approval. State hospitals and labor unions have announced that they will attempt to block the conversion.

Mass. approves Harvard Pilgrim rehab

The Massachusetts Supreme Judicial Court May 24 approved the release of Harvard Pilgrim Health Care from state receivership. Brookline-based Harvard Pilgrim, a non-profit HMO with one million members, was placed under state supervision Jan. 4 after losing $228 million in 1999. Harvard Pilgrim increased premiums, withdrew from Rhode Island, cut its workforce and restructured its pharmacy benefits as part of its financial turnaround plan. The HMO is projected to return to profitability next year.

Large corps. move to defined benefits

Major companies in the United States expect that they will eventually shift to a defined contribution health benefits program, according to a Booz Allen & Hamilton survey of 100 corporations.

Most companies indicated that they want to shift to the system, in which employees are given a set amount of money per year to spend on health insurance, but are hesitant to do so during a tight labor market.

A recession, continued health care inflation and additional government mandates are factors that would motivate companies to the switch, according to the survey.

Insurer, consumers reach settlement

The Hawaii Medical Service Assn. and the Hawaii Coalition for Health, a consumer advocacy group that was concerned over low physician reimbursement rates, reached an agreement last month regarding physician compensation for certain services.

As part of the settlement between the HMSA and the consumer coalition, the HMSA has agreed to work with physicians to resolve reimbursement disputes and to establish a new fee review process.