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Highmark Inc., Blue Cross of Northeastern Pennsylvania seek merger

By , - Last modified: February 18, 2014 at 2:14 PM
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Highmark Inc. and Blue Cross of Northeastern Pennsylvania are seeking approval for a merger, the Pennsylvania Insurance Department announced today.

"The highest priority in our review of this application is to see that consumers will be protected and the impacted health insurers remain financially strong and the market competitive," Insurance Commissioner Michael Consedine said in a news release, adding that the department's review process will be as transparent as possible. "Public input is an integral part of our evaluation and we encourage the public to review the filing and offer written comments. Additionally, we intend to host a public hearing in Northeastern Pennsylvania in an effort to understand any issues first-hand so that we have a full and robust public record."

The two nonprofit health insurers announced in November that they were pursuing a stronger affiliation, although the term "merger" was not used at that time. Highmark and Philadelphia-based Independence Blue Cross spent almost two years pursuing a merger before withdrawing their application in early 2009 after deeming the PDI requirements unacceptable.

Highmark, based in Pittsburgh, is among the largest health insurers in the U.S. and the fourth-largest Blue Cross and Blue Shield-affiliated company, operating health insurance plans in Pennsylvania, Delaware and West Virginia that serve 5.3 million members.

Blue Cross of Northeastern Pennsylvania is an independent licensee of the Blue Cross and Blue Shield Association, offering health insurance products and administrative services to more than 540,000 people in 13 counties in northeastern and northcentral Pennsylvania.

According to a news release from the organizations, they have signed a definitive agreement to merge, with BCNEPA's local operations to be merged with Highmark, and Highmark to become the Blue Cross and Blue Shield Association affiliate for BCNEPA's 13-county service area. The release says the agreement also contains provisions to preserve BCNEPA's historical presence, operations and significant workforce in northeastern and north central Pennsylvania, as follows.

• Highmark will maintain regional operations in the BCNEPA service area, will make efforts to maintain local staffing levels and will attempt to identify and create new employment opportunities in the BCNEPA service area as business needs and conditions permit.

• Highmark will create a local advisory board to include board members of BCNEPA, which will have a voice in major decisions relating to the transition and operations in the BCNEPA service area for at least four years.

• Highmark and BCNEPA agreed that BCNEPA will provide up to $100 million through a charitable foundation to benefit health and wellness and economic development efforts across the region.

"Health care is changing at an incredible pace. This merger will enable BCNEPA to continue to improve the quality, accessibility and affordability of health care across its region while taking advantage of Highmark's resources, tools and advanced technologies," Dr. William Winkenwerder Jr., president and CEO of Highmark Health, the parent company of Highmark Inc., said in the release. "Bringing together BCNEPA and Highmark will be good for northeastern and north central Pennsylvania residents and the communities in which BCNEPA operates."

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