Highmark's revised plans to acquire the faltering West Penn Allegheny Health System would push the Pittsburgh insurer's cost to launch an integrated delivery network to more than $1.6 billion, new regulatory filings show.

The insurer, which first filed plans for the deal with state insurance regulators in November 2011, said in a new filing that Highmark would borrow the $600 million needed to buy out investors in West Penn Allegheny's bonds. The insurer said last week that major bondholders agreed to sell the bonds at a loss. Under the deal, Highmark will pay 87.5 cents on the dollar for the debt.

Highmark plans to hold onto the bonds until West Penn Allegheny returns to tax-exempt bond markets for financing to buy back the debt. West Penn Allegheny, also based in Pittsburg, has seen its speculative grade credit rating fall in recent months as its operating losses continue. The system lost $112.5 million on operations with revenue of $1.6 billion last year, which ended June 30, its unaudited financial records show.

Highmark has already poured $200 million into West Penn Allegheny in less than a year, and the system is set to receive $75 million when the deal closes and could see another $200 million in loans.

Highmark also said it would pay out $10 million to West Penn Allegheny each of the next five years “as part of its provider rate negotiations,” according to the latest filing.

The insurer also has committed $525 million to its plans for an integrated network, the Pennsylvania Insurance Department said in a letter acknowledging the latest filing. Highmark reached proposed agreements with Jefferson Regional Medical Center and St. Vincent Health System last year.

Highmark's latest plan “significantly changes the level of risk and the transaction is now materially different than what was presented” in November 2011, the insurance department said. The agency will accept public comment on Highmark's plans for 30 days.