It's getting to be Blue against Blue in the northeast region of the country.
To survive the dog-eat-dog world of managed care, Blue Cross and Blue Shield plans are staking out turf in other Blues' markets. The latest to do so is Blue Cross and Blue Shield of New Jersey.
Last week the Newark-based plan, which insures nearly 2 million people, filed an application with the state of New York to operate an HMO in New York City and surrounding counties. The New Jersey plan is targeting an eight-county region of metropolitan New York with 8 million potential customers. The insurer did not disclose estimates of expected revenues from the region.
The New Jersey Blues' regional expansion is part of a strategy to compete against for-profit HMOs, said Fred Hillmann, a plan spokesman. The insurer already operates an HMO in Philadelphia under the name Medigroup of New Jersey and has filed an application for HMO licensure in Delaware.
Now it's pushing into New York.
"We've always had this (move) in the back of our minds. It kind of got delayed a little bit because of our merger and acquisition plans (with Anthem Insurance Cos.)," he said.
The New Jersey Blues' proposed merger into Indianapolis-based Anthem fell apart because it was unable to secure state approval to convert to mutual status, a prerequisite for doing the deal. Rulings by the state attorney general and state courts that the New Jersey plan is a charity stalled the mutualization process.
Hillmann acknowledged that the move into the Big Apple will pit the plan against New York-based Empire Blue Cross and Blue Shield. "But that's nothing new. The Blues plans (throughout the nation) have been competing with each other for at least the last decade," he said.
Diane Iorio, a vice president for brand enhancement at the national Blue Cross and Blue Shield Association, based in Chicago, said about 40 of the nation's 55 Blues plans market non-Blue-branded products outside their service areas. But only a handful have any significant non-Blue volume, she said. Less than 10% of Blues plans' $75 billion in premium revenues comes from non-Blue business.
Blues plans are licensed to use the Blue marks in a given region, Iorio explained. They are prohibited from using those marks outside their service areas.
Hillmann cautioned that the New Jersey plan's expansions are not aimed at undermining fellow Blues plans. The intent is to better serve multistate employers and stave off big for-profit HMOs, he said. "Frankly, we have to do that to compete, to survive down the line against these major (managed-care) companies."
Blue Cross and Blue Shield of Delaware has seen lots of new players put up shingles but isn't scared by the competition. "It's been our experience that HMOs come and go here in Delaware, so another one shouldn't make a difference," Kerin Hearn, a spokeswoman for the plan, said of the New Jersey Blues' attempt to crack the Delaware market.
For its part, Empire isn't sweating a new competitor, either. "We think that competition is good for the consumer in this healthcare marketplace," said Deborah Bohren, a plan spokeswoman.
In fact, Empire has gotten into the regional expansion game, too. Last November it bought an insurance license from Peapack, N.J.-based Central National Life Insurance Co. Any day now, Empire expects to receive approval to sell indemnity and managed-care products in 13 northern New Jersey counties under the name Empire Health Care. Empire is currently seeking state approval to convert to for-profit status.
The New Jersey Blues said it has retained MultiPlan, a New York-based PPO, to develop a provider network in New York. So far, MultiPlan has secured letters of intent with 32 New York hospitals and groups representing more than 6,600 physicians.
Iorio said the movement by East Coast Blues into other service areas is not surprising, given the local geography and the need to serve multistate employers.
The Washington-Maryland region is a good example. Ultimately, the Blues plans in those states decided it made more sense to merge. That consolidation, announced in January, is in the regulatory stages.
"I think in the long run that's probably more the pattern for the future," she said.