Highmark Blue Cross and Blue Shield of Pittsburgh has the green light from state regulators to begin selling its low-cost HMO plan, CommunityBlue.
The expected approval from the state insurance and health departments clears the way for Highmark to launch the budget HMO plan, a significant break from its gold-plated tradition.
"CommunityBlue is designed to meet the needs of certain cost-conscious purchasers who are seeking the option of lower-cost health benefits using a selective network of hospitals," said Kenneth Melani, M.D., an executive vice president at Highmark.
Premiums for the CommunityBlue plan are expected to be about 10% lower than other Highmark HMO products.
To achieve those savings, CommunityBlue relies on a slimmed-down network of hospitals and doctors who have agreed to discount fees in exchange for participation.
Highmark's switch to a tighter HMO ship is a significant development, according to David Langnese, a consultant with Towers Perrin in Pittsburgh.
"This market has been a virtual Blue Cross monopoly, and their products have been characterized as a party-invitation approach to managed care-everyone's invited," Langnese said.
For now, the CommunityBlue network is limited to 21 hospitals and about 1,000 primary-care physicians and 2,600 specialty physicians in and around Pittsburgh.
Advanced clinical services will be provided by 559-bed Allegheny University Hospitals-Allegheny General, 493-bed Mercy Hospital of Pittsburgh and 462-bed Western Pennsylvania Hospital.
University of Pittsburgh Medical Center Health System hospitals are prominently absent from the new plan. Critical of Highmark's fee-discounting strategy, the system is rolling out its own commercial HMO plans (May 11, p. 34).
How the new Highmark plan will fare in the marketplace remains to be seen.
"We're pretty much at the infancy stage as far as (insurance) choice is concerned," said Chris Whipple, executive director of the Pittsburgh Business Group on Health. Whipple expects employers to welcome the new HMO option.
But, she added, CommunityBlue's ability to garner business with employers will depend in large part on the geographic match between the employees' homes and the provider locations in the HMO network.