Don't get me wrong: I love free market competition.
But the current incestuous relationship between Highmark Blue Cross Blue Shield and MexExpress urgent care clinics is a classic example of government utterly failing at "regulating" a market.
To begin with, let's go back and recall that Senator Patti Blevins and Insurance Commissioner Karin Weldin Stewart teamed up to exempt Highmark from the Attorney General's authority to require the insurance company to set aside $175 million in reserves for a foundation to benefit taxpayers.
This was Highmark's condition for entering the Delaware market--$175 million plus multiple other exemptions and exceptions to existing insurance law. If you bother to go look at either Blevins' or Stewart's campaign donation pages at the Delaware Commissioner of Elections page, and you take the 2-3 hours necessary to trace down the bewildering array of PACs and healthcare related donations that each woman received in 2012, you will discover that they were well compensated for screwing Delaware taxpayers out of $175 million.
Next, you need to recognize that Highmark holds a $51+ million stake in MedExpress urgent care clinics. To put it as clearly as open sources allow: Highmark holds at least a 10% ownership stake in MedExpress, probably more.
So it was no surprise that, as in Pennsylvania, when Highmark came to Delaware, MedExpress quickly followed behind. In the past year, MedExpress has dumped FOUR new clinics into New Castle County, and is (or has) added four more in Kent and Sussex. These new clinics arrived with tens of thousands of dollars worth of smaltzy advertising about "your new neighbor."
Here are the harsh realities: the arrival of MedExpress is only the FIRST STEP in a tried and true Highmark business model for vertical integration. Basically, the plan involves four steps:
1. Bargain for major concessions from the State to become the BCBS provider, which pre-emasculates (maybe I shouldn't use that word with a female insurance commissioner) the regulatory authority of the State to influence operations. CHECK. Done.
2. Introduce a glut of new urgent care centers in which Highmark has a financial stake, and engage in the following activities to first drive independent centers out of existence and second drive down the profitability of larger hospital and chain-associated centers:
a. Pay Highmark-owned MedExpress facilities higher rates for the same services that doctors at other comparable centers receive. This is not an assertion on my part: Highmark has admitted to the practice in court.
b. Hold up (often for weeks or months) tens of thousands of dollars in reimbursements owed to independently owned clinics. These clinics, locally owned small businesses, usually employ 35-50 people each, and depend on the cash flow generated by timely reimbursements to order supplies and make payroll. Last summer an informal survey I conducted with three such clinic owners turned up the fact that each of them was currently owed between $28-50,000 in delinquent claims from Highmark, claims that had gone unpaid (and even unprocessed) for up to eight weeks.
c. "Review" and threaten to cancel the employee medical coverage at competing clinics. Many of our independent medical clinics in Delaware have secured their own employees' insurance coverage via BCBS, which then became Highmark. This spring--totally at odds with the renewal dates of these policies--Highmark as begun conducting what it characterizes as "routine" reviews of the eligibility of these businesses. The contracts signed to get coverage allow for this, but Highmark is demanding not just information about number of employees, etc. etc., but also the person TAX RETURNS of the business owners; lists and ownership information about all other businesses that the owners may be invested or partnered in; and other proprietary information that would include knowing how much cash on hand and how large the cash reserves of the clinic owners happen to be. NONE of this material was required to set up the insurance plans, and none of it is a requirement under Title 16 Section 72 of the DE State Code to maintain coverage. But if you don't provide it, Highmark then tells you that in sixty days your employees' health insurance will be canceled. (I have copies of these letters but have not been given permission to publish them, as they identify the business owners by name.)
d. Change the definition of a "medical aid unit" as a component of continuing to be counted as a participating provider by Highmark. This one is really interesting. Highmark is now demanding that all walk-in clinics conform to (a) specific hours of operations (12 hours per day, seven days a week) and (b) specific certification ATLS [Advanced Trauma Life Support] for the physicians working there. You get three months, or Highmark will refuse to consider you a provider. [Again, I do have copies of these letters.]
What's going on here? Most locally owned walk-in clinics are NOT currently open 12 hours per day, because (specifically) the early morning hours do not normally generate sufficient hours to cover the cost of manning the facility. Most of our independent facilities are open about 8 hours per day, sometimes 5 or 6 on Sundays. Highmark is requiring 12 hours per day because MedExpress can afford to run coverage 12 hours per day at a loss until it runs its local competition out of business. But you need to know that there are nearly 200 other insurers authorized to do business in Delaware, and NONE OF THEM make such requirements, nor does the State Code. This is a purely monopolistic practice to reduce the number of clinics in Delaware in MedExpress' favor--and it is a favorite tactic of the Highmark-MedExpress team in other states as well.
What about that ATLS certification? You need to understand that walk-in clinics in Delaware CANNOT call themselves "urgent care" clinics precisely because urgent care clinics have an ATLS requirement. ATLS certification is expensive, and cuts down dramatically on the available pool of doctors and nurses who qualify to work there. Again, Highmark alone out of 200 medical insurers demands this certification (as of this summer), despite the fact that state law does not.
What Highmark is doing, plain and simple, is taking advantage of its position as the largest insurer in the State to literally make law/policy that will drive out smaller clinics in favor of MedExpress.
3. Go after the weakest "chain" clinics once the independents have been run out of business. Again, this is old news for Highmark, and exactly what it started doing in PA once it had closed out the little guys. Highmark went after the University of Pennsylvania centers, specifically trying to close down their walk-in clinics by excluding them from Highmark insurance coverage. The strongest clinic system in Delaware belongs to Christiana Care, and if you ask people there (off the record because they are scared), they already know that it is at best 2-3 years before Highmark comes after them directly. By that time the smaller chains will have been run off first.
4. Go directly after the hospital chains themselves, for at least an ownership stake if not outright control. This is the classic monopoly scheme. Having pursued horizontal integration with the control of clinics statewide, Highmark will then go after the hospitals and medical supplier to attain vertical integration. Because here's the truth: between politicians in their pocket (Blevins, Stewart, and others) and the incredibly deep pockets of one of the industry's largest bank accounts, Highmark can use EXACTLY THE SAME TACTICS against Christiana Care that it started out by using against Lantana or Eden Hill walk-in clinics.
In the end, you know what happens? With the last vestiges of actual competition removed from the system, Highmark can settle in to do what it does best: exploit a monopoly to make a profit, end product be damned.
Highmark is already encouraging people to pay to get diagnosed by dermatologists without ever seeing them, and cutting way back on chiro and physical therapy coverages.
And what, I might ask, are Delaware's elected officials doing to protect Delaware consumers?
Well, you can't blame Beau Biden for this one; Patti Blevins removed his authority.
But the Governor, the Insurance Commissioner, the General Assembly?
They are all cashing their PAC checks and turning a blind eye while they cede their so-called regulatory authority to Highmark of Delaware.