Shifting Tides

Two health insurance carriers have gotten out of the game, but Springfield employers looking to renew their group insurance policies will still have options.

On Sept. 30, Des Moines, Iowa-based Principal Financial Group Inc. (NYSE: PFG) announced it was no longer offering health insurance, and that United Health Group (NYSE: UNH) insurer UnitedHealthcare would offer renewal options to its existing clients.

The following day, Bethesda, Md.-based Coventry Health Care Inc. (NYSE: CVH) announced its acquisition of Mercy Health Plans was final.

The moves expand Coventry’s and UnitedHealthcare’s presences in southwest Missouri.

For Coventry, which had a limited customer base in the area before the purchase, the acquisition also creates an on-the-ground presence.

With its purchase of Mercy Health Plans for an undisclosed amount, Coventry took on the roughly 140 employees and the lease at Mercy Health Plans’ Springfield headquarters, 4520 S. National Ave.

The center pays 2.5 million claims annually, said Coventry Health Care of Kansas Inc. President and CEO Michael Murphy, adding that the business will continue to operate under the Mercy Health Plans name for the time being.

“In a number of the markets we’re in, we maintain the name of the market,” Murphy said.
Coventry also expects to maintain Mercy Health Plans’ presence in Springfield, he noted.

“As far as I know, there are no plans to move people anyplace else,” he said. “We’re not moving out of Springfield.”

While Coventry is establishing itself in Springfield, it will be business as usual at UnitedHealthcare’s Springfield claims processing center, 1930 W. Bennett St., said UnitedHealthcare spokesman Greg Thompson. The claims center employs 385 people and processes 700,000 claims a month, he said.

Getting out of the business
As Coventry and UnitedHealthcare reposition themselves in the market, the insurers that have exited the health insurance business are shifting focus to other areas.

“For us, 97 percent of our business is outside the medical insurance arena,” said Susan Houser, Principal Financial Group spokeswoman.

The sentiment is similar at Sisters of Mercy Health System, former owner of Mercy Health Plans and parent company of St. John’s Health System in Springfield.

“We had to make a decision,” said Dr. Robert Steele, chairman of St. John’s Health Plans. “Do we want to spend money on an insurance company when really, Mercy is in the business of taking care of people?”

Mercy’s answer led the company to entertain sales offers. Both Mercy’s and Principal’s decisions to drop their health insurance business were both made prior to the federal health care reform legislation passed in March, officials said.

“We considered a number of factors, including the changing environment,” Houser said. “Health reform is one of those factors, but it wasn’t a driving factor at all.”

Two systems, one policy?
Now that the national carriers are beginning to broaden their bases in the area, Coventry and UnitedHealthcare also have hopes to add options for their customers.

The current standard for insurance carriers that operate in southwest Missouri is to contract exclusively with either CoxHealth or St. John’s Health System, Steele said. Currently, Coventry and UnitedHealthcare have agreements with CoxHealth, while Mercy Health Plans and Principal worked exclusively with St. John’s.

“Right now, we’re trying to expand our network, and in southwest Missouri, the goal is to have both hospital systems in our network,” said UnitedHealthcare’s Thompson.

Coventry also is working to make that happen, Murphy said, adding that Mercy Health Plans will continue its relationship with St. John’s, and Coventry will continue to offer insurance through CoxHealth.“There really is a desire in the community for the market to open up, so a company can offer the same set of benefits and its employees can choose to go into either system,” Murphy said. “Whether that can be accomplished and how soon, I’m not certain.”

While Coventry doesn’t have an on-the-ground presence in southwest Missouri, about six employees in its Kansas City office have some responsibility for serving Springfield-area clients under the Coventry name.

Murphy estimates Coventry’s health plans currently insure fewer than 10,000 lives in the Springfield area. Mercy Health Plans insures about 180,000 lives in Missouri and Arkansas.

Mercy Health Plans’ customers shouldn’t see immediate changes, Murphy said, though a number of new products have been filed, which means there will be more choices available.

And Coventry’s buying power helped trim some out-of-pocket expenses, he said.

For Principal’s existing customers, the option to switch to UnitedHealthcare will be available when policies come up for renewal.

“For the most part, we’re trying to match the plans they have,” Thompson said. “We may not be able to match a policy specifically, but the reason Principal chose us is that we have enough products that they think we can offer their customers something similar.”[[In-content Ad]]