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Wellchoice, Inc.
(212)
476-7800
11
West 42nd Street
New York, NY 10036
www.wellchoice.com
HMOs- Category Directory
PPOs- Category Directory
Group Health Insurance - Category
Directory
Sales
$5.4
billion
Business Description
We are the largest health insurance company in the State of New York based
on preferred provider organization, or PPO, and health maintenance
organization, or HMO, membership. At December 31, 2003, we served
approximately 4.8 million members through our service areas. Our service
areas include 10 downstate New York counties which we refer to as the “New
York City metropolitan area,” where we hold a leading market position
covering over 21% of the population, upstate New York and New Jersey. We
offer a broad portfolio of managed care and insurance products primarily to
private and public employers through a variety of funding arrangements,
including insured and self-funded, or administrative services only (ASO).
Our managed care product offerings include:
• health maintenance organizations, or HMOs;
• preferred provider organizations, or PPOs;
• exclusive provider organizations, or EPOs;
• point of service, or POS, products; and
• dental-only coverage.
We have a broad customer base. Among our customers are large groups of more
than 500 employees, which include employees of New York State and New York
City as well as labor unions; middle market groups, ranging from 51 to 500
employees; small groups, ranging from two to 50 employees; and individuals.
We also serve approximately 1.1 million members through our national
accounts, generally large, multi-state employers, including many Fortune 500
companies.
We have the exclusive right to use the Blue Cross and Blue Shield names and
marks for all of our health benefits products in ten counties in the New
York City metropolitan area and in six counties in upstate New York and the
non-exclusive right to use these names and marks in one upstate New York
county. In addition, we have an exclusive right to use only the Blue Cross
names and marks in seven counties in our upstate New York service area and a
nonexclusive right to use only the Blue Cross names and marks in an
additional four upstate New York counties. Our membership in the Blue Cross
Blue Shield Association also enables us to provide our PPO, EPO and
indemnity members access to the national network of providers through the
BlueCard program. This program allows these members access to in-network
benefits through the networks of Blue Cross Blue Shield plans throughout the
United States and over 200 foreign countries and territories. Substantially
all of our revenues, and nearly all of our membership, is derived from the
sale of our Blue Cross Blue Shield products and services.
Health Care Benefits, Products and Services
We offer a wide range of health insurance products. Our offerings include
managed care products consisting of HMO, POS, PPO and EPO plans and
traditional indemnity products. Our principal health products are offered
both on an insured and, except with respect to our HMO products,
self-funded, or ASO basis and, in some instances, a combination of insured
and self-funded.
Commercial Managed Care Products
Managed care generally refers to a method of integrating the financing and
delivery of health care within a system that manages the cost, accessibility
and quality of care. Managed care products can be further differentiated by
the types of provider networks offered, the ability to use providers outside
such networks and the scope of the medical management and quality assurance
programs. Our members receive medical care from our networks of providers in
exchange for premiums paid by the individuals or their employers and, in
some instances, a co-payment by the member. We reimburse network providers
according to pre-established fee arrangements and other contractual
agreements.
We currently offer the following managed care plans: an HMO product, a PPO
product, an EPO product and a POS product.
HMO. Our HMO plan provides members and their dependent family members with
all necessary health care for a fixed monthly premium in addition to
applicable member co-payments. Health care services can include emergency
care, inpatient hospital and physician care, outpatient medical services and
supplemental services, such as dental, behavioral health and prescription
drugs. Under our standard HMO product, members must select a primary care
physician within the network to provide and assist in managing care,
including referrals to specialists. We also offer a Direct Connection HMO
product, which offers all the advantages of our standard HMO product, but
allows our eligible members to seek care from in-network specialists without
a referral. HMO members do not have access to services on a national account
basis through the BlueCard program. We also provide services to Medicare
beneficiaries through our Medicare+Choice product, which covers all Medicare
covered services, Medicare deductibles and coinsurance and certain
additional services. HMO members receive all covered medical care through
physicians selected from the applicable HMO provider network.
PPO. Similar to an HMO, a PPO managed care plan provides members and their
dependent family members with health care coverage in exchange for a fixed
monthly premium. Our PPO provides its members with access to a larger
network of providers than our HMO. A PPO does not require a member to select
a primary care physician or to obtain a referral to utilize in-network
specialists. In contrast to an HMO product, a PPO also provides coverage for
members who access providers outside of the network. Out-of-network benefits
are usually subject to a deductible and coinsurance. Our PPO also offers
national in-network coverage to its members through the BlueCard program.
For our New York State and New York City accounts we provide a hospital-only
network PPO benefit.
EPO. Our EPO plan is similar to our PPO managed care plan but does not cover
out-of-network care. Members may choose any provider from our PPO network in
our New York service area and do not need to select a primary care
physician. Outside of our service area in New York State, EPO members may
use the BlueCard program to secure in-network benefits nationally. We
currently offer an EPO product only to New York State employers and to
national accounts on a self-funded basis. For national accounts needing
coverage in jurisdictions where the EPO product is prohibited, we offer a
variation of this product that requires a 50% coinsurance payment for
out-of-network services.
POS. Consistent with our strategy to offer a broad continuum of managed care
products in the New York market, we have recently introduced a point of
service, or POS, product to employer groups, focused primarily on local
small and middle market customers. The product, Direct POS, provides members
with the ability to utilize services on an in-network basis utilizing our
HMO network of providers or on an out-of-network basis. POS members do not
have access to services on a national account basis through the BlueCard
program. Our POS product has similar features to our Direct HMO product that
permits members to access in-network specialists without a referral, and
also allows members to access out-of-network providers in return for
deductibles and/or co-insurance. We believe the POS product will complement
our existing managed care product portfolio by offering employers an
additional product within our family of managed care products to meet the
needs of their employees.
In addition, we offer dental coverage on a PPO basis and other dental
managed care products.
BlueCard
For our members who purchase our PPO, EPO and indemnity products under a
Blue Cross Blue Shield plan, we offer the BlueCard program. The BlueCard
program offers these members in-network benefits through the networks of the
other Blue Cross Blue Shield plans in other states and regions. In addition,
the BlueCard program offers our PPO, EPO and indemnity members in-network
coverage in over 200 countries and territories. We believe that the national
and international coverage provided through this program allows us to
compete effectively with large national insurers, without compromising our
focus and concentration in our geographical region. We derive administrative
fees from other Blue Cross Blue Shield plans when their members receive
medical care from providers in our service areas. In 2003, approximately
413,000 members of other Blue Cross Blue Shield plans utilized our provider
networks through the BlueCard programs. We also pay other Blue Cross Blue
Shield plans administrative fees when our members receive medical care from
providers in those other plans’ service areas.
Other Insurance Products and Services
We provide indemnity health insurance, which generally reimburses the
insured for a percentage of actual costs of health care services rendered by
physicians, hospitals and other providers. Persons with indemnity insurance
are not restricted to receiving professional medical services from a
specified provider network. Our indemnity products include hospital-only
coverage as well as comprehensive hospital and medical coverage.
We also offer a number of individual products, including Child Health Plus,
Medicare supplemental, Healthy New York (whether purchased by groups or by
individuals), direct pay hospital-only and the New York State-mandated,
direct pay HMO and HMO based POS products. Child Health Plus provides a
managed care product similar to our HMO products to children under the age
of nineteen who are ineligible for Medicaid and not otherwise insured. Our
Medicare supplemental insurance policies, also referred to as Medigap
policies, are designed to supplement Medicare by paying hospital, medical
and surgical expenses as well as, in some cases, prescription drug expenses
for a portion of those costs not covered by Medicare. Direct pay
hospital-only is a low-cost policy that covers primarily inpatient services
on an indemnity basis and Healthy New York is a state-mandated HMO product.
We also serve as fiscal intermediary for the Medicare Part A program and a
carrier for the Medicare Part B program, for which we receive reimbursement
of certain costs and expenses at predetermined levels.
Administrative Services Only
In addition to our insured plans, we also offer selected products, including
PPO, EPO and indemnity benefit designs, on a self-funded, or ASO, basis
under which we provide claims processing and other administrative services
to employers. Employers choosing to purchase our products on an ASO basis
fund their own claims but their employees are able to access our provider
network at our negotiated discounted rates. We administer the payment of
claims to the providers but we do not bear any insurance risk in connection
with claims costs because we are reimbursed in full by the employer. The
administrative fee charged to self-funded groups is generally based on the
size of the group and services provided. Our primary ASO customers are large
national accounts and large local groups (over 1,000 employees).
Industry Overview
The managed health care industry has experienced significant change during
the past decade. The increasing focus on health care costs by employers, the
government and consumers has led to the growth of alternatives to
traditional indemnity health insurance. HMO, PPO, EPO and POS plans are
among the various forms of managed care products that have developed in
response to these market pressures. Under these arrangements, the cost of
health care is contained, in part, by negotiating contracts with hospitals,
physicians and other providers to deliver care at favorable rates and
adopting programs to ensure that appropriate and cost-effective care is
provided.
In addition, economic factors and greater consumer awareness have resulted
in the increasing popularity of products that offer larger, more extensive
networks, more member choice related to coverage and the ability to
self-refer within those networks. There is also a growing preference for
greater flexibility to assume larger deductibles and co-payments in exchange
for lower premiums. At the same time, organizations and individuals are
placing an increased focus on the quality of health care and the level of
sophistication and customer service in delivering service. Employer groups
and providers are also demanding prompt and accurate payment of claims,
including automated claims payment options. There is also a growing
preference for national accounts and other large groups to fund their health
care costs themselves rather than purchase an insured product.
The Blue Cross Blue Shield Association and its member plans also have
undergone significant change. Historically, most states had at least one
Blue Cross (hospital coverage) and a separate Blue Shield (physician
coverage) company. Prior to the mid-1980s, there were more than 125 separate
Blue Cross and/or Blue Shield companies, which we sometimes refer to as
“Blue” plans. Many of these organizations have merged, reducing the number
of Blue plans to 41 as of December 2003. We expect this trend to continue,
with plans merging or affiliating to address capital needs and other
competitive pressures. At the same time, the number of people enrolled in
Blue Cross Blue Shield plans has been steadily increasing, from 65.6 million
in 1995 to 88.7 million at September 30, 2003 nationwide.
The Blue Cross Blue Shield plans work together in a number of ways that
create significant market advantages, especially when competing for large,
multi-state employer groups. For example, all Blue Cross Blue Shield plans
participate in the BlueCard program, which effectively creates a national
“Blue” network. Each plan is able to take advantage of other Blue Cross Blue
Shield plans’ broad provider networks and negotiated provider reimbursement
rates. Utilizing the BlueCard program, an indemnity, PPO or EPO member of
one plan who lives or travels outside of the state in which the policy under
which he or she is covered may obtain health care services from a provider
that has contracted with the Blue Cross Blue Shield plan in the locale in
which such member is then situated. This makes it possible for individual
Blue Cross Blue Shield plans to compete for national accounts business with
other non-“Blue” plans with nationwide networks.
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WellChoice
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