Aetna

With little more than a week to go before the heart of a new auto-insurance law takes effect, the fifth-largest insurer in Pennsylvania agreed yesterday to roll back rates to motorists, state officials said. The Aetna Casualty & Surety Co., which previously notified customers that it would not renew their policies under the new law, consented to comply with that law. In return, the Casey administration agreed to consider a whopping 25 percent rate increase that Aetna had planned to put into effect before the new law was passed in February.

Aetna Inc., the nation's largest health insurance company, yesterday announced that it will spend $1 billion to acquire Prudential HealthCare, adding 6.6 million subscribers to its membership base. The deal, combined with Aetna's billion-dollar purchase of New York Life Insurance Co.'s health-care business earlier this year, would bring the insurer's membership to 22.4 million people nationwide. With the anticipated completion of the Prudential deal in the second quarter of next year, Aetna U.S. Healthcare said it would become a leading insurer in nine states, including Pennsylvania and New Jersey.

Aetna Inc. is getting into the behavioral health insurance business. The region's second-largest health insurer said yesterday that on Dec. 31, 2005, it would end its contract with Magellan Health Services Inc., the company that now provides Aetna subscribers with behavioral health coverage to pay for the evaluation and treatment of mental health problems. Aetna also is buying the assets that Magellan used to service the behavioral health insurance needs of more than 10.5 million Aetna subscribers, including access to a network of psychologists, psychiatrists and other providers.

Aetna Inc. said yesterday it would whack 4,400 jobs from its national workforce, but spare virtually all 3,000 employees in Blue Bell, where it acquired control of U.S. Healthcare Inc. last summer. Aetna's plan to reduce the number of jobs by 13 percent is largely an outgrowth of the $9 billion merger that created the Aetna U.S. Healthcare division. The total after-tax charge against earnings for the reorganization, which also involves Aetna's retirement services, will be $307 million, according to the company.

A rumored takeover of Oxford Health Plans Inc. by Aetna Inc. would make strategic sense, but the timing is problematic, industry analysts said yesterday. Shares of both companies were higher yesterday amid speculation that Aetna will buy Oxford. Aetna shares closed at $76.687, up $3.187, or 4.3 percent, on the New York Stock Exchange. Oxford closed at $17.75, up 25 cents, or 1.4 percent, on the Nasdaq Stock Market. Analysts said Aetna might well opt to focus instead on digesting its July 1996, $8.9 billion acquisition of U.S. Healthcare of Blue Bell.

The nation's largest health insurer, a pioneer in covering infertility treatment, will eliminate benefits for advanced infertility procedures such as in-vitro fertilization. In a move that has already outraged infertile couples and their doctors, Aetna US Healthcare said it would take the action nationally because it felt an excessive number of members were attracted to its plans for coverage of the expensive treatment. "We had a significant amount of adverse selection," said Arnold Cohen, a doctor and Aetna's corporate medical director for women's health.

Leonard Abramson, the onetime pharmacist who created U.S. Healthcare and sold it to Aetna Inc. for $900 million, announced his resignation from the insurer's board of directors. Analysts said his departure, announced late Tuesday, was part of a housecleaning by Aetna's new chief executive, William H. Donaldson, and followed the exits of several executives whom Abramson had hand-picked before selling the company in 1996. "What we're seeing is the new CEO wanting to make a clean break from all the U.S. Healthcare people and their culture," a managing director at PaineWebber Inc. in New York, William McKeever, said.

President Obama had few nice things to say about insurance companies in his speech on health care last night, but leaders of two of this region's largest private insurers - Independence Blue Cross and Aetna Inc. - gave him generally high marks anyway. Joseph Frick, chief executive officer of the Philadelphia-based Blue plan, which has 3.4 million subscribers, said he found the "call to action refreshing" and agrees the country needs change now. "We're closer to reform than we've ever been," he said.

Aetna Inc., the parent of Aetna U.S. Healthcare in Blue Bell, said yesterday that higher medical costs drove profits down 14 percent in the third quarter. But the company said it had raised premiums and would pare operations to boost profitability in the coming year. Aetna also said it might take "significant" charges in the fourth quarter to pay for severance to departing employees and other costs of exiting unprofitable markets. Operating profit fell to $158.1 million, or $1.10 a share, in the quarter, down from $184.

Aetna U.S. Healthcare is cutting commissions by 20 percent to 50 percent to independent brokers who sell its health insurance to employers, an action that raises the prospect that the company and its competitors may soon bypass agents altogether and enroll most members directly over the Internet. Aetna considers brokers to be integral to its business, but the Blue Bell insurer is cutting administrative expenses because of the growing convenience of the Internet, company president Michael J. Cardillo said in a speech late last month to 175 brokers and others at American College, a school for insurance professionals in Bryn Mawr.

In­de­pend­ence Blue Cross, the largest health in­sur­er in the Philadelphia re­gion, said Tues­day that its 2011 net in­come soared 49 percent, to $314.8 mil­lion. The com­pa­ny's prof­it mar­gin of 3.4 per­cent was its biggest in at least 10 years. "I'm proud of the pro­gress we've made," said IBC's president and chief ex­ec­u­tive of­fi­cer, Dan­iel J. Hilferty. The in­sur­er has rebounded from two years of losses, in 2008 and 2009. Glen Philips, an IBC customer, said it bothered him to hear of IBC's strong profits, given the heavy cost of buying insurance for 40-plus employees at Philips Bros.

Independence Blue Cross, the biggest health insurer in the Philadelphia region, added 45,020 members last year, the first growth since 2008 for the Center City nonprofit, which serves nearly 3.1 million people. IBC has yet to release comprehensive financial results for 2011, but president and chief executive Daniel J. Hilferty said the company continued its recovery from losses in 2008 and 2009 and expected to report an improvement over 2010, when it had a profit margin of 2.2 percent.

In the Region Medical group back with Aetna Abington Medical Specialists , a large cardiology practice, is back in the Aetna network. The contract between the health insurer and the group, which has 17 cardiologists and two internists, expired Jan. 1. Adam Cohen, a doctor in the practice, said the group was back in the Aetna network as of Friday. He said he could not discuss terms of the contract because of a confidentiality agreement. The contract dispute, which focused on reimbursement rates, affected up to 10,000 Aetna subscribers.

Up to 10,000 Aetna subscribers are caught in the middle of a contract fight between the insurance company and a 19-member cardiology group that says it provides most of the heart care at Abington Memorial Hospital. Negotiation battles between hospitals or doctors and insurers that go down to the wire - and beyond it - have become more common in recent years as insurance companies have faced more pressure from subscribers and employers to curb costs. The contract between Aetna and Abington Medical Specialists (AMS)

For the first time, some of the region's largest employers have formed a coalition to fight relentless increases in health-care costs by improving the quality of care. The 10 employer members of the Greater Philadelphia Business Coalition on Health provide health insurance for 100,000 people in the region, and they plan to use that leverage to create report cards and other tools to reshape health care. "If we all get together, we have a little more power, a little more clout," said Dottie McFalls, a principal in human resources at the Vanguard Group, which employs 11,000 in Chester County.

At a time when health-insurance premiums continue their steady rise, Pennsylvania legislators will likely pass twin bills in the Senate and House that will broaden the state Insurance Department's ability to review rate increases. That sounds as if it should be good news to health advocates such as Antoinette Kraus and Sharon Ward, who have been tracking the legislation in Harrisburg. The bills are set to come to a vote Wednesday. But it's not good news, Kraus and Ward say. "If this law passes, fewer rate reviews will be scrutinized," said Ward, director of the Pennsylvania Budget and Policy Center in Harrisburg.

How's your health these days? Aetna Inc. said Wednesday that more members are refraining from using health-care services. That was part of what led to a healthy 9 percent increase in second-quarter income. The Hartford-based company, which has thousands of employees at the old US Healthcare offices in Blue Bell, has benefited by a trend that sees consumers skipping doctor visits and elective procedures during a recession. Aetna earned $536.7 million, or $1.39 a share, in the three months ended June 30, up from $491 million, or $1.14 a share, in the comparable period a year ago. Adjusted earnings were $1.35 per share.

Protesters crashed Aetna Inc.'s annual shareholders meeting in Philadelphia on Friday morning, accusing the Connecticut-based health insurer of publicly supporting President Obama's health-care plan while privately funneling money to its opponents - in particular, the U.S. Chamber of Commerce. Aetna chairman Mark T. Bertolini had just gone to the microphone at Le Meridien Philadelphia, a Center City hotel, when the protesters walked into the meeting, chanting and carrying signs. Hotel security and police hurried out the group of about 20, detaining three for 30 minutes.