Aetna

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.

When public hearings on the proposed merger of the state's two largest health insurers begin next month, speakers opposed to the deal are sure to complain that a combination of Independence Blue Cross and Highmark Inc. would quash competition. In the Philadelphia marketplace, Independence Blue Cross dominates its competitors, commanding a lion's share of the business, though both it and Highmark say they need to get bigger to fend off national insurers such as Aetna Inc., which is gaining market share.

When public hearings on the proposed merger of the state's two largest health insurers begin next month, speakers opposed to the deal are sure to complain that a combination of Independence Blue Cross and Highmark Inc. would quash competition. In the Philadelphia marketplace, Independence Blue Cross dominates its competitors, commanding a lion's share of the business, though both it and Highmark say they need to get bigger to fend off national insurers such as Aetna Inc., which is gaining market share.

The Pennsylvania Department of Health has asked Independence Blue Cross and Aetna Inc. to investigate allegations that the company they hired to manage mental-health treatment is creating bureaucratic roadblocks to proper care and payment. The move came in response to a highly critical report on Magellan Health Services from the Pennsylvania Psychological Association, said Stacy Mitchell, director of the department's Bureau of Managed Care. Blue Cross and Aetna are responsible for Magellan's conduct, she said yesterday, and have undertaken "full-scale investigations.

The Pennsylvania Psychological Association blasted Magellan Health Services yesterday for what it called inefficient rules and bureaucratic roadblocks that it said keep Southeastern Pennsylvania patients from getting care and therapists from getting paid. Therapists have been dropped temporarily from Magellan's rolls for no apparent reason, and communication with the company is so slow it's sometimes impossible to meet deadlines, the association said in a report released to the public.

Aetna Inc., the region's second-largest health insurer, announced a huge jump in profit last year propelled by membership growth, higher premiums and expense reductions, as well as more than $1 billion in a tax refund and tax benefits from businesses sold in 1996. Even excluding the windfall from its property and casualty insurance businesses sold nearly 10 years ago, Aetna's profit rose by 30 percent, to $1.2 billion, on revenue of $19.9 billion last year. Aetna also announced a two-for-one stock split and a doubling of its annual dividend to a post-split 4 cents a share.

Independence Blue Cross' board of directors acted quickly to choose a new leader from inside the company to fill the vacancy caused by the death 16 days ago of its president and chief executive officer, G. Fred DiBona Jr. The Blue Cross board unanimously elected Joseph Frick to head the Philadelphia region's largest health insurer at a regularly scheduled meeting yesterday. Frick had been senior vice president for human resources and administration. He and Christopher Butler, another senior Blue Cross executive, had been serving together in the chief executive position since early January, when DiBona's battle with kidney cancer prevented him from being in the office on a regular basis.

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. says it will once again offer Medicare HMO plans to senior citizens and other beneficiaries in Bucks and Montgomery Counties. The move comes more than 2 1/2 years after the health insurer pulled its Medicare health plans from the two counties, dumping 37,420 subscribers. At the time, Aetna said the federal government's payments were not keeping pace with the rising costs of care. Aetna currently offers Medicare plans in Philadelphia, Chester and Delaware Counties in Pennsylvania as well as in Camden County in South Jersey, where the government paid the insurer higher rates.

The region's major insurers say they are poised to cut premiums for Medicare managed-care plans for 180,000 seniors in the Philadelphia region starting March 1. Executives for Aetna and Independence Blue Cross say that the reductions will be seen most dramatically in the suburbs and that Medicare members throughout the region will see reduced co-pays and, in some cases, additional drug benefits. The cuts are possible because of the new Medicare prescription-drug law, which funnels a onetime increase of 8 percent to 10 percent in payments to commercial insurers so they can provide more options to seniors.