So we’re innovating more with groundbreaking partnerships to reshape care and change lives. We're creating radically different models of care that empower physicians and reward quality. We're building better tools to exceed the expectations of today's consumers.
Independence Blue Cross. We're reimagining health care.
We’re reimagining health care through Human-Centered InnovationSM. Our goal is to enhance the lives and health of people across the nation.
Daniel J. Hilferty (left), president and CEO, and
M. Walter D'Alessio, chairman of the board
At Independence Blue Cross, we’re reimagining health care through a process we call Human-Centered InnovationSM. That means that every decision we make starts with this simple question: How can we keep our members well and improve their health? Our goal: to change for the better the lives and health of people across the nation.
Human-Centered Innovation drives us, pushing us to do more, do it differently, and do it better. It inspires our collaborations with medical researchers and health care startups to imagine, create, and support the most promising technologies for making people healthier. It shapes our partnerships with doctors and hospitals to introduce new models of care that emphasize the quality of care, not the quantity. And as you will see in our 2014 Annual Report, it is the foundation for every innovative product and service we create to simplify the health care experience and help our members navigate pathways to good health.
We've teamed up with world-class institutions, not only to keep people well but also to get them well more quickly when they’re ill. For example, we’re working with researchers at the University of Pennsylvania and Fox Chase Cancer Center to change the future of cancer care. Through our joint effort in genomic research, we’re exploring which patients will receive the most benefit from certain treatments and experience the fewest adverse side effects. The results of this research could truly change the lives of millions of cancer patients across our nation.
We want to do more than just treat illness — we want to prevent people from becoming ill in the first place. So in 2014 we launched a study to predict — and prevent — hospitalization among our chronically ill members. We have developed a sophisticated model to determine which of our chronically ill members are most at risk of being hospitalized within the next six months. This gives us the opportunity to offer individualized help, and we’ve found that can reduce hospitalization rates up to 50 percent for certain chronically ill members!
The relationship between a person and his doctor is critical. So we asked, How can Independence empower primary care doctors to deliver quality care and provide incentives for keeping costs down? Our answer is Tandigm Health. We formed this new company in Philadelphia in 2014 with a nationally prominent company, DaVita HealthCare Partners. Tandigm Health provides data and analytical tools to help physicians and patients better manage chronic conditions and meaningful incentives when they succeed. Simply put, Tandigm rewards doctors for the quality of care, not the quantity.
And we’re doing even more. We are harnessing technology to strengthen the relationship between physicians and patients. Three years ago, we partnered with two other Blue insurers and the health care technology firm Lumeris to purchase NaviNet, the nation’s largest real-time, secure communication network for physicians and hospitals. We took a claims data pipeline — which runs into the offices of hundreds of thousands of physicians — and turned it into something much more. Through NaviNet, we now notify physicians in real time if any of the patients they are about to examine need an immunization or a health screening, or if another critical care gap needs to be addressed. And we tell your doctor what care he gave you — or did not — and what care you have received from any other physician or hospital. It's a complete, 360-degree view of your care!
We want high-quality, low-cost care to follow our members wherever they go. That’s why we partnered with Bupa, an international health care company with a network of more than 750,000 physicians in 190 countries. Through this partnership, our members can have access to care no matter where they live, work, or study. New this year, all the claims for Bupa’s overseas members who receive care in the United States will be processed by our subsidiary AmeriHealth Administrators.
Today’s health care consumer takes an active role in her health and care — and that gets us excited. To capitalize on this, we’ve partnered with Accolade, a local company that provides a customer service model aimed at developing a relationship built on trust. Accolade offers our members a dedicated health assistant who helps navigate the health care process. Our customers also need data to help manage their health care costs — and that’s what we provide through our partnership with Castlight Health. With Castlight, we empower members to make better health care decisions by providing the actual out-of-pocket cost of care.
We want to attract the best and brightest minds to work with us and to foster their success. So in 2014, we continued DreamIt Health, our partnership with Penn Medicine and DreamIt Ventures to attract health care startups from around the nation to Philadelphia. Our goal is nothing short of transforming Philadelphia into the Silicon Valley of health care innovation!
Our company was founded nearly 80 years ago and we’ve grown tremendously, expanding from a small, local insurer to a national company. Our corporate structure had become increasingly complex, so in 2014 we adopted a modern corporate structure similar to those of our peers and competitors that will allow us more flexibility to rapidly respond to the fast-changing health care environment. Under the new structure, Independence Health Group, Inc., a nonprofit holding company, is the parent company of Independence Blue Cross and our other subsidiaries. This simpler structure increases our transparency for consumers and regulators and makes our financial reporting more streamlined. We proudly retain our status as a nonprofit, tax-paying corporation committed to giving our best to our customers, community, and associates.
Putting people first and revolutionizing care through Human-Centered Innovation is good for our customers — and our business too. Our membership grew 30 percent from last year, adding more than 2 million people. As a result of this growth, our revenues climbed to $13.2 billion with net income of $69.2 million, or 0.5 percent of total revenue. We paid $568 million in federal, state, and local nonpayroll taxes, significantly more than in previous years, largely because of $204 million in new Affordable Care Act–related taxes.
We take great pride in being an active and involved corporate citizen in Philadelphia. The $64–million Independence Blue Cross Foundation invests in our community to promote good health in our region today and into the future, through its Blue Safety Net, Healthy Futures, and Nurses for Tomorrow programs.
We now count more than 9,000 associates as part of the Independence family. It is their dedication to our members that has made Independence such a success. Our associates’ spirit and their determination to always excel is what Human-Centered Innovation is all about. It’s what we mean when we say we’re reimagining health care.
Chief Executive Officer
With a bold, innovative vision for a healthier America, Independence Health Group, the parent company of Independence Blue Cross, and its subsidiaries continue to grow and expand. In 2014, we served nearly 10 million people in 26 states and the District of Columbia with a robust, diversified portfolio of products and services, including medical coverage, administrative services, and pharmacy, dental, vision, and other specialty services.
We’re innovating more to change lives through our Center for Health Care Innovation and our visionary partnerships. We’re helping to change the face of cancer care, harnessing the potential of genomics, and collaborating with other innovators to change the future of health care.
America has made great strides in fighting cancer in recent years, yet cancer remains a devastating force in our region and our nation. This year, more than a million and a half newly diagnosed patients will join the millions of Americans already fighting cancer. Many will face treatments that have uncertain results and are sometimes as debilitating as the disease itself.
We demand the best possible outcomes for our members. That’s why we’ve partnered with research experts who are exploring revolutionary ideas and asking critical questions about cancer.
They are asking questions such as: How can we use genomic research to personalize cancer treatment? Can doctors use their patients’ genomic information to select treatments that are most likely to benefit each individual cancer patient? And can the results of genomic testing be used to reassure patients that they don’t need chemotherapy, thus sparing them unnecessary side effects?
Through our Center for Health Care Innovation, we’ve joined forces with a leading research team from the University of Pennsylvania and Fox Chase Cancer Center that is working to gather the evidence needed to make genomic testing part of mainstream cancer treatment. This project is funded through the Pennsylvania Department of Health and uses health care data from Independence Blue Cross with all identifying details removed.
Genomics, a branch of biotechnology that uses the techniques of genetics and molecular biology to map and sequence genes, has shown great potential to improve the delivery of cancer care by identifying the precise gene mutations responsible for a patient’s cancer and allowing doctors to tailor treatments accordingly. In particular, genomic testing holds promise for patients with breast, colon, or lung cancer, three of the most common and devastating cancers in our region and across the country.
Dr. Yu-Ning Wong from Fox Chase Cancer Center and her fellow researchers at the University of Pennsylvania, led by principal investigator Dr. Peter Groeneveld, are searching for scientific evidence that the use of genomic testing can have a beneficial effect on cancer treatment, complications, mortality rates, and cost.
“Personalized medicine is the new frontier in fighting cancer,” says Dr. Wong, 41, who has been fascinated with public health outcomes since medical school. “There are so many promising new drugs that have improved cancer treatment. If we can match the right treatment to the right patient, we will revolutionize the care of cancer.”
This groundbreaking study is just one impressive example of how we are collaborating with best-in-class partners who are the movers and shakers in the national spotlight on health care innovation.
Two years ago, our Center for Health Care Innovation joined with national health care leader Penn Medicine and entrepreneurial experts DreamIt Ventures to create DreamIt Health. This health care business accelerator provides funds and mentoring to attract the best and brightest minds of our era and their promising startups to our region to implement big ideas that solve critical health issues. In 2014, we selected our second group of DreamIt Health entrepreneurs, choosing ten innovative young companies and awarding each $50,000 in seed funding.
One innovative startup from our 2013 DreamIt Health class, Biomeme, is harnessing an iPhone’s computing power and built-in camera to test people for diseases and run other biological diagnostics at the patient’s convenience in almost any setting.
And a member of our 2014 DreamIt Health class, TowerView Health, helps chronically ill patients manage multiple medications by sending patients pre-filled medication trays that insert into an Internet-connected pillbox that alerts the patient, loved ones, and nurses when the patient misses a dose.
Both startups are fresh, novel, and ahead of their time, and we believe they will change the future of health care.
At Independence Blue Cross, we are reimagining health care. To do that, we continue to maintain the financial strength of our parent company, Independence Health Group, while pursuing strong and consistent growth in revenue and membership.
Fiscal stability provides the financial fuel to help us put people first and revolutionize health care. In 2014 we continued to create new ways to anticipate — and exceed — our customers’ expectations in a rapidly changing health care environment. And we continued to respond to our customers’ needs for new products and services and for innovative ways to improve the quality and lower the cost of care.
In 2014, Independence Health Group continued its solid financial performance. We ended the year with $13.2 billion in total revenue and $69.2 million in net income, or 0.5 percent of total revenue.
Our revenue growth was driven by our growing membership. We increased overall membership in 2014 by 30 percent, adding more than 2 million new members. Our diversified portfolio of products and services in commercial, government, and specialty services contributed to this impressive gain.
The most significant membership increases came from Medicaid, our national segments, and our government-market pharmacy management company. In addition, as a result of our inventive outreach to consumers about the Affordable Care Act (ACA), our individual health plans on and off the federal marketplace were well received, attracting more than 285,000 new members in Pennsylvania and New Jersey.
We are not a publicly traded stock company, which means that our net income benefits our customers and our community, not shareholders. We use our net income to enhance our businesses and to support the health of our members.
To continue our high level of service, we modernized our processes, took steps to make it easier to do business with us, and added new capabilities, while we continued to manage our operation with fiscal discipline.
In 2014, we maintained $2.7 billion in surplus — the funds set aside to pay unexpected claims. A solid surplus is a critical measure of an insurance company’s financial stability. Our surplus level falls in the “sufficient” range, as defined by the Pennsylvania Insurance Department, and ensures that we have adequate resources to pay claims and keep our customers secure.
We spent 83.8 cents of each premium dollar to pay for our customers’ health care in 2014. We used 11.4 cents to run our business and invest for the future. We used 4.3 cents to pay taxes — a total of $568 million in federal, state, and local nonpayroll taxes, including $60 million in state premium taxes, $175 million in gross receipts tax, and $204 million in ACA-related taxes and fees. We had a 0.5-cent margin, which we used to enhance our business, support good health, and preserve our financial foundation.
December 31, 2014, and December 31, 2013 ($ in thousands)
|Cash and investments||$4,015,761||$3,663,406|
|Premiums and other receivables||2,066,998||1,407,885|
|Intangibles and other assets||905,273||851,079|
|Independence Blue Cross surplus||2,481,643||2,533,219|
|Noncontrolling interest surplus||219,095||201,504|
|Total liabilities and surplus||$6,988,032||$5,922,370|
December 31, 2014, and December 31, 2013 ($ in thousands)
|Operating income (loss)||$275,040||$253,293|
|Other income (expense)||(203,718)||(232,940)|
|Pretax net income (loss)||$234,469||$236,643|
|Income tax benefit (expense)||(155,341)||(83,861)|
|Net income (loss)||$69,175||$142,635|
We’re creating radically different models of health care by collaborating with physicians to keep you well. We’re disrupting the status quo and putting real-time data to work so you receive complete, coordinated care.
We believe that great care starts with a trusting relationship between physician and patient. But with patients scheduled every ten minutes, a primary care doctor simply doesn’t have enough time to develop a close relationship with each patient. And if you’re chronically ill, a longer, more thorough consultation with your doctor is critical to learning how to manage your illness and stay well.
So, with a nationally prominent company — DaVita HealthCare Partners — we designed a new, radically different model of care and set up a new company to introduce it in our market. The company is Tandigm Health, and its new model of care is disrupting the status quo and changing the future of health care in our region and our nation.
Tandigm Health, a Pennsylvania-based physician-led management company, is empowering more than 350 doctors in our region by giving primary care physicians like Dr. Shiva Chandrasekaran the latest analytic tools and access to real-time data to help better manage chronic conditions such as diabetes and heart disease. And we’re rewarding Tandigm physicians with financial incentives for the quality of care they provide, not for the number of patients they see, which lowers costs.
“It’s a confusing health care landscape for patients,” says Dr. Chandrasekaran, a primary care physician with Greenhouse Internists in Philadelphia. “Costs are rising, access to primary care is dwindling, and communication between various parts of the system has broken down. As doctors, we want to help the system evolve so that every patient can get the best quality care at the lowest cost. Tandigm Health is giving us the information and the support we need to make that happen.”
If Tandigm Health can have an impact in Philadelphia, one of the largest and most expensive health care markets in the nation, it can work anywhere.
We’re doing even more to use information to improve health: We’re harnessing technology and using real-time data to strengthen the relationship between physicians and their patients.
Three years ago, we partnered with two other Blue insurers and a health care technology firm to purchase NaviNet, the nation’s largest real-time, secure communication network between insurers and their physician and hospital networks — an electronic pipeline that delivers information directly to physicians about their patients’ health insurance benefits.
But because NaviNet reaches directly into the offices of hundreds of thousands of physicians nationwide, we are also using it to provide doctors with information that can make patient care more complete and navigating the health care system easier and more seamless.
We notify physicians in real time through NaviNet if the patients they are about to examine need an immunization or a health screening, or if the doctor needs to address another critical care gap.
And we tell your doctor not only what care she’s given you, but also whether you’ve received care from any other physician or hospital across our entire network.
It’s an unprecedented 360-degree view of your care and a valuable tool for building trust and improving patient satisfaction.
Independence Health Group, Inc., the parent company of Independence Blue Cross, LLC, and its subsidiaries and affiliates, delivers innovative health and wellness solutions in southeastern Pennsylvania and throughout the nation by offering a wide range of market-leading health plans and specialty services.
Independence Blue Cross, an independent licensee of the Blue Cross and Blue Shield Association, is the largest health insurance organization in southeastern Pennsylvania. Through its subsidiaries, the company offers innovative and competitively priced health care products and services.
QCC Insurance Company offers quality, cost-effective preferred provider plans — including Personal Choice® PPO and Personal Choice 65SM PPO — and a Medicare Part D Plan called Select Option® PDP.
Keystone Health Plan East offers a flexible suite of products that includes Keystone Health Plan East, Keystone Point of Service, and Keystone 65.
Independence Administrators, a third-party administrator operated by QCC Insurance Company, serves self-funded health plans in the five-county southeastern Pennsylvania region for groups of 100 or more employees. The company offers tailored, cost-effective benefits management services, including claims payment, health management, and consumer-directed health plan options.
AmeriHealth, a group of health companies, provides HMO, POS, PPO, traditional coverage, and AmeriHealth 65® products in Pennsylvania (outside the five-county southeastern region) and New Jersey. Cooper University Health Care owns a minority interest in AmeriHealth New Jersey.
AmeriHealth Administrators, a national third-party administrator, serves self-funded health plans for groups of 100 or more employees. The company provides comprehensive benefits management services, such as claims payment, health management, and consumer-directed health plan options.
AmeriHealth Caritas, owned by Independence Health Group (majority shareholder) and Blue Cross Blue Shield of Michigan (minority shareholder), is an experienced leader in government-funded health insurance programs. The company brings access to health care to nearly 2.7 million people through Medicaid managed care plans and administrative services. Including pharmacy benefits management and behavioral health care, AmeriHealth Caritas touches nearly 7 million lives in 16 states and the District of Columbia.
AmeriHealth Casualty Insurance Company offers workers’ compensation insurance coverage to employers in the Mid-Atlantic region.
AmeriHealth Casualty Services, formerly CompServices, Inc., and CSI Services, Inc., offers workers’ compensation insurance, third-party claims administration, nonoccupational disability insurance, FLMA management, and underwriting and brokerage in the Mid-Atlantic region.
NaviNet, Inc., owned by Independence Health Group, Highmark Inc., Horizon Blue Cross Blue Shield of New Jersey, and Lumeris, Inc., speeds and simplifies more than 50 kinds of administrative, financial, and clinical transactions among three-quarters of America’s physicians, 3,800 hospitals, and dozens of the nation’s largest health insurers. The company also offers software and guidance to support hospitals shifting to accountable, value-based health care.
Tandigm Health, LLC, owned by Independence Health Group and DaVita HealthCare Partners, works in tandem with primary care physicians to create a paradigm shift in the delivery of high-quality affordable care — empowering doctors in the Philadelphia region so their patients can live healthier lives.
We’re building better tools to exceed your expectations and improve your health. We’re launching an innovative study that predicts and prevents hospitalization, using data to predict and avoid acute illness, and developing new tools that make your health care more complete, convenient, and personal.
Nobody wants to be in the hospital unless it’s necessary. And we believe that some hospital stays can be avoided. Hospitalizations can lead to life-threatening infections and higher medical costs, problems that make life more difficult for our chronically ill members.
So in 2014, we launched an innovative study to find out which of our chronically ill members have the highest likelihood of being hospitalized, and whether we could keep them well so they could avoid a hospital stay.
We developed our own sophisticated scientific model, which is more accurate than others already in the market, that can identify who is at risk for the kinds of acute health issues that could require a hospital visit in the next six months.
This gives us an opportunity to lower that risk by offering customized programs and services that help members stay well. To help members with a variety of chronic diseases such as diabetes, congestive heart failure, and asthma, we share the information from our predictive model with our members’ primary care physicians, the hospitals involved in their care, and our care managers.
Our results are in: We can reduce hospitalization rates — by an impressive 50 percent for some groups of chronically ill patients.
With a history of chronic heart disease, a recent stroke, and other medical issues, John Iovine, 77, was one of the members we identified as high-risk using a comprehensive database of health insurance claims information. John is now cared for at home by his wife, Carol, 76. We created profiles of John and other high-risk members based not only on their diagnoses, but also on lab data, demographics, and customer service call histories. Our findings showed that members were more likely to be hospitalized within six months if they had these risk factors: having been ill for a long period, not taking their medicine, not seeing specialists regularly, or being on oxygen.
However, when we reached out to those high-risk members through mailings, phone calls, and visits from a Health Coach, who monitored them at home and provided support and encouragement, their rate of hospitalization was cut in half.
After John was identified as high-risk for hospitalization, he received a letter from Health Coach Donna Crockett, an Independence Blue Cross associate, who offered her help. Donna now helps Carol schedule appointments, arrange transportation, set up home therapy visits, and renew prescriptions. As a result of Donna’s care, John and Carol say they feel more secure and supported, and are enjoying spending time together at home without hospital stays.
“I don’t know what we would have done without our Health Coach, Donna,” says Carol. “If I’m crying, she makes me laugh. She is caring. She’s intuitive. And she has a great sense of humor. She’s our guardian angel.”
Our hospitalization risk model is a valuable tool that is helping our members stay home with loved ones, save money, and stay well. And it’s just one of several new tools and services we introduced in 2014.
We’re also working with external collaborators — such as NYU Langone Medical Center to predict risk of diabetes and Lumiata, a California-based health care analytics company that uses real-time data to predict health — to build a new generation of models that can detect undertreated and underdiagnosed chronic diseases.
Another organization with which we are collaborating is Accolade, a Pennsylvania-based customer service model for employers that combines leading technology and analytics with personal guidance in making important medical decisions. Accolade allows employees of participating companies to build a trusting and lasting relationship with a specially trained health assistant who offers support and encouragement in navigating the complexities of the health care process, from claims and benefits to choosing a doctor.
Another valuable resource is a groundbreaking Blue Distinction+ study by the Blue Cross Blue Shield Association. The study looked at variations in cost for knee and hip replacements, and is giving members facts to help them choose the best doctors and hospitals for these procedures — here in southeastern Pennsylvania and across the country.
These new tools work together with our comprehensive portfolio of health plans to make your health care more complete, more convenient, and more personal. Our portfolio includes: