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In what might become a trend, Blue Cross Blue Shield of Delaware is looking to build a “strategic partnership” with another Blue Cross or Blue Shield affiliate in the face of federal health care reform.

Matt Denn

Rumors of discussions among the Delaware Blues and other Blue Cross and Blue Shield affiliates in the region have been widespread, but the insurer confirmed its plan to the Wilmington News Journal today (Aug. 17).

Delaware’s largest health insurer appears to have been pursuing the plan since 2006, when it was ordered to disband from its partnership with Owings Mills, Md.-based CareFirst BlueCross BlueShield, Maryland’s largest health insurer.

With federal health care reform now law, many experts expect a wave of deals among and involving small insurers seeking to become larger. The economies of scale possible with bigger partners makes the possibility seem likely for many smaller health insurers in the U.S.

“They need help,” Dr. Nicholas Biasotto, president of the Medical Society of Delaware, told the News Journal. “They know it.”

Any deal would require the approval of Karen Weldin Stewart, the state’s insurance commissioner, as well as the insurance commissioner in the state where the partner is located.

The need for a new partner began when former Delaware Insurance Commissioner Matt Denn, now the state’s lieutenant governor, refused to amend the Delaware Blues’ agreement with CareFirst in 2006. His refusal, and the Delaware Blues’ unwillingness to pay for a lengthy battle, led the two companies to part ways after six years.

Denn, in detailing the situation, said the insurer was eager to partner with a bigger Blue Cross or Blue Shield affiliate to lower its administrative costs and be able to invest more money in technology.

Those two issues are only heightened as the health reform puts a bigger lens on how much insurers are spending on medical costs and whether they are using technology to improve delivery of services and results.