Last year, Paul Tufano’s 19-year-old son, an avid cyclist, turned his father on to cycling so much that he agreed to a five-day bike ride across Pennsylvania with his son, beginning in Pittsburgh and ending on Father’s Day at Independence Hall, near their home the suburbs of Philadelphia.

With his wife and 17-year-old daughter driving the “sag wagon” (a cycling term for a vehicle to assists riders who have to stop riding due to fatigue), Tufano, 48, and his son, now a freshman at Harvard University, made their winding, grueling trek across the state.

“I’m glad we started in Pittsburgh because it’s more mountainous out there, and I probably wouldn’t have made it if it was at the end of the trip,” joked Tufano. “To go from not being a cyclist to accepting the challenge of this five-day trip was an important experience for me, in terms of setting a goal and tackling it head on.”

Tufano relishes challenges like this. As senior vice president, general counsel and chief government business executive of Independence Blue Cross (IBC), Tufano has seen his fair share of obstacles in his career, including last year’s rejected merger between IBC and Pittsburgh-based Highmark, as well as today’s health care reform discussions.

“It’s never a dull moment in the health insurance business,” said Tufano, who still expresses disappointment that the merger did not happen.

To have employees from IBC and Highmark spend thousands of hours for more than two years working toward the same goal, only to have the state Insurance Department refuse to endorse the deal, was a great blow to both companies, Tufano said.

“But it forced us to pick ourselves up, dust ourselves off, and work on a different strategic plan that didn’t include the synergies resulting from a merger,” he said. “We still scratch our heads and wonder why it didn’t happen. We missed a great opportunity to reduce health care costs for our customers, communities, and associates.”

It wasn’t for lack of trying. IBC did everything it was asked to do, Tufano said, from seeking regulatory approval from the 14 states the two companies operated in to developing a viable financial and business plan. It was also required to craft an integration plan, which turned out to be 10,000-plus pages, part of which ensured that providers would still be paid and customers’ claims would be processed once the deal was approved.

With the failed merger behind it, IBC is implementing a new strategic plan that positions the company to manage through the transformational changes that are happening in the health insurance industry.

“We’re trying to make sure that amidst the loud debate on reform that people not misunderstand the facts with regards to the real issues that drive the cost of health care and health insurance,” said Tufano. “Many people talk about health insurance reform and the cost of health insurance and think it’s simply a matter of limiting premiums. Only a small percentage of the health care premium dollar goes to insurers.”

Like other health insurers nationwide, IBC has the problem of getting the general public to understand that the premium is the price of a unit of health care multiplied by utilization.

“As much as people want to attack health insurers or limit what we charge, we charge what the actuaries tell us to in order to support how often people plan to use those services and what the providers charge,” said Tufano.

People understand this concept as it relates to automobile or property insurance. If a reckless driver continues to have accidents, they understand why their auto insurance premiums increase.

“We have a system where people use health care services at constantly increasing levels, so some people have a disconnect about why their premiums are going up,” said Tufano. “We’ve been trying to explain to legislators and our customers what drives those costs and try to get the debate focused on the real drivers.”

Tufano is up for this demanding task. Along with his devotion to public service, it is why he became a lawyer.

Upon graduating from Villanova University School of Law in 1986, Tufano joined Blank Rome in Philadelphia. He was there for nine years, eventually becoming a partner before ending up in the cabinet of former Pennsylvania Gov. Tom Ridge, serving as his general counsel.

For Tufano, 33 at that time, the opportuity was too good to pass up.

He recalled the advice a former board trustee from Villanova gave him when he was elected student body president: “He told me about a situation in his life when he was offered a wonderful career opportunity at a young age, but he thought there were other people more experienced,” said Tufano. “His boss told him that his bus only comes around once, and if you don’t get on, it won’t come around again. So he said, ‘Paul, at some point in your life, the bus may come around for you, and you may wonder if you should get on it.’ He looked at me and said, ‘I would encourage you to get on the bus and to take the risk.’”

Tufano said he thought about that advice when Ridge asked him to become his general counsel.

“I got on the bus, and there have been other situations where that advice has helped me out,” he said. “At 33, I had over 500 lawyers working with me, representing the entire executive branch. It was a thrill of a lifetime.”

With his family remaining in suburban Philadelphia, Tufano made the commute to Harrisburg every week. After five years, it was time for him to seek new challenges, but it was not because he wanted to leave government. Although he had a wonderful time working for Ridge, as well as re-energizing and re-organizing the Office of General Counsel for the commonwealth of Pennsylvania, he says he wanted to become more involved in his children’s lives. They were 4 and 2 years old when he went to work in Harrisburg, and 9 and 7 when he left.

While he gave some thought to returning to a law firm, deep down, Tufano said, he was looking for something that would come close to the excitement, the importance and the relevancy to people that he had working in government.

IBC happened to be doing a search for a new general counsel at the time, so Tufano got on another bus.

For 10 years, Tufano served in that capacity, and earlier this year he assumed an expanded role and added chief government business executive to his responsibilities. In this role, Tufano is responsible for the strategic, financial, and tactical leadership of the company’s government business, its products and programs, as well as its approximately 150 employees who work in this area. This includes Medicare and Medicaid products, as well as health plans for low-income members: the Children’s Health Insurance Program (CHIP), adultBasic and Special Care.

“Federal health insurance plans, like Medicare and Medicaid, and other state programs which provide insurance to state residents are a critical growth area for our company,” said Joseph A. Frick, IBC president and CEO. “It’s a complex and heavily regulated business and we needed an executive with the experience, drive, and passion to lead it. Fortunately, we didn’t need to go far to find the right person for this job. Paul is a dynamic general counsel and creative thinker. His corporate and government experience and proven team-building skills will serve him and our company well in his new, expanded role.”

Tufano also oversees the company’s Medicaid business and serves as the liaison between Independence Blue Cross and the AmeriHealth Mercy Family of Companies, a Medicaid-managed care company headquartered in Philadelphia and providing services in 13 states. AmeriHealth Mercy is jointly owned as a partnership of Independence Blue Cross and Mercy Health System.

“What excites me about my expanded role is being able to ensure that we’re constantly improving our products and making them as easy to use as possible,” said Tufano. “The skill set is similar to my training as a lawyer, which is problem-solving and trying to help people achieve their goals.”

Tufano will also continue in his role of general counsel, providing oversight for the legal, regulatory and corporate governance affairs of IBC.

“Today, being a general counsel is also being a risk manager,” he said. “A good GC not only deals with today’s issues, but is also trying to anticipate issues before they become problems. As in-house lawyers, we have to counsel our clients to think about those unanticipated risks or issues and prepare for them, and to take that into account into developing our business plans. More than ever before in-house counsels are critical business partners with the marketing, finance and government relations people.”

The legal department at IBC is comprised of five practice groups, which are organized and primarily based on the different skill sets of the lawyers that it employs:

• The litigation practice group manages litigation and deals with the company’s outside law firms in connection with the lawsuits that it may be defending at any given time.

• The corporate practice group deals with transactional work, such as real estate leases, software license agreements, or any type of financial or transaction-related issues.

• The managed care practice group supports the medical management department of IBC, which negotiates with the provider clients: hospitals and physicians.

• The product/marketing practice group focuses on the products that IBC sells in the marketplace.

• The government business practice group supports the legal work of the area in which Tufano has taken responsibility for from a business perspective.

Each of these groups is headed by a deputy general counsel that oversees the 19 lawyers and 5 paralegals across the groups. The department also employs 10 contract analysts, who prepare the insurance policy documents and booklets that members receive annually.

IBC tends to use law firms when it needs more brain power or horsepower. In terms of more brain power, it seeks outside counsel when there’s a specialty that the legal department may not have. For example, it may be in antitrust, intellectual property, or tax-related areas, in which most in-house legal departments can’t necessarily afford to have a full-time position dedicated to that expertise. In terms of more horsepower, whether it’s a big transaction or a big piece of litigation, at times IBC needs lawyers who can come in and take on those cases.

“While we certainly work with outside counsel on a regular basis, the bulk of the legal work of the company is done by lawyers in house,” said Tufano. “We make it our goal to do as much in-house as we possibly can, and only reach out to law firms when we don’t have that type of substantive expertise, or the kind of staff to handle something like a class action lawsuit. We’re not equipped as lawyers to handle it, but we’ll quite closely and intimately manage that litigation with our outside counsel partners.”

Looking ahead, Tufano said it’s an exciting but uncertain time in his business.

“At a time of great dynamic change in this country in regards to health care reform, we need to ensure that we are providing access to the health care system in as affordable a manner as possible,” he said. “We don’t know what the future holds as Congress and the White House look at literally changing rules of the game and the whole economic model for health care. We just need to focus on making our business as simple to deal with, and ultimately work on our goal of trying to provide as much affordable access to the health care system for our customers as possible.” •

Company: Independence Blue Cross

Title: Senior Vice President, General Counsel, and Chief Government Business Executive

Education: J.D., Villanova University; B.S. in Accounting, Villanova University.

Professional: Blank Rome, 1986-1995; General Counsel to former Pennsylvania Gov. Tom Ridge, 1995-1999; Independence Blue Cross, 1999-present.

Memberships: Villanova University Board of Trustees; Trustee of Penn State University, Franklin & Marshall College, and Moore College of Art & Design; Alumni Association President, Villanova University; Board Member of the Kimmel Center for the Performing Arts, WHYY Inc., the Committee of 70, and Rosemont School of the Holy Child; Former Board Member for Avenue of the Arts Inc. and Green Tree School; Co-Chair of Search Committee for the next Dean of the Law School at Villanova; Philadelphia Bar Association; Pennsylvania Bar Association (PBA); Founder of the Government Lawyers Committee of the PBA.