Highmark ad's layoff claims called into question by state Insurance Department
State regulators are questioning claims by Highmark Inc. that its health insurance division might lay off thousands of workers if it cannot renew a reimbursement contract with UPMC.
Highmark, the state's largest health insurer, says in a television commercial that UPMC's refusal to extend a contract giving Highmark members in-network access to UPMC beyond 2014 will mean the “loss of thousands of critical jobs right here in Western Pennsylvania.”
But the state Insurance Department is calling the insurer out on the claim.
“These statements appear to be inconsistent with information supplied by Highmark to the department in the course of the department's consideration of” Highmark's application to acquire West Penn Allegheny Health System, according to an Oct. 4 letter to the insurance company from Deputy Insurance Commissioner Stephen Johnson.
Highmark spokesman Aaron Billger said the company does not believe there's anything inconsistent between what it told the state and the message in the ad.
“During that process, we did disclose that we did have the strong potential for enrollment losses,” he said, referring to financial projections and other documentation the insurer provided to the department during the review of its plan to acquire West Penn Allegheny.
The acquisition, which the regulator approved in April, is cited by UPMC as the primary reason it won't contract with Highmark. UPMC spokesman Paul Wood declined to comment on the letter or Highmark's ad.
If Highmark members leave the insurer in 2015 for insurance companies that have in-network access to UPMC's hospitals and doctors, Highmark would have to reduce expenses to match membership levels, Billger said.
“As a result of enrollment declines, we'd need to address administration costs, and some of that would come through our workforce,” he said.
In a written response to the department on Wednesday, Highmark Chief Legal Officer Thomas VanKirk references a March filing in which the insurer states that “Highmark has higher projected enrollment in the UPMC in-network projections than it does in the UPMC out-of-network projections.”
But the document makes no mention of the potential for job losses.
“During the process we disclosed that Highmark Health Services would suffer losses of enrollment if there were no ongoing contract with UPMC and that significant administrative costs would need to be eliminated as a result,” VanKirk's response states.
Johnson pointed out that financial projections Highmark provided showed that its revenue and expenses would continue to grow at equal rates in 2015 and 2016 once it acquires the five-hospital West Penn Allegheny network and loses its contract with UPMC. The projections show that Highmark would continue to make profits of more than $300 million a year in those years.
Highmark and UPMC are not-for-profit organizations.
“The department is very concerned to see public statements by Highmark that appear to be inconsistent with information supplied by Highmark,” Johnson wrote.
Insurance Department spokeswoman Melissa Fox declined to comment on Highmark's response.
Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or email@example.com.