Highmark ad's layoff claims called into question by state Insurance Department
By Alex Nixon
Published: Saturday, Oct. 12, 2013, 12:01 a.m.
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.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Secret Service close to understanding Target data breach
- Wal-Mart rolls out money transfer service
- Facebook feature lets users locate nearby pals
- Target expands subscription service tenfold
- Former BP employee settles insider-trading charges
- Applications for jobless aid edge up
- Judge won’t order recalled GM cars to be parked
- Wages have soared in Pittsburgh, but economy appears to have stalled
- Emboldened by Italy move, QVC to expand into France
- PPG shareholders vote against proposals; sales, profit see double-digit increases
- Earnings carry more weight as investors attempt to look past winter