Health contract battle resumes

| Thursday, Dec. 19, 2013, 12:01 a.m.

The latest attempt by lawmakers in Harrisburg to address patients' concerns that they will lose affordable access to UPMC hospitals and doctors at the end of next year took center stage on Wednesday.

Supporters and critics of two bills that would force UPMC to contract with Highmark Inc., the state's biggest health insurer, argued during a House Health Committee hearing about how best to spur competition in the health industry and slow the trend of rapidly rising costs.

UPMC, Western Pennsylvania's largest hospital network, contended that allowing the contract to expire as scheduled would force it and Highmark to compete vigorously for insurance subscribers and patients — leading to greater innovation and lower prices.

Highmark countered that requiring hospital systems to accept all insurance plans will better stimulate competition by establishing a level playing field on which insurers can battle on price — and force hospitals to lower costs.

Caught in the middle are millions of patients in Western Pennsylvania — and billions of dollars in health-related revenue that come with them — who may be forced to pick a side in 12 months or sooner.

“The ramifications of the split between UPMC and Highmark are serious,” said Rep. Dan Frankel, a Squirrel Hill Democrat who sponsored the bills with Beaver County Republican Rep. Jim Christiana.

“This is not about helping Highmark. ... This is about helping our patients and our communities,” Frankel said.

In the past three years, a variety of legislative proposals have been introduced in response to UPMC's plan not to renew a contract after Highmark announced in 2011 that it would buy UPMC's chief rival, West Penn Allegheny Health System, and convert itself into a direct competitor for insurance and medical services.

In 2012, the House passed a bill that would have increased the state insurance commissioner's power to extend contracts between insurers and hospitals. The nearly unanimous support for that measure was widely credited with pushing UPMC to enter talks with Highmark, mediated by Gov. Tom Corbett, that produced an 18-month extension in the contract.

With 12 months remaining until the extension expires, the issue is again gaining traction.

“We want Pennsylvania citizens to understand that this issue is bigger than partisan politics,” Christiana said.

UPMC, along with trade groups representing the state's hospitals and for-profit insurance industry, argued that Frankel and Christiana's bills would unfairly tip the balance of power in contract negotiations to large insurers such as Highmark, as well as erode the burgeoning competition Highmark is facing from three national carriers in Pittsburgh.

“In three short years, the region has moved from one of the least competitive markets — with one dominant insurer and one increasingly preferred provider — to one of the most competitive,” said Tom McGough, UPMC's chief legal officer.

Because of that competition, every patient in Western Pennsylvania will have the option of in-network access to UPMC hospitals and doctors when the health system's contract with Highmark Inc. expires, McGough said.

Medicare and Medicaid beneficiaries aren't affected by the contract ending. Individuals who purchase their own insurance through a federal government website can choose from a range of insurance plans that include UPMC as an in-network provider. And employers are increasingly offering their workers options to Highmark insurance that guarantee less-costly access to the largest network of hospitals and doctors in the region, he said.

“Clearly, anyone who wants access to UPMC can get it,” he said.

Highmark CEO William Winkenwerder said the bills have his company's backing “because we believe it preserves people's ability to choose” any insurer and all hospitals and doctors, rather than just specific systems.

“In my opinion, the guiding purpose of this legislation is to do what's right and what's fair for Pennsylvania consumers ... making sure they're not forced to abandon” the doctors and hospitals they prefer.

Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or

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