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Highmark lays off 28 more, encounters 'hurdle' in Harrisburg

| Friday, Feb. 21, 2014, 12:01 a.m.

Highmark Inc. shouldn't count on Harrisburg to solve its contract problems with UPMC, two prominent senators told the state's largest insurer.

The troubling political news developed on the same day Highmark announced a second round of layoffs in Pittsburgh and Camp Hill. The company laid off 28 workers in its finance department, including 14 in Pittsburgh. A week ago, it cut 132 workers in information technology and sales.

Highmark has been pushing for bills in the General Assembly that would force hospital giant UPMC to renew a reimbursement contract with Highmark. Without a contract, Highmark members will have to pay costly out-of-network rates at UPMC hospitals and doctors starting in 2015.

But Republican Sens. Don White of Indiana and Joe Scarnati of Jefferson County told Highmark CEO Bill Winkenwerder in a Feb. 18 letter that they opposed the bills because they could violate the state constitution, among other reasons.

“Highmark's continued attempt to have the Legislature engage in this issue is one that will not be supported by either of us for several reasons,” the senators wrote in the letter, which was obtained by the Tribune-Review.

White, chairman of the Senate Insurance and Banking Committee, and Scarnati, president pro tempore of the Senate, are among the most influential leaders in the GOP-controlled Senate, and their opposition presents a “major hurdle,” said Christopher Borick, political science professor at Muhlenberg College in Allentown.

“Having opposition from both those individuals, especially the Senate pro tempore, in Scarnati, is problematic if you're looking to move any legislation forward,” Borick said.

“It's a Republican-held senate with Scarnati in leadership. It's incredibly difficult to have bills move forward if he's not behind them,” Borick said. “Those are significant roadblocks for Highmark as they try to push for something to come out of the Senate.”

Highmark spokesman Aaron Billger said the insurer believes the bills are “good public policy” and downplayed the significance of the opposition from White and Scarnati.

“There's growing support in a bipartisan way in Harrisburg for the legislation,” he said.

House versions of the bills, 1621 and 1622, were introduced in October, and are under consideration in the House Health Committee.

Sens. Randy Vulakovich, R-Shaler, and Jay Costa, D-Forest Hills, have circulated a sponsorship memo for Senate versions of the house bills, but they've not been introduced.

Costa, the Democratic leader in the Senate, could not be reached for comment. Melissa Farabaugh, Vulakovich's chief of staff, said she had not seen the letter from the GOP leaders and couldn't comment.

UPMC spokesman Paul Wood said the hospital network, which opposes the legislation, wants to work with Highmark, the state insurance commissioner and lawmakers on a transition plan that informs Highmark members how to maintain in-network access to UPMC after the contract expires in 10 months.

White and Scarnati urged Winkenwerder to drop Highmark's advertising campaign aimed at UPMC, which the senators called “confusing” and “designed to create fear among the general public,” according to the letter.

Highmark and UPMC should instead “use their financial resources to fund public service announcements” explaining what the end of the Highmark-UPMC contract means for patients in Western Pennsylvania, the senators said.

In September, Gov. Tom Corbett called on UPMC and Highmark to drop negative advertising that had flooded the airwaves and newspaper pages in Pittsburgh. While the two health giants have toned down their commercials, the ads continue.

“Once we return to civility by both UPMC and Highmark, we believe a constructive conversation can be had regarding how both organizations can vest serve Western Pennsylvania in the future,” White and Scarnati wrote.

Wood said UPMC this week dropped its recent campaign attacking Highmark. Billger said Highmark believes its ads are necessary “to educate the public and set the record straight.”

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

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