Details of UPMC-Highmark deal released; AG says it averted legal action

| Friday, June 27, 2014, 12:00 p.m.

Highmark Inc. did not get a contract covering UPMC's full network of hospitals and doctors, but its millions of insurance subscribers will have plenty of ways to access the system at in-network rates starting next year.

Under a five-year transition plan announced on Friday by Gov. Tom Corbett and Attorney General Kathleen Kane, Highmark members will pay in-network prices for many services UPMC's 20 hospitals and 3,500 doctors provide.

And for UPMC medical services that are out-of-network — primarily hospitals and doctors in Allegheny County — Highmark members will be billed the difference in cost, but the charges will be capped.

“All along, I didn't think it was going to be as bad as the television commercials would have you believe,” said J.T. Shilling, head of the Pittsburgh office for Mercer, a benefits consulting company.

Much of the contract between UPMC and Highmark expires at year's end.

“Really, the only hospitals that are being lost are the ones where members have a choice,” Shilling said. “In Pittsburgh, people can choose between going in-network to an Allegheny Health Network hospital, or going out-of-network to a UPMC hospital. ... In a lot of cities, that's a choice that people face every day.”

Corbett, a Republican, and Kane, a Democrat, put aside political differences to explain the deal at a Harrisburg news conference, delayed for days to seal legal issues.

“This agreement puts the needs of patients and consumers first,” Corbett said. But he cautioned, “This is not a contract extension.”

Many important details remain unresolved: in-network and out-of-network rates, the cap on out-of-network charges for Highmark members and which doctors will be considered in-network.

Kane called the agreement “the first step in a long process.”

Her office had been prepared to take UPMC to court to force it to cooperate with Highmark.

“This settlement has averted a lengthy court battle,” she said. “There are many limitations of the law that prevented us from getting everything we wanted.”

Lawmakers who pushed for UPMC to negotiate a long-term contract with Highmark praised the agreement.

“While it wasn't exactly what I hoped for, which was a contract extension, this is a very good agreement,” said Rep. Dan Frankel, D-Squirrel Hill.

Frankel and Rep. Jim Christiana, R-Beaver, co-sponsored two bills that would have forced large integrated health systems to contract with any willing insurer.

“My hope all along was to find a way to give affected Pennsylvanians peace of mind about their health care options without relying on a legislative solution,” Christiana said.

Not everyone was pleased with the settlement.

Allegheny County Controller Chelsa Wagner, a former legislator, said she's disappointed it won't benefit all Western Pennsylvanians.

“It is a dark day when purely public charities decide those portions of the public who are worthy of their charity,” Wagner said.

Highmark subscriber Ruth Anne Ford, 35, a mother of four from Butler County, said she cannot afford higher out-of-network charges to see her doctors at UPMC Passavant campuses in Cranberry and McCandless.

“I think they should all be considered in-network,” she said of UPMC's hospitals. “It's not that easy to go find other insurance; you have to go by what your employer gives you.”

The Pittsburgh Business Group on Health, an organization representing many of Western Pennsylvania's largest employers, withheld judgment on the deal until more details are available. The group unsuccessfully advocated for a role with Corbett's negotiating team so that employers' concerns would be heard. Most people get health insurance coverage through employers, experts say.

Deborah Rice-Johnson, president of Highmark's health plans, said the “vast majority” of Highmark members would keep their doctors at in-network rates.

UPMC's oncology, pediatric and mental health physicians will be in-network, Rice-Johnson said. So will physicians employed at UPMC hospitals outside Pittsburgh, which are in-network. Some doctors employed by UPMC but who practice at independent community hospitals could be in-network, she said.

UPMC spokesman Paul Wood disputed Rice-Johnson's assertion.

“It's not anywhere close to a vast majority,” Wood said. “The vast majority of our doctors work for the flagship hospitals (in Pittsburgh), which are clearly out-of-network. It's based on where the service is provided, not who is providing the service.”

The transition plan is laid out in a consent decree, a legal settlement the companies signed, Kane spokeswoman Renee Martin said. It requires them to settle disagreements through binding arbitration, she said.

Martin said such an arrangement has the backing of the court system for enforcement of the plan's terms.

“This gives the consumers ... a little bit of backup and enforcement power, should we get to that point,” she said.

Rancorous television commercials from UPMC and Highmark likely will end. Both agreed not to air misleading or unclear advertising, Kane said.

State regulators will use $4 million donated by UPMC and Highmark for a communications and education campaign targeting consumers in Western Pennsylvania.

Alex Nixon is a Trib Total Media staff writer. He can be reached at 412-320-7928 or Staff writers Brad Bumsted and Gideon Bradshaw contributed to this report.

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