UPMC, Highmark to extend contract
Millions of health care consumers in Western Pennsylvania won a reprieve on Wednesday from scrambling over the next year to find insurers with access to UPMC hospitals and doctors, or choosing new doctors.
Highmark Inc., the state's largest health insurer, reached agreement with UPMC to extend their contract until the end of 2014 -- 18 months beyond a June 2013 deadline. The deal, first reported yesterday by the Tribune-Review, affects about 2 million Highmark subscribers.
Some experts cautioned that the terms, under which Highmark incrementally will pay more, could hurt health insurance competition and result in higher overall costs for employers and patients.
Announced by Gov. Tom Corbett in Harrisburg, the agreement gives Highmark time to complete its planned takeover of West Penn Allegheny Health System, lawmakers and insiders said. It does not preclude the health care giants from negotiating another contract, though UPMC had strongly resisted this extension amid heavy public pressure.
"If we've got two viable, strong, integrated delivery systems in our area, that only benefits consumers," state Sen. Jay Costa, D-Forest Hills said.
State Rep. Dan Frankel, D-Squirrel Hill, urged the companies to work at cutting costs and increasing openness about their rates and contracts.
"Let's keep the champagne bottles corked until we see the details," Frankel said. "We know that the last contract between UPMC and Highmark allowed UPMC administrators to engage in techniques that raised costs with no benefit to patients."
Without the agreement, Highmark members would pay higher out-of-network charges when visiting UPMC's 19 hospitals or 3,200 doctors. Highmark and UPMC jointly advised employers and people with insurance to take the extra time to prepare for the companies' permanent separation.
"This resolution is a relief for the thousands of patients who were anxious and confused about how their care would be limited," said Mark DeRubeis, CEO of Premier Medical Associates, a Monroeville group with more than 60 independent doctors and 100,000 patients.
The deal gives less assurance to four private insurers who increased their presence in the Pittsburgh market over the past year, said Jan Jennings, president of American Healthcare Solutions, a hospital consulting company Downtown.
"Highmark owns Western Pennsylvania, and it's going to take a lot to make someone like me buy my health insurance from someone else, even if they say it's a better deal," Jennings said.
"We're concerned that this is going to hurt or at least delay meaningful competition," said Samuel Marshall, CEO of the Insurance Federation of Pennsylvania, a trade group representing for-profit national carriers in the state.
State Sen. Don White, R-Indiana, said he, too, worries about competition among the region's health insurers but believes the deal strikes the best balance.
The renegotiated contract includes three increases of reimbursement rates that Highmark pays UPMC, so that its payments will reach "current market rates," White said.
Highmark has said UPMC's market rate is 40 percent higher than what Highmark pays. Neither side would disclose details, referring the Trib to a prepared press statement.
The cost for employers to provide health insurance likely will rise as competing insurance companies lose the market advantage of offering full access to UPMC, said Tom Tomczyk, a principal in health care practice at Buck Consultants, Downtown.
"I know most people in this market want those two to be together, but that comes with a price," he said.
Other insurers said they still welcome the chance to compete.
"While we would have preferred that market forces be allowed to operate, we are confident in the value of our products and services, and we remain committed to the Western Pennsylvania marketplace," said Amy Turkington, Cigna insurance spokeswoman.
A competitive and healthy West Penn Allegheny is important, White said, because if the struggling hospital system fails and Highmark reverts to being just an insurance company, it will strike a new deal with UPMC and push out the other insurers.
In return for UPMC's agreement to the extension, Highmark agreed not to seek or support state government intervention under Act 94, which gives the state Insurance commissioner power to intervene in contract disputes between insurers and hospital systems. Legislators introduced several bills last year seeking to give the commissioner authority to force UPMC and Highmark into a new or extended contract.
Beyond 2015, the companies agreed to work together to extend access for Highmark members to unique UPMC-owned facilities such as Western Psychiatric Institute and Clinic, community hospitals and some oncology services. They would negotiate continued coverage for members of the Children's Health Insurance Program and patients with pre-existing conditions.
Separately, Highmark agreed to give members access to the UPMC East hospital in Monroeville, scheduled to open this year.
Initially, Highmark wanted a 10-year extension and later said it would try to continue working with UPMC for up to five years. Contract negotiations broke down last year after Highmark began pursuing its acquisition of West Penn Allegheny. That $475 million merger awaits approval by Insurance Commissioner Michael Consedine.
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.
- Pirates pitcher Morton turns in solid performance in win over Marlins
- Tesla home battery at $7K, partnered with rooftop solar system, may help reduce power bills
- CMU, Pittsburgh’s Surtrac program aims to ease traffic congestion
- Accident at West Virginia’s Cheat Lake sends boaters to hospital
- Westmoreland Veterans’ Monument unveiled, rededicated in Greensburg
- Foes of South Huntingdon gas-fired plant fight approval
- Cops: Man shoots 11-year-old with BB gun in McKeesport; boy critical
- Worthington-Kittanning Palomino baseball team struggles early
- Pirates notebook: Morton’s return to Pirates means Liz leaves
- Newsmaker: Susan M. Rademacher
- Another broken promise: ObamaCare in the ER