Corbett enters UPMC, Highmark health feud
By Brad Bumsted and Alex Nixon,
Published: Monday, Nov. 21, 2011
HARRISBURG -- Gov. Tom Corbett on Monday disclosed that he met with the heads of UPMC and Highmark and will consider state intervention to resolve the health care giants' contract dispute.
"I will work with the Legislature, if necessary, to address this," Corbett said at a Pennsylvania Press Club luncheon.
Fellow Republicans, who control the state House, have been working with Corbett's office on legislation that would give the governor and his insurance commissioner a process resembling arbitration -- with penalties for failure to meet deadlines -- to resolve this dispute and any like it in the future, said Rep. Randy Vulakovich, R-Shaler, who is drafting the bill.
House Minority Caucus Chairman Dan Frankel, D-Squirrel Hill, called Corbett's comments encouraging and said it "reflects this is not a partisan issue. When I walk down the street, this is the first thing I get asked about" by constituents.
The dispute began in June when UPMC learned that Highmark was poised to buy West Penn Allegheny Health System. UPMC, which owns 20 hospitals and generates $9 billion a year in revenue, said it won't give Highmark's customers favorable rates at its hospitals because the insurer would become a direct competitor. They were negotiating a new 10-year reimbursement contract for Highmark customers using UPMC facilities and doctors.
The contracts with both hospitals and doctors expire on June 30. The contract with hospitals has a one-year extension to allow Highmark customers to continue receiving in-network rates until June 30, 2013. Highmark says the extension also covers UPMC doctors, but UPMC says it does not.
"Highmark continues to support efforts by both the Pennsylvania General Assembly and the Corbett administration to get UPMC back to the table to negotiate a new contract so we can preserve for all Western Pennsylvanians affordable access to community assets that were funded by and supported by taxpayer grants, local philanthropy and subscriber premiums," Highmark spokesman Michael Weinstein said.
UPMC refuses to negotiate because it says the combined insurer-health system would have to steer customers away from UPMC and toward West Penn Allegheny. It prefers what has been called an orderly divorce from Highmark.
"UPMC stands ready to work with the state regulatory agencies and is committed to discussing transition issues with Highmark as part of an orderly unwind that minimizes disruptions to patients, employers, physicians and subscribers when the contracts expire on June 30," UPMC spokesman Paul Wood said.
Corbett said he met separately with Highmark and UPMC officials, and with the chairmen of both boards together. UPMC's board chairman is G. Nicholas Beckwith III, CEO of Arch Street Management LLC, a Monroeville holding company for family investments. Highmark's board chairman is Robert Baum, an associate professor at the University of Maryland.
Corbett didn't set a deadline for resolving the contract dispute.
Vulakovich will coordinate activities in the House, said Majority Leader Mike Turzai, R-McCandless.
"We will hold hearings. We are concerned about access for the insured. We also want to make sure it's done in a reasonable and balanced manner," Turzai said.
In the Senate, Sen. Don White, R-Indiana, and Senate Minority Leader Jay Costa, D-Forest Hills, are seeking co-sponsors for legislation to give the state insurance commissioner "greater authority to extend the terms of the existing contract between Highmark and UPMC." White chairs the Senate Banking and Insurance Committee.
The bill is similar to Vulakovich's, Costa's office said.
"This is one of the primary issues which Sen. Costa has been pursuing intensely over the last several months through a number of channels, including a package of bills now in the Banking and Insurance Committee," said his spokeswoman Lisa Scullen.
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