Health goliaths UPMC and Highmark remain at odds
In his first public statements since UPMC walked away from negotiations with Highmark Inc. this spring, Jeffrey Romoff made it clear on Thursday that Pittsburgh's No. 1 hospital system has no intention of restarting talks with the region's largest health insurer.
Romoff, UPMC's chief executive officer, told members of the state House Insurance Committee in Pittsburgh that Highmark's $475 million plan to acquire West Penn Allegheny Health System would make it a direct competitor. Highmark could steer its 3 million Western Pennsylvania members away from UPMC's hospitals and doctors, he said.
"In light of Highmark's decision to convert itself from a neutral insurer into a competing integrated system, UPMC will not renew its contracts with Highmark," Romoff said. "This is not a negotiating ploy, but rather an inevitable decision dictated by the realities of competition. Again, to be clear, there will be no contract with Highmark."
Dr. Kenneth Melani, Highmark's CEO, testified that the insurer wants to renew its contract with UPMC.
Melani was asked if he would support legislation to prevent Highmark from steering patients away from UPMC if the insurance company acquires West Penn Allegheny Health System. He answered no.
Seated behind Melani, Romoff showed no reaction. The two men did not interact during the hearing.
Lawmakers concluded that any hope of bringing the health care titans together would require legislative action.
Rep. Anthony DeLuca of Penn Hills, the Democratic chairman of the Republican-led committee, said after the meeting that he would begin drafting a bill to break the standoff.
"I plan on taking testimony from today back to Harrisburg to craft legislation so millions of Western Pennsylvanians will no longer be caught in the middle of this dispute," DeLuca said.
The state Department of Insurance has no authority to force Highmark and UPMC into contract negotiations, said Randy Rohrbaugh, executive deputy insurance commissioner. Though by law the department could delay termination of the contract with UPMC's hospitals by several months, it cannot delay the contract termination with UPMC's 2,700 doctors.
The contracts allow Highmark to reimburse UPMC about 30 cents on the dollar for what the hospital system charges for services. When they expire on June 30, Highmark subscribers will have in-network access to UPMC hospitals for another year. Children's Hospital of Pittsburgh, UPMC Hamot in Erie and UPMC Mercy have separate agreements for several more years.
The contract with UPMC doctors has no one-year "run out" period. UPMC doctors would be out-of-network on June 30, meaning Highmark would absorb those additional costs or require subscribers to pay full price.
Melani said absorbing those full charges could cost Highmark $2.5 billion a year, which would wipe out the insurer's nearly $4 billion reserve in under two years.
To prevent Highmark members from paying additional money to continue seeing UPMC doctors, Rep. Dan Frankel, D-Squirrel Hill, said lawmakers should consider amending state law to require the nonprofit organizations to engage in binding arbitration to settle their dispute.
Frankel suggested trying to negotiate separate terms for Magee-Womens Hospital, Hillman Cancer Center and Western Psychiatric Institute and Clinic -- to keep those institutions independent of the contract dispute -- similar to the deal arranged for Children's Hospital.
During questioning from the committee, Romoff and Melani talked about increasing health care competition in Western Pennsylvania, though from differing perspectives.
Romoff tried to convince lawmakers that having UPMC cut ties with Highmark would improve the region's health care system because two independent companies would compete over quality and cost. If Highmark members want in-network access to UPMC, they can find another insurance provider, he said, which would benefit insurance rates here.
"People all over the country do that every year," he said.
Melani said the insurer wants to buy West Penn Allegheny to reduce UPMC's dominance in the market. A dominant health care provider too easily drives up prices, he said.
"The market needs competition," he said.
Add Alex Nixon to your Google+ circles.
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.
- Bigger version of Dutch artist’s giant rubber duck coming to Philadelphia
- New Castle man gets prison for rape of girl seen on flea market tablet computer
- Pope to join gallery of murals in Philadelphia
- Man claiming 1988 abuse by Sandusky seeks way into court
- Greene County woman found dead in burning home
- Bee crisis deepens; Pa. keepers turn to making honey over pollination
- Pa. Gov. Wolf proposes to add $28M a year for human services
- Pa. business sector tells GOP committee of worries about minimum wage, taxes, pensions
- Penn State fraternity suspended for 3 years
- Philadelphia’s SEPTA board expected to ban controversial ads on buses
- Massive coal breaker, Pennsylvania’s last, is coming down