Highmark CEO: Hospital group wrong for siding with UPMC over AG Shapiro

Pennsylvania’s largest hospital association is mistaken in trying to squash state Attorney General Josh Shapiro’s attempt to halt the looming breakup between Highmark and UPMC, Highmark Health CEO David Holmberg said Tuesday.

On Monday, the Hospital and Healthsystem Association of Pennsylvania joined UPMC in asking a federal judge to block a legal effort by Shapiro. The attorney general seeks to rewrite a 2014 consent decree between nonprofit health system rivals Highmark and UPMC and impose new requirements before the state-brokered agreement expires this summer.

The association, which represents more than 240 hospitals and health systems statewide, argued that Shapiro’s proposed changes “threaten competition, quality and innovation in Pennsylvania health care markets.”

“I think maybe they (HAP) misunderstood what the Attorney General is trying to do,” Holmberg told the Tribune-Review shortly after a news conference to discuss Highmark’s 2018 financial performance. “The Attorney General is essentially saying put the power back in the hands of the consumers.”

Among other demands, Shapiro asked UPMC hospitals and doctors to accept Highmark patients “in perpetuity” and drop a controversial prepay rule threatening to impact thousands of Highmark-insured Medicare Advantage patients and cancer patients when it takes effect in July. Shapiro accused UPMC of breach of fiduciary duties and violating federal laws regarding charities, unfair trade and consumer protection.

“What the Attorney General is saying is that for any charitable hospital receiving those benefits, that you have to be open to all,” Holmberg said. “What this is doing is creating a level playing field for all hospitals and all insurers so they can work together.”

Under Shapiro’s proposal, according to Holmberg, “there will be no exclusive contracts between hospitals and insurers, and if terms cannot be reached, the hospital and insurer will go to arbitration, and insurers will have the ability to create health care provider networks of their own choice based on cost, quality and value.”

“We welcome competitive health care markets and believe that innovation driven by competition will benefit consumers and build healthier communities,” Holmberg said.

In contrast, UPMC has dismissed the proposal as “delegating price-fixing to self-interested, private parties.”

“At the heart of HAP’s concern is that insurers will have more influence over patient care,” the association said in a statement.

HAP argued in federal court that if granted, Shapiro’s proposal will result in a “two-tiered system in which Pennsylvania for-profit providers would have an advantage over nonprofit providers” and said that it “will not improve health care or otherwise benefit patients.”

HAP President and CEO Andy Carter said that Shapiro’s “new health care regime, hastily imposed through litigation, will force cost-cutting over improving quality and outcomes — resulting in lower reimbursements for hospitals and increased administrative costs.”

“The Office of Attorney General has proposed a plan that would potentially force all nonprofit hospitals to do business with any insurer regardless of that insurer’s offered payment terms, procedures for assuring high-quality care, or the strength of its provider network,” Carter said. “Hospitals would have their hands tied, keeping them from standing up for their patients and communities.”

HAP’s decision to intervene in the legal battle and side with UPMC over Shapiro prompted Allegheny Health Network CEO and President Cynthia Hundorfean to resign from her post on HAP’s board of directors. AHN is the provider network under parent company Highmark Health, which, like UPMC, includes both insurer and provider arms.

Hundorfean said she submitted her resignation letter on Monday.

UPMC cited HAP’s opposition in its latest response to Shapiro’s legal team in Commonwealth Court on Monday, in which UPMC’s attorneys continued to demand that the court reject Shapiro’s petition for violating state and federal law and threatening instability and uncertainty in the marketplace.

UPMC has further accused Shapiro of political grandstanding and promoting the interests of Highmark over the general public.

Shapiro has said he is not intimidated by UPMC’s legal arguments and that he looks forward to making his case in court.

RELATED: Pa. Senate GOP accuses AG Shapiro of overstepping authority in UPMC legal fight