Hospital system and insurer end long battle by reaching deal

A sometimes bitter contract dispute was resolved July 3 when western Pennsylvania’s largest insurer finalized a deal that will give Highmark members access to University of Pittsburgh Medical Center physicians and facilities through at least 2015.

The two sides had concurred in principle during arbitration in May organized by Pennsylvania Gov. Tom Corbett.

Without the deal, Highmark members would have lost network access to some UPMC facilities and 2,700 physicians this year.

“The immediate reaction from the medical community, for patients as well as probably from the two entities was a giant sigh of relief,” stated Leo McCafferty, MD, a plastic surgeon in Pittsburgh who is chair of the Allegheny County Medical Society and president of the American Society for Aesthetic Plastic Surgery. “I think the important takeaway is that this is still a community that cares about patients.”

Highmark won’t pay UPMC as much as the hospital system demanded — UPMC reportedly wanted a more than 40% increase. But Highmark will raise payments each successive year under the new contract. Highmark spokesman Michael Weinstein stated the insurer’s fee schedule for physicians will remain the same for UPMC as for all other network physicians.

The long battle between the hospital and health insurer mirrored disputes around the country, with each side painting the other as abusing its market power. Both launched public relations campaigns to pressure the other party and keep their customers from abandoning them.

Typically in hospital-insurer disputes, the insurer or the health system is bigger or has greater market share. Pittsburgh is unique in having two evenly matched giants battling over the health care market.

UPMC holds a 55% share of the area’s hospital market. Highmark holds between 60% and 80% of the health insurance market.

Both companies released statements that referenced the need for more robust competition in the other side’s market. Whether that competition develops will depend on the success of UPMC’s health insurance plan and the approval by regulators of Highmark’s purchase of the struggling West Penn-Allegheny Health System, which would create competition for UPMC. The smaller hospital system had been on the brink of financial disaster before Highmark concurred to purchase it.

A corporate statement from UPMC said, “In the wake of the Supreme Court’s June 28 decision upholding the Affordable Care Act, this agreement creates a foundation for increased competition in the health insurance market with the UPMC-UPMC Health Plan integrated delivery and financing system, the Highmark-WPAHS integrated delivery and financing system and the four national insurers [Aetna, Cigna, HealthAmerica and UnitedHealthcare] competing on the basis of quality, cost and network access, all to the benefit of patients, subscribers and businesses in western Pennsylvania.”

Highmark released a statement that stated it will continue work on creating “an alternative integrated delivery and financing system for the region aimed at improving coordination of care, making health care more inexpensive and providing a better patient experience.”

Highmark will drop a lawsuit it filed against UPMC over its advertisements during the contract dispute that suggested UPMC patients change insurers to keep in-network access to their doctors, Weinstein said. He stated the insurer also intends to drop its antitrust lawsuit against UPMC whenever the acquisition of WPAHS is complete.

Copyright 2012 American Medical Association. All rights reserved.

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Submited at Wednesday, July 25th, 2012 at 4:15 pm on Uncategorized by chuck
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