State officials attempt to avert UPMC, Highmark breakup

UPMC+and+Highmark+have+begun+a+coverage+split+that+will+be+effective+July+1.+

Via Cbaile19 | Wikimedia Commons

UPMC and Highmark have begun a coverage split that will be effective July 1.

By Jon Moss, Contributing Editor

With six months until the formal separation of Pittsburgh’s two largest health care companies, UPMC and Highmark, state officials are intervening in the name of protecting consumers from the two health care giants.

To try and halt the split, state Attorney General Josh Shapiro announced a lawsuit against UPMC over its charitable status and the state senate minority leader proposed legislation on Thursday to force the health care companies to contract with each other. But the seven-year history of conflict between the companies may prove difficult to resolve.

It took about 20 years for UPMC, a health care provider, and Highmark, an insurance company, to transform from more modestly sized companies to corporate behemoths.

Beginning in the mid-1980s, UPMC acquired several health care centers in the Pittsburgh area, before peaking at its current 40 hospitals. The health care juggernaut is the largest employer in Allegheny County, and the largest non-governmental employer statewide, according to data from the Pennsylvania Department of Labor and Industry.

In the meantime, Highmark began to grow, too. In 2013, the company acquired the West Penn Allegheny Health System — a five-hospital Pittsburgh care network, including West Penn Hospital in Bloomfield — and rebranded it as the Allegheny Health Network.

The two companies ultimately became fully integrated, housing both health insurance and health care provider services under one roof.

But the creation of the Allegheny Health Network proved to be a breaking point for its competitor. UPMC threatened to decline Highmark insurance at its care facilities, which required the intervention of state officials to solve the conflict.

The two companies are currently governed by a five-year extension of the original 2012 consent decrees — legal agreements requiring UPMC to accept Highmark insurance as in-network — brokered by then-Gov. Tom Corbett, the Pennsylvania Insurance Department, the Department of Health and the attorney general.

UPMC and Highmark will officially start unwinding their coverage agreements on July 1 when the consent decrees expire, beginning with Medicare Advantage customers. Children’s Hospital of Pittsburgh and the Western Psychiatric Institute and Clinic will be the only in-network UPMC hospitals in the Pittsburgh area for Highmark customers, until they become out-of-network, beginning July 2022 and July 2024, respectively.

In the 73-page court filing, Shapiro alleged that UPMC not allowing Highmark customers access to its facilities violated the Solicitation of Funds for Charitable Purposes Act. He also said the use of chartered executive jets and above-average executive compensation violated the Nonprofit Corporation Law. Additionally, he said deceptive marketing tactics were in violation of the Unfair Trade Practices and Consumer Protection Law.

“I can’t sit idly by and watch our seniors and children and workers suffer because of corporate greed,” Shapiro said at a press conference.

He is looking to modify the 2014 extensions to the original consent decrees to ensure in-network coverage and lower rates for both health care companies — changes that Highmark agreed to in late 2018, but UPMC didn’t.

Shapiro is also suing UPMC under the Consumer Protection Law due to alleged deceptive marketing practices and causing public confusion over changes in its insurance policies.

State Senate Minority Leader Jay Costa, D-43, announced on Thursday he was seeking co-sponsors for a set of two bills to force health care companies like UPMC and Highmark to work together to care for patients, and send them to arbitration if contract disputes arise.

“It’s time to undo the damage caused by the divorce of these two companies,” Costa said. “Disputes between enormous, profitable companies cannot get in the way of patients and their care.”

The legislation is similar to two bills introduced in October 2013 by then-state Rep. Jim Christiana, R-15, and state Rep. Dan Frankel, D-23. One bill would have forced hospitals that are part of integrated health care companies to “contract with any health insurance carrier that is willing to enter into a contract.” Another bill would have outlawed limiting or restricting care solely based on the customer’s health insurance. Neither bill made it out of committee.

Costa’s proposed legislation would also introduce a new state Health Care Competition and Oversight Board, which would act as a consumer health care watchdog across the state.

“Health care consumers should not have to worry about whether their insurance will be accepted when they’re sick, injured or simply seeking preventive care,” Costa said. “Their only worry should be getting healthy.”

David Holmberg, president and CEO of Highmark, said Highmark supports the proposed modifications to the consent decree.

“We support the Pennsylvania Attorney General’s proposed modified Consent Decree between Highmark and UPMC. It is in the best interest of the communities we serve,” Holmberg said in a statement. “We believe that all health plans and health systems should compete based on their value to the consumer.”

UPMC spokesperson Paul Wood said UPMC is confident consumers will not suffer a lapse in coverage, and consumers have had enough time to be ready for the change.

“The five-year transition as provided for by the Consent Decrees expiring June 30, 2019, has allowed businesses and consumers substantial time to prepare for the end of the UPMC-Highmark relationship in western Pennsylvania,” Wood said. “Consumers have greatly benefited from the heightened competition.”

But some of those affected by the health care conflict say that the two companies’ competition has negatively affected them.

Catherine Tomes, a first-year history major at Pitt from the Pittsburgh area, said she had insurance through Highmark for most of her life, but had to change to insurance during high school.

“I had Highmark all my life, and then my freshman year of high school I had found a breast tumor,” Tomes said. “I had to switch doctors and insurance because the surgeon that they recommended was through UPMC, and so because of that I had to change all of my doctors.”

Tomes added she had to change most of her doctors since the ones she had been going to for years were now considered out of network — an example of how patients are often collateral damage in the fight between the two companies.

“I just think that it’s really selfish of both institutions and they should really think about everybody in the area,” Tomes said. “People come to Pittsburgh for specific medical procedures, and having to deal with the feuding health care is really bad.”