Highmark will no longer accept price markups on some oncology-related services beginning April 1, the Pittsburgh insurer announced Wednesday, a move that health provider giant UPMC promptly labeled "an egregious contract violation."
What's at stake is some $200 million in annual markups for cancer treatments from a variety of providers -- including UPMC -- double the amount billed from just three years ago, said pediatric cardiologist Donald R. Fischer, chief medical officer for Highmark Blue Cross Blue Shield.
"It was growing uncontrollably," he said, "so we decided to fix this."
He said the move was prompted by a trend among hospitals and health systems of buying oncology physician practices, then billing subsequent treatments as a hospital outpatient service instead of as lower-cost office visits. On average, Dr. Fischer said, this could translate into a three-fold increase in cost.
Many patients would not see the bill since it would be covered by their insurance. But for Medicare recipients without supplemental coverage, or those privately insured with a high deductible plan, it could add tens of thousands of dollars to their out-of-pocket costs.
"It's all about the patient," said Dr. Fischer, adding that the markups had become a lucrative revenue source for hospitals and health systems "on the backs of sick cancer patients."
Under the new pricing, Dr. Fischer estimated that a lung cancer patient could save from $1,000 to $3,500 or more per single treatment, depending on the drugs used and how costs are applied to the member's insurance deductible.
Highmark spokesman Aaron Billger said the move will impact payments to UPMC and related hospitals -- the region's major cancer treatment provider -- as well as Highmark's own Allegheny Health Network and community hospitals. The change will not affect fees charged for complex cancer services delivered in a hospital.
Highmark's announcement did not go unchallenged.
UPMC spokesman Paul Wood said on Wednesday that it "would be an egregious contract violation for Highmark to attempt to unilaterally change fee schedules specifically in place for nearly 20 years and recently affirmed in the 2012 Mediated Agreement," which allowed Highmark members to continue receiving in-network care at UPMC through 2014.
"UPMC's contracts with Highmark, Medicare regulations and Pennsylvania Department of Health regulations all contemplate and establish requirements for hospital-based outpatient services," Mr. Wood said. "UPMC is fully compliant with these requirements, which Highmark executives have publicly acknowledged."
UPMC and Highmark are in the final year of a contract that provides Highmark members with in-network access to UPMC physicians and facilities. UPMC has said it will not renew the contract now that Highmark has set up the Allegheny Health Network to compete in the provider market.
By reducing cancer care payments, "Highmark has chosen to willfully violate provisions of that contract," Mr. Wood said. "It is our expectation that we will be reimbursed for our services provided per the contractual arrangements until [the contract] expires at the end of this year."
Dr. Fischer said eliminating the markups on chemotherapy drugs given in a hospital outpatient center is not a contract issue, but he did not elaborate.
For the past three to four years, he said, the insurer had noticed the growing cost of chemotherapy drugs and treatments even though those drugs and treatments had not changed. "It is affecting some of our sickest members, who are the most vulnerable," he said.
Earlier this month, the Pittsburgh Post-Gazette reported on the wide variation in charges and costs for cancer drugs. Steven Gray of Butler, diagnosed with Stage IV pancreatic cancer, received treatment at both Johns Hopkins Hospital in Baltimore and UPMC Passavant in McCandless.
Gray, who died in August, received two specific cancer drugs in the same dosage at both places, but the cost of the drugs ran three to seven times higher at Passavant.
"I'm curious from a quality rationale why the price should be so much higher," Dr. Fischer said.
Steve Twedt: email@example.com or 412-263-1963. First Published February 26, 2014 3:22 PM