Highmark, UPMC argue over terms of contract's end

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Highmark Inc. and the University of Pittsburgh of Medical Center, in the midst of an epic contract showdown, can't seem to agree on much these days -- including how long Highmark's millions of commercial customers will continue to have full access to UPMC's vast network of doctors and hospitals.

In separate position statements issued this week, both the insurer and the health care system sought to ease the "confusion in the market" regarding access to care.

Highmark makes the case that even though the contract between the two Pittsburgh health giants expires June 30, 2012, "Highmark members will have full access to UPMC facilities during the 12-month run-out period through June 30, 2013."

The statement continues: "When the parties negotiated the 10-year agreement in 2002, they anticipated at the end of that long contract period there would very likely be several issues that would take time to work through," perhaps beyond the expiration date of the contract, which is why the run-out period was built into the deal.

"Both parties actively participated in the development of this position."

But UPMC says that the truth is a bit more complicated.

In its own position statement, UPMC says that as of June 30, 2012, "most UPMC hospitals [will] no longer be participating providers in Highmark's commercial networks," meaning that Highmark subscribers may be subject to out-of-network charges when they seek care at those hospitals, and "may be required to obtain Highmark's approval to use non-participating UPMC hospitals, in addition to obtaining required authorizations of medical necessity from Highmark for certain designated services."

Also, "the Highmark contracts governing the services of UPMC physicians, as distinguished from UPMC hospitals, are generally terminable on 60 days notice. If those contracts are terminated effective June 30, 2012, in whole or in part, the availability of UPMC physicians to Highmark's members at current contract rates would be limited or precluded after that date.

Both companies continue to ratchet up the rhetoric, as well.

Highmark says that "UPMC has mounted a communication campaign aimed at frightening Highmark policyholders and individual members that they will not have coverage beyond that date. They are conveniently ignoring the run-out period that they had helped to define in the current contract."

On Friday, UPMC spokesman Paul Wood reiterated that "with Highmark having announced its intention to compete with UPMC as a provider, there cannot be any prospect of a contract renewal between UPMC and Highmark."

He's referring to Highmark CEO Ken Melani's remarks from April, when he said that Highmark would entertain an investment in, or acquisition of, the troubled West Penn Allegheny Health System, which lost $22.4 million in the three months ending March 31.

When pressed on why UPMC is seemingly giving up on the prospects for an agreement a full year before the contract expires, Mr. Wood responded that "The time for negotiations and a new agreement has passed."

The dispute pertains only to commercial insurance contracts between UPMC and Highmark, he added, and does not affect Medicare or Medicaid patients.

UPMC, he said, "welcomes more choice and competition in the health insurance market as well as among providers -- it will create significant benefits for employers, insurance subscribers and the healthcare system overall. By virtue of a newly competitive health insurance market, rate increases to employers and health insurance subscribers will soon begin to decline."

UPMC has recently signed agreements with insurers Aetna, Cigna and United Healthcare and has its own UPMC Health Plan, so, Mr. Wood said, "the residents of this region will continue to have access to UPMC's doctors and hospitals at affordable rates."

Both Highmark and West Penn Allegheny boards of directors met separately this week, and members likely discussed ongoing talks of an affiliation, but there was no immediate word of any decisions.


Bill Toland: btoland@post-gazette.com or 412-263-2625. Steve Twedt: stwedt@post-gazette.com or 412-263-1963.


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