UPMC vs. Highmark: Policy experts say now's the time to end the warfare

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Twenty-one months from now, barring an unexpected thawing of the relationship, UPMC and Highmark will go their separate ways with ripple effects that will be felt throughout the region.

Local health policy experts say that should not be allowed to happen and suggest now may be the time for state intervention to require the Pittsburgh region's largest health provider and its largest health insurer to cooperate.

"They both need to exist in the community. They can't drive each other out of business. Neither can exclude the patients of the other," said Stephen Foreman, associate professor of health care administration at Robert Morris University.

The latest example -- UPMC effectively blocking Highmark Community Blue subscribers from continuing to see UPMC physicians -- illustrates the level of animus between the two health care giants that makes a reconciliation seem unlikely.

"It just seems wrong," said Martin Gaynor, professor of economics and health policy at Carnegie Mellon University.

"If UPMC would act as a nonprofit with a community mission, then we might not have this problem at all," he said. "The people on the UPMC board should take a good long look in the mirror and ask themselves if they're performing their duties to the organization and to its mission and not just to current management.

"You have to wonder if the board of directors is really in control."

While UPMC's dismissal of Community Blue subscribers has generated the latest wave of criticism, Mr. Gaynor and Mr. Foreman say the dynamic of one powerful insurer and one dominant provider is not healthy for the community, especially when the two spend so much time and money battling each other.

"It's clearly not a good situation," Mr. Gaynor said. "Even with the previous UPMC-Highmark pact, my feeling is that they were making decisions because it was to both of their mutual benefit and not ultimately to the benefit of the community.

"It's a pretty ugly mess, and it may be that the state stepping in and forcing their hand might be in order here."

It took an intervention by Republican Gov. Tom Corbett a year ago to broker an extension of the UPMC-Highmark agreement to 2015, an agreement that provides in-network access to UPMC physicians and facilities for Highmark's 3.1 million members in Western Pennsylvania.

One key public official says the issue is already on legislators' radar.

State Rep. and Democratic Caucus Chairman Dan Frankel of Squirrel Hill has been circulating a memo to colleagues about his plans to introduce a bill that would make illegal "anti-tiering" clauses that prevent insurers from offering lower cost insurance plans such as Community Blue.

"To me, it's a much bigger issue than the contract between Highmark and UPMC," he said, citing the nationwide increase in hospital charges.

But clearly the Pittsburgh situation illustrates his point. Mr. Frankel bluntly describes as "predatory" UPMC's ousting of Community Blue patients and says there have been discussions in the capitol about possible legislation with a singular purpose:

"If you lock out an insurer or lock out a provider in trying to control the marketplace, then you might trigger the loss of your tax exemption."

The parties themselves are sticking to their positions.

Highmark spokesman Aaron Billger said the insurer has long said it wants a long-term, affordable contract with UPMC, which he said would be "in the best interest of the community and our members. Everyone in the region -- regardless of their health insurer -- should have access to community assets like area hospitals that were built and are supported by taxpayer dollars and community giving."

But UPMC spokesman Paul Wood countered that extending the contract with Highmark would lessen competition.

"The idea of a contract between a dominant insurer [Highmark, which will own West Penn Allegheny Health System and other hospitals] and a dominant provider [UPMC, which owns its own set of hospitals and has a vibrant insurance company] is to combine into one contractually bound 'organization' the delivery of all health care in Western Pennsylvania," he said.

"It will instantly extinguish all insurance competition and all provider competition. Unless the government is going into the single-payer/single-provider business, this model would allow all pricing and accessibility to be controlled by Highmark and UPMC. This is unacceptable to UPMC, and it should be unacceptable to the community."

Not everyone is keen to have government play a larger role in the local healthcare market. While employers are concerned about the Highmark-UPMC standoff, an agreement such as the one that has kept Children's Hospital of Pittsburgh of UPMC accessible to everyone could be a model for other specialty services, said M. Christine Whipple, executive director of the Pittsburgh Business Group on Health.

"Can something similar be activated to address the issues our region is facing today before we would pursue additional regulatory oversight?" she asks.

Mr. Frankel acknowledges, too, that it may be difficult to craft statewide legislation to address Pittsburgh's unique market when health care markets look much different in other parts of the state.

And Mr. Gaynor agrees, "The details really matter" if the state does intervene.

It may be that both Highmark and UPMC have grown so large, he said, that "short of coming in and breaking these guys up, we're kind of stuck with them. I don't think the feds are going to break up UPMC and break up Highmark -- but it would be a good thing if they both could be broken up."

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Steve Twedt: stwedt@post-gazette.com or 412-263-1963.


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