State questions Highmark's ad claims of potential job losses

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The Pennsylvania Insurance Department is questioning a recent Highmark television ad that says "thousands" of jobs will be lost if there's no contract with Pittsburgh health care provider UPMC after the current pact expires Dec. 31, 2014.

If that's the case, the state says, the Pittsburgh insurance carrier should have noted that when it asked for approval of its affiliation with the financially ailing West Penn Allegheny Health System.

"A projected significant loss of employment is a material factor that should have been disclosed," wrote Deputy Insurance Commissioner Stephen J. Johnson in an Oct. 4 letter to Highmark's attorneys.

Not including that information in the application, he continued, "raises the question" of whether the ads are accurate "or, if accurate, to what extent, if any, Highmark believes the information was disclosed" during the application process.

In response, Highmark attorney Thomas VanKirk wrote to Mr. Johnson that the application did say Highmark Health Services would suffer enrollment losses without a UPMC contract "and that significant administrative costs would need to be eliminated as a result."

Among those administrative costs, he wrote, "employee costs are the major component. For this reason, Highmark Health Services does not believe the statements made in its recent TV messages are inconsistent with information that was filed with the department" in its application.

Highmark spokesman Aaron Billger said Friday, "We were very transparent about the facts," although he could not confirm whether Highmark explicitly told the state that "thousands" of jobs would be lost without a contract.

The Insurance Department is reviewing Highmark's response to determine if it will take further action.

Highmark announced its intention to acquire WPAHS in 2011, with plans to make the health system the centerpiece of its own provider network, the Allegheny Health Network.

To close the deal, though, it needed approval from the Insurance Department, which had to consider whether acquiring WPAHS -- which had an operating loss of $99 million through the first three quarters of fiscal 2013 -- would jeopardize Highmark financially and, by extension, harm its policyholders.

The Insurance Department gave its final approval for the acquisition in April.

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Steve Twedt: or 412-263-1963. First Published October 11, 2013 6:44 AM


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