UPMC directors pass resolution not to extend Highmark contract after 2014 expiration

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UPMC's board of directors has set out its rationale for not extending or renewing its contract with Highmark Inc., saying the insurer's need to shift 41,000 patients to its own Allegheny Health Network "would greatly damage UPMC," according to board chairman G. Nicholas Beckwith III.

In a resolution passed unanimously Wednesday, the board cites the health system's "duty to protect and preserve its charitable assets, and its obligations to the communities it serves" in deciding not to renew the contract.

Losing 41,000 admissions to the Allegheny Health Network "would be the equivalent of, for example, the closing of UPMC Shadyside and UPMC Mercy and, with it, laying off 11,000 professionals," Mr. Beckwith wrote in a commentary made public on Thursday.

The 41,000 figure comes from a business plan submitted by Highmark in its application to state insurance officials as the number of patient admissions it needs to reach its financial goals.

Mr. Beckwith also said a new contract with Highmark would create "a classic bait-and-switch," in which the insurer would market its in-network access to UPMC to draw in subscribers, then steer them to its own hospitals.

Highmark spokesman Aaron Billger, in a written response, said Thursday that "UPMC, as a pure public charity and in their monopolistic position, should not dictate where consumers receive their health care based on their insurance coverage. The Allegheny Health Network will ensure open access to the community by contracting with any insurer who wants to work with it. The consumer should decide where they want to seek care."

A continued Highmark-UPMC relationship, he said, "is in the best interests of the community."

He added: "We are sorry that UPMC is so afraid of competition that they are willing to deny access to hundreds of thousands of Highmark subscribers. This is especially true when it purportedly comes from a Board of Directors that is made up of community leaders.

"While Highmark and UPMC are now competitors in the delivery of health care, UPMC has been competing against Highmark for more than 15 years through their health plan. Highmark's creation of Allegheny Health Network does not change the Highmark-UPMC relationship."

UPMC spokesman Paul Wood replied in a written response, "It is Highmark that wants and needs to limit access to UPMC by forcing 41,000 of its subscribers who would rather go to UPMC to go to West Penn Allegheny. It's why we cannot sign a contract. ..."

UPMC officials have consistently said they will not extend the contract with Highmark now that the insurer is building its own provider network to compete against UPMC, with the newly acquired West Penn Allegheny Health System as its centerpiece.

Wednesday's resolution, though, puts an official stamp on those statements and apparently leaves little chance of UPMC continuing its relationship with Highmark after 2014, barring outside intervention by state or regulatory officials.

The current contract expires Dec. 31, 2014. Without a contract renewal, Highmark subscribers no longer would have in-network access to UPMC hospitals or physicians other than for Children's Hospital of Pittsburgh of UPMC; Western Psychiatric Institute and Clinic; UPMC Northwest in Seneca, Venango County; UPMC Bedford Memorial in Everett, Bedford County; and some specialty services, such as certain oncology services.

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Steve Twedt: stwedt@post-gazette.com or 412-263-1963. First Published June 13, 2013 8:15 PM


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