UPMC refuses to negotiate new contract with Highmark

Health giant says no to new contract; Highmark says it's still willing to talk

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UPMC will not negotiate a new contract with Highmark, the health system's chief legal officer said Wednesday.

UPMC's W. Thomas McGough Jr. told members of Allegheny County Council that the only issue the hospital system would discuss with Highmark was the best way to dissolve their relationship.

"This is not a negotiating ploy," Mr. McGough said.

The current contract between the region's largest health insurer and the largest hospital system expires on June 30, 2012.

Mr. McGough's answer clearly disappointed several members of council.

"I think you should lock yourselves in a room and talk," council Vice President Charles Martoni told Mr. McGough and Dan O'Malley, Highmark's western region market president.

Mr. Martoni and other council members said they were getting a flood of phone calls, emails and visits from constituents worried about which doctors they could see and which hospitals they could use if UPMC and Highmark end their relationship.

Mr. McGough said University of Pittsburgh Medical Center facilities, including the Hillman Cancer Center and Magee-Womens Hospital, would remain open to patients with Highmark insurance.

Lack of a new reimbursement agreement, however, would make treatment at UPMC facilities "out of network" for Highmark customers. That situation likely would result in treatment charges doubling or tripling, Mr. O'Malley warned.

UPMC's unalterable decision to not sign a new contract with Highmark means that Highmark customers should consider signing up with another insurance company if they "want to ensure unfettered, in-network access to UPMC doctors or physicians," Mr. McGough said.

The expiration of the agreement between Highmark and UPMC would affect only people with private insurance. People covered by Medicare and Medicaid would continue to have full access to UPMC facilities and doctors.

Mr. O'Malley said Highmark was willing to continue talks with UPMC toward reaching a new contract that would continue to offer choice and competition to Allegheny County residents. "The region needs multiple, viable health-care delivery systems," he said.

UPMC ended contract talks this spring after reports surfaced that Highmark planned to acquire the troubled West Penn Allegheny Health System, UPMC's largest local competitor.

Highmark's decision to take over and operate West Penn Allegheny was the "show-stopper" for UPMC, Mr. McGough said. That action would make Highmark no longer an insurance company but a direct competitor to UPMC.

"They are out there right now trying to hire our physicians to staff their hospital system," he said. "We can't finance that effort through a new contract [with Highmark]."

For the past decade, UPMC has operated its own health insurance program that competes with Highmark.

Councilman Ed Kress, R-Shaler, asked why UPMC now is objecting to Highmark's efforts to increase competition among health-care providers. As a 501c3 charitable institution, UPMC should be acting like the selfless nurse Florence Nightingale, Mr. Kress said. "Instead you are acting like Donald Trump," he said.

Highmark's plan to make West Penn Allegheny an "integrated delivery and finance system," or an IDFS, meant the insurance company could no longer be a "neutral gatekeeper," Mr. McGough said. Once Highmark has spent more than a billion dollars acquiring and rebuilding West Penn Allegheny facilities, "it's going to use every lever it has as a monopoly to make sure its hospital beds are filled before anyone else's," he said.

The only issues remaining to be decided between UPMC and Highmark representatives involve such questions as how to transfer medical records to new physicians and hospitals for Highmark customers who choose to keep their existing insurance, Mr. McGough said.

Mr. McGough and Mr. O'Malley were invited to speak to members of council's health and human services committee. Committee Chairman John Palmiere, D-Baldwin Township, said he was still hopeful the two giants would ultimately agree on a new deal.

He pointed to stormy National Football League negotiations and acrimonious Congressional debate over raising the national debt ceiling as recent examples of opponents who reached last-minute deals.

"It's still my hope that both parties will get together and do what is best for Allegheny County and Western Pennsylvania," he said.


Len Barcousky: lbarcousky@post-gazette.com or 412-263-1159.


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