Paul H. O'Neill: Now is the time for action on UPMC

Public officials can save the community from a showdown with UPMC

Share with others:


Print Email Read Later

Six months to go until we, in and of the community, become the innocent but impaled victims of the UPMC decision to force us to change insurance agents. It is time for us to stand up for what is right for the community.

There are some things we should demand and some things we should suggest.

We should demand that UPMC disclose the percentage price increase it has negotiated with Aetna and the other replacement insurance companies, as compared to the prices in the existing Highmark contract. I have made this request directly to the general counsel of UPMC and his answer is that the prices are "higher." We need to know exactly how much higher.

I have spoken with seven UPMC board members and if they know the answer they would not tell me. Here is a fact people should understand; 90 percent of what we pay for medical care goes to providers, the other 10 percent goes for insurance functions. So the idea that the new insurance companies can offset a 40 percent price increase, which Highmark says UPMC wanted in a new contract with the insurer, is a fantasy.

It seems improbable, after months of stonewalling on this critical issue, that UPMC and its board members, either individually or collectively, will provide this information. Therefore, I believe we should call on governmental authorities to cause the production of this information in discharging their responsibility to us under the law.

Specifically, by law, the state attorney general is authorized to "conduct studies, investigations and research into matters affecting consumer interests and make such information available to the public" and "investigate fraud and deception in the sale, servicing and furnishing of goods and products and strive to eliminate such illegal actions." The attorney general also has oversight for non-profit organizations.

It is past time for the attorney general to act on behalf of the community. With millions of citizens at risk, there is no excuse for her to sit idly by. While the attorney general is producing documents, she should cause UPMC to make public the resolution signed by all of the directors agreeing to sever the relationship with Highmark. One director told me he did not remember a formal vote on this issue, in spite of the fact that the president of UPMC has repeatedly claimed the board voted unanimously to take this action.

Good corporate governance practices require that when important issues are to be considered by a board, necessary materials, studies and research be sent to the board at least one weekend before the matter is considered. I have been told, contrary to good corporate governance practice, this matter was brought to the board at the end of a meeting called for the purpose of considering the investment in the former Ford Motor Co. building on Center Avenue.

If UPMC produces a signed document, the attorney general should ask the individual board members to declare they signed the document on the day of the meeting. Further, the attorney general should cause the production of studies claimed to show UPMC prices are unfairly lower than those in other similar communities. Finally, she should assure the community that the new insurance contracts do not begin with "low-ball" rates with a side letter between the parties agreeing to substantial price increases in subsequent years.

There is one complication with these requests. The attorney general is married to a Highmark lawyer. Therefore, it may be necessary for her to recuse herself and cause the matter to be pursued by the deputy attorney general but, in any event, the people in the community have a need and a right to know the facts.

At the federal level, I believe we should request that the U.S. attorney for the Western District of Pennsylvania open an investigation into this matter. If it is true that those who choose not to end their relationship with Highmark face a 40 percent price increase for the same services they have been receiving at UPMC, there must be a basis in the U.S. antitrust law administered by the Justice Department to protect citizens from acts of predatory pricing, or fraudulent billing practices for identical services. The U.S. Department of Justice Consumer Protection Division should also have a basis for intervening because tens of thousands of people could find themselves uninsurable under the UPMC edict.

There are provisions in the so-called Affordable Care Act giving the secretary of Health and Human Services the power to override proposed price increases from insurance companies. If these powers are found not to apply to providers, we should ask our federal representatives to quickly enact legislation to take away the power of providers to capriciously raise prices as UPMC is trying to do by forcing us to pay "out of network" prices, i.e., a 40 percent price increase.

At the state legislative level, we should ask our representatives to enact a simple bill that would be good for all Pennsylvanians. Specifically, a bill should be enacted that deems every citizen in Pennsylvania who has a health insurance card from a licensed health insurance company to be "in network" -- that is, charged the lowest prices offered by each provider. Under this plan, it would not be necessary for an insurance plan to have a contract with providers; their policy holders would have an entitlement right to preferential pricing.

So, in the instant case, I could keep Highmark as my claims processor and UPMC would be required to charge me "in network" prices. This provision would produce transparent pricing for services used and would clearly differentiate medical service pricing from insurance function pricing. It would no longer be possible for providers and insurance companies to rig the market at the expense of citizens.

This would be a major advance for citizens because we would finally get through the fog of current practices, so we can understand what it is we're paying for.

If you support these ideas, please send an email saying so to split@post-gazette.com and be sure to include your name.


Paul H. O'Neill was secretary of the U.S. Treasury, CEO of Alcoa Inc. and a founder of the Pittsburgh Regional Health Initiative, which seeks to eliminate medical errors and to perfect medical care in the Pittsburgh region.


You have 2 remaining free articles this month

Try unlimited digital access

If you are an existing subscriber,
link your account for free access. Start here

You’ve reached the limit of free articles this month.

To continue unlimited reading

If you are an existing subscriber,
link your account for free access. Start here