The terms of divorce between UPMC and Highmark emerged Wednesday, ending -- for now -- a year of brinkmanship by the region's health giants.
Highmark subscribers who feared that they might be forced to abandon their UPMC doctors by mid-2013 can breathe easier, with in-network access now guaranteed through 2014.
Experts and insiders, though, stressed that with limited exceptions, the special status Highmark subscribers had long enjoyed at UPMC hospitals won't exist on Jan. 1, 2015. Further, there is no guarantee of long-term stability in the local health care and health insurance markets, nor of improvement in the system's continuing problems that notably include modest competition and high costs.
In 2015 and beyond, most Highmark customers could find themselves priced out of most UPMC services, which would then be available at out-of-network rates. There is no guarantee that West Penn Allegheny Health System, Highmark's partner-in-waiting, will be in tiptop shape by then.
Gov. Tom Corbett announced in Harrisburg that Highmark and UPMC will continue to work together through 2014. The two health giants revealed some details of the 18-month contract extension that may end their lengthy relationship.
"Hopefully, things can come together and work out," Allegheny County Executive Rich Fitzgerald said. "That's obviously almost three years in the future. A lot of things can happen over three years."
The immediate crisis of the past year began when Highmark agreed to buy West Penn Allegheny. That affiliation awaits state Insurance Department approval.
UPMC then announced it would not negotiate a new reimbursement agreement with the insurer. That meant most area patients would be excluded from most regional hospitals. National insurers rushed into the breach.
Pressure for a new deal came from politicians, businesses and unions, and crystallized in two ways in Harrisburg. Gov. Tom Corbett assigned an Eastern Pennsylvania health care executive, David F. Simon, to mediate the dispute. And Highmark battled for, and UPMC fought against, a bill that would have forced them into binding arbitration by the state insurance commissioner.
"I think the legislators and I were somewhat in agreement we were not going to let the people of Western Pennsylvania live in the world of anxiety that they have lived in," Mr. Corbett said. "And ... keeping in mind that both of these institutions were nonprofits that have received a great deal of benefit from that status."
Many details of the new pact were unavailable Wednesday, but it appears to include gains and losses for nearly everyone involved.
Highmark, for 32 months, gets to tell clients that their employees have in-network access to UPMC -- but at a higher cost. Experts said Highmark now pays 30 percent to 40 percent less for UPMC's services than do the national insurers.
Over the course of the pact, those reimbursement rates will go up, in steps, until they are roughly the same as those paid by national firms. That will cost Highmark money at the same time that it's striving to build West Penn Allegheny into a viable rival to UPMC.
UPMC backed off of its no-extension stance but won agreement that Highmark will let its subscribers go to the new UPMC East in Monroeville. That gives the region's newest hospital an opportunity to snatch patients from nearby Forbes Regional Hospital, owned by West Penn Allegheny -- the very entity Highmark is trying to prop up. Highmark had previously refused to bring UPMC East into its current contract.
Businesses, unions and others get a reprieve from the uncertainty of the past year. But as the increase in reimbursement rates ripples through the system, they could see an end to the downward pressure on premiums that has marked the year of competition.
Uncertainty, meanwhile, begins again in 2015.
National insurers Aetna, United Healthcare, Cigna and HealthAmerica may not get droves of fleeing Highmark customers in the coming year, but they do get to compete under more comparable reimbursement rates. A big winner may be UPMC Health Plan, which by virtue of its ties to UPMC could be positioned as the lone insurer with special reimbursement rates with the area's biggest provider.
Sen. Don White, R-Indiana, chairman of the Banking and Insurance Committee, pushed for a deal that would foster the emerging competitive health insurance environment.
He said he was concerned that a mid-2013 cutoff date, before Highmark had fully propped up the West Penn system, could have forced Highmark to more abruptly steer policyholders toward WPAHS, at the expense of other suburban hospitals.
Regional leaders said the positives outweigh the negatives.
The Allegheny Conference on Community Development said in a statement that the deal "will secure a predictable transition in our health care insurer-provider environment" toward a more competitive market.
"My administration has encouraged an agreement that is fair for rate payers, and that also allows the Highmark-West Penn Allegheny alliance to continue to play a key role in local job creation and economic growth," Pittsburgh Mayor Luke Ravenstahl said.
Highmark, "hopefully within the three years, can get West Penn Allegheny on their feet and save 11,000 jobs," said Rep. Tony DeLuca, D-Penn Hills, minority chair of the House Insurance Committee.
No one seems to think the region's health care problems are over.
Competition between the two health care networks is important, but the community can't allow "one entity to compete with its hand tied behind its back," said Sen. Jay Costa, D-Forest Hills, who was involved in arranging the pact. "Folks still question the issue of whether or not these entities honor their mission. That's something that's going to linger as we go forward."
Highmark and UPMC "are both excellent. But they both, in my opinion, have predatory practices when it comes to rural hospitals," said Sen. Kim Ward, R-Westmoreland. UPMC and Highmark press doctors to steer patients to facilities they control, she said, "starving out community hospitals."
Acrimony could break out again in 2014, as the termination of the agreement approaches.
While Highmark and UPMC said in a joint statement that the agreement will "eliminate the need for any possible governmental intervention," legislators said they haven't ruled out reintroduction of bills demanding binding arbitration. Rep. Randy Vulakovich, R-Shaler, author of one binding arbitration bill, said he may revisit that approach during the next legislative session.
"There was no deal signed by me, nor was there a deal signed by the Legislature," said Rep. Dom Costa, D-Stanton Heights, whose district includes West Penn Hospital.
For months, Highmark and UPMC could not even agree when terms of the current 10-year contract expired.
UPMC maintained that the one-year run-out period, which would go to June 30, 2013, applied only to hospital services but not services provided by UPMC physicians.
In December, Mr. Corbett's office brokered an agreement that assured Highmark subscribers in-network access to UPMC physicians and hospitals through June 2013.
Highmark, meanwhile, has been rebuilding the West Penn Allegheny system, reopening the West Penn Hospital emergency department in Bloomfield and, in January, announcing a $20 million upgrade to the Forbes Regional Hospital campus in Monroeville.
Rich Lord: email@example.com or 412-263-1542. Karen Langley, Bill Toland and Steve Twedt contributed. First Published May 3, 2012 5:30 PM