Thursday, August 1, 2013

Legislators prepare preventive medicine in recurring UPMC/Highmark battle

Posted By on Thu, Aug 1, 2013 at 12:44 PM

As you may have noticed if you have, like, a TV set, UPMC and Highmark are gearing up for a reprise of their 2011 clash of healthcare titans. Now, as then, UPMC is threatening to drop patients with Highmark coverage, because Highmark has affiliated with UPMC's long-suffering competitor, the Western Pennsylvania Allegheny Health System (recently renamed "Allegheny Health Network"). Their current contract doesn't expire until the end of 2014, but already, UPMC is airing ads which depict a nightmare scenario for patients unless it is allowed to terminate the deal.

But a bipartisan pair of lawmakers are hoping to intervene — on terms that arguably represent a worst-case outcome for UPMC.

A week ago, state Rep. Jim Christiana, a Beaver County Republican, began circulating a "sponsorship memo" urging legislators to sign onto a bill he plans to cosponsor with State Rep. Dan Frankel, a Squirrel Hill Democrat.

The bill's final language has not been drafted. But the memo suggests that at its heart, the legislation will "[r]equire hospitals operating as part of an integrated delivery network to contract with any willing insurer." Put in simple language, the bill would put an end to UPMC's very publicly stated desire to terminate Highmark's network access at most facilities. (The bill would also require Highmark to contract with UPMC Health Plan customers, but Highmark has already stated a willingness to do so.)

And if Highmark and UPMC can't come to terms on a long-term contract, the memo says, the legislation would require them to submit to mandatory binding arbitration.

Another provision of the bill, the memo says, will prohibit healthcare providers "from using contractual provisions and engaging in business practices that impede the availability of quality health care at affordable prices and that restrict access to facilities or services." That's a reference to UPMC's hostility to "tiering" — a practice in which insurers offer plans charging different rates for access to different healthcare facilities. UPMC has warned that such practices "amount to a classic bait and switch," in which Highmark could lure customers in by offering UPMC services on paper, but then use steeper rates and copays to dissuade them from actually seeking treatment there.

Frankel, though, says tiering is a market-driven way to rein in costs — and that it could help end "the kinds of abuses I've seen." (For example, he says, the practice of moving surgical procedures to "specialty" hospitals like Magee, and then charging more for the same treatment.)

Frankel's bill, at least in the near term, would be a boon to Highmark, who has made no secret of its need to contract with UPMC. Losing in-network access to UPMC facilities, especially when its own fledgling network is struggling to get its feet, would put Highmark at risk of losing much of its customer base.

Frankel admits that the bill seems pointed at UPMC's heart; UPMC officials "haven't been happy with me for a long time," he says. But he points out that its provisions will apply to Highmark's Allegheny Health Network as well — especially if AHN gets powerful enough to start considering adopting some of UPMC's tactics itself. "Hopefully, this would be a rein on them down the road too."

Frankel says the bill is likely to be drafted by mid-September; the House goes back into session Sept. 23. And the fact that its earliest backers include a Democratic and Republican "sends a message," he adds. "This shouldn't be a partisan issue."

Republican support for any legislation is essential. Both houses of the legislature are controlled by Republicans, as is the governor's mansion.

This would not be the first time Frankel has joined in a bipartisan effort to referee a dispute between UPMC and Highmark. In 2011, he joined Republican state Sen. Randy Vulakovich — then a state Representative — in cosponsoring a bill that also would have forced the two giants into binding arbitration. That measure, HB 2052 passed the House overwhelmingly. And while it died in the Senate, it arguably fulfilled its purpose. While acknowledging that interfering in a business dispute went against the grain for a Republican, Vulakovich told City Paper at the time that he hoped the bill would help Gov. Tom Corbett broker a deal between the two. Sure enough, in late 2011, the two parties — with Corbett's encouragement — reached a settlement extending the terms of the contract through 2014.
That track record would seem to bode well for this year's initiative, although circumstances may be different this time around. For one thing, UPMC has pledged to keep Highmark customers in network at rural hospitals where there are no competing providers. That's a change from last go-round, when public officials in rural areas that only had UPMC worried they'd be collateral damage for a battle being waged for dominance in the city. Without such a threat this time, rural Republicans may feel they have less stake in the battle Too, Gov. Tom Corbett recently named as his chief of staff the wife of UPMC's top lobbyist

We'll see whether the political landscape has changed in the next couple months. As Frankel says, "The issue hasn't reached the same crescendo as last time." At least not yet



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