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UPMC vs. Highmark - What it Means for Western Pennsylvania Residents

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UPMC's Position

UPMC opted to end its hospital and physician contracts with Highmark after the insurer announced plans to acquire West Penn Allegheny Health System, the region's second largest hospital group after UPMC. UPMC president and CEO Jeffrey Romoff has stated on many occasions that UPMC won’t renew its contract with Highmark when it expires in June, and according to Pittsburgh Post-Gazette reporter Steve Twedt, Romoff said of concern about unfair competition from West Penn Allegheny Health System.

While UPMC refuses to negotiate with Highmark over new contracts, they have added or expanded coverage with several other national insurance carriers, including Aetna, CIGNA, HealthAmerica and United HealthCare. They also plan to add an option for individual subscribers to their own UPMC Health Plan by January 2012, pending government approval. Highmark subscribers will still be able to use UPMC physicians and hospitals after the final expiration of the contract and any extensions, but will be personally responsible for the difference in cost between in-network and out-of-network rates.

For Further Information:
Keep Your Doc Campaign - UPMC Patient Care Assurance Plan - UPMC
Better Health Care in Pittsburgh: An Update on Why UPMC's Stance Will Improve the System by Tom McGough, senior vice president and chief legal officer of UPMC (Pittsburgh Post-Gazette)

Highmark's Position

In June 2011 Highmark and the West Penn Allegheny Health System announced plans to pursue an affiliation with the goal of saving and revitalizing West Penn Allegheny, the apparent final blow to contract negotiations with UPMC. Prior to that, Highmark claims that UPMC was "demanding a 40 percent hike in payments," which would "translate into a $400 million increase in health care expenses."

Highmark's FAQ stated that "Highmark members will continue to be covered for UPMC services through June 30, 2013. Although Highmark’s current contract with UPMC expires on June 30, 2012, under the terms of the contract, our members will continue to have access to UPMC hospitals and physician services through June 30, 2013." It is important to note here that this statement does not say that members will continue to have in-network access, meaning that Highmark subscribers could potentially be responsible for the difference in cost between in-network and out-of-network services (up to 4 to 5 times higher).

Update: June 2013
Highmark and UPMC ultimately extended their contract, which is in place until December 2014. However, in June 2013 UPMC announced that they do not plan to extend or renew their contract with Highmark.

Where It Stands

Contract negotiations between UPMC and Highmark have ceased, but many feel the state and local governments have the right to step in and demand that the two "non-profit" corporations work together to find a solution given both the potential impact on area residents, and the non-profit tax breaks and other money that residents of Western PA have contributed to UPMC and its facilities. Contracts with most UPMC hospitals and doctors could cease effective June 2012, but the PA Insurance Department and/or other legislation could potentially delay this deadline until at least April 2013.
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