Highmark purchase of AGH prompts insurance war

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When Highmark announced it had agreed to invest $475 million into the struggling West Penn Allegheny Health System, it was cautiously hailed as a boon to the area, as it could maintain a competitive balance with UPMC and offer patients more options as to where they receive care.

“For consumers, we want to preserve their choices. For physicians and other health care providers, we want to ensure multiple patient referral options. This affiliation will help preserve those very options,” said Highmark President and CEO Dr. Ken Melani.

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IS THE DOCTOR IN?—Clients of Highmark insurance who enjoy access to UPMC doctors and hospitals could be forced to change insurance or find new doctors after June 30.

“In addition, $75 million that we will be contributing for scholarships for medical school students and other educational programs will go a long way in addressing the shortage of physicians in the region, and help us retain highly trained doctors to serve our community.”

However, almost instantly, UPMC announced that it would not be renewing its contract with Highmark if the deal passes all regulatory hurdles because it would essentially be supporting the rival hospital system. So, does that mean patients can keep their doctors if they keep the same insurance? Can they use either system’s facilities? Right now, the answer to those questions is yes. But that could change soon.For the 1.6 million area residents with UPMC insurance who never had access to WPAHS doctors and hospitals, the contract ending will not affect them. For the nearly 5 million insured by Highmark who want to retain access to UPMC, it may mean having to change carriers and possibly finding new physicians. Highmark spokesman Michael Weinstein said he was still hopeful that a new contract could be worked out, but even if not, its clients will continue to have access to UPMC doctors and facilities through June 30, 2013.

“We are continuing to look for common ground and a reasonable contract with UPMC, to preserve choice and options when selecting hospitals and physicians,” he said.

Paul Wood, spokesman for UPMC, said that is not correct. While patients would have access to the facilities the contract with Highmark doctors runs out in June 2012, which means patients would be charged at “out of network” rates.

“The time to think about this is now, because plans renew in November,” he said. “We’re fine with Highmark buying (WPAHS), but there will not be another insurance contract, there can’t be. There isn’t a business on earth that would subsidize its competitor.”

However, Wood added, UPMC patients will have more insurance options in the fall, because the system has for the first time contracted to grant access to all its facilities and doctors with national insurance giants Aetna, Cigna, HealthAmerica and United Healthcare.

“Insurance-wise, this probably makes Highmark the most limited system in town,” said Wood. “The (national insurers) are bidding on business they couldn’t before. All of us are competing now.”

As this has unfolded, politicians have begun to insert themselves into the Highmark/UPMC dispute. First, Insurance Commissioner Michael Consedine threatened to intervene. Then, last week, a group of state legislators did the same, but they admitted they have no legislative solution.

As for the $475 million infusion to WPAHS, it will not reverse any of the changes made last year when 1,500 jobs were eliminated and, with the exception of its bariatric surgery program, the burn unit and inpatient rehabilitation services, all West Penn Hospital surgical services were moved to Allegheny General on the North Side. West Penn’s emergency closed in January.

WPAHS is comprised of five hospitals, including Allegheny General Hospital on the North Side, West Penn Hospital in Bloomfield, Allegheny Valley Hospital in Natrona Heights, Canonsburg General Hospital in Canonsburg, and Forbes Regional Hospital in Monroeville.

The UPMC system includes 15 hospitals; among them are Children’s Hospital, Magee-Women’s Hospital and Western Psychiatric Institute and Clinic.

(Send comments to cmorrow@newpittsburghcourier.com.)

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