Healthcare price war from a broker’s perspective

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Once UPMC began inking deals in January to grant major national insurers access to all its hospitals and physicians, insurance brokers for local businesses quickly saw an increase in inquiries and offers.

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“I’m telling employers to negotiate because this is the best year for employers in a long time,” said one broker, who asked not to be identified. “Everyone with more than 50 employees will see a discount, so will those under 50 employees—except those with Highmark. It’s keeping that rate the same.”

The reason for deals is competition. Cigna, United Healthcare, Aetna and HealthAmerica are now offering insurance packages that offer clients in-network access to both UPMC’s and West Penn Allegheny Health System’s hospitals and doctors.

Until recently, only Highmark customers had such access. And with UPMC saying it will not renew its current contract with Highmark, the big companies may be the only way for patients to access both.

Small businesses, however, can forget about one, and possibly two, of the national carriers. Cigna is only looking for clients with 250 or more employees, and United Healthcare only has one benefit plan for small businesses.

Still, that means when it comes time for businesses to renew, a broker can now offer four possible plans, instead of two. It also means price wars.

“Two weeks ago I had a client whose HealthAmerica plan was going up 29 percent,” said the broker. “After a competitive bid from Highmark, Health­America offered a 30 percent discount. So the client is now paying one percent less than last year.”

UPMC began granting this full access to the national insurers when they first suspected Highmark would purchase the rival WPAHS—which it announced it would do in June.

This coincided with contract renewal negotiations between UPMC and Highmark, which had stalled because UPMC was asking the insurer to increase its reimbursements by 40 percent. Following the purchase, UPMC said no contract would be renewed because it could not subsidize a rival health system.

But will UPMC’s business from the national firms make up for the loss of Highmark, even at the current contract rate? This broker doesn’t think so.

“UPMC is a regional insurer and provider. Highmark is a partner in Blue Cross/Blue Shield, so it’s national—you’re “in-network” everywhere. That’s why large firms with offices across the country have it,” said the broker. “Highmark covers 3 million employees and a lot use UPMC. That’s a lot of reimbursements to lose. They are banking on these big employers terminating with Highmark.”

Some of those big employers, the broker said, are staying with Highmark just because they don’t like UPMC’s tactics. UPMC is also slashing its plan prices to compete.

“I think they will have to make a deal, because without those Highmark reimbursements, I don’t think it can survive,” the broker said. “We’re seeing a price war. I can only say what I can do today. Tomorrow it may be different.”

(Send comments to cmorrow@newpittsburghcourier.com)

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