Pittsburgh-UPMC relationship gets new bruise [Pittsburgh Post-Gazette]

June 20--If you work for the city of PittsburghUPMC Health Plan.

UPMC Health Plan, the insurance arm of the UPMC hospital and physician network, is out of the running when it comes to being the health benefits carrier of choice for the city's 3,400 employees and their kin starting next year.

"UPMC decided not to bid. We did not believe we could get a fair shake from the current administration," spokesman Paul Wood said.

The non-bid represents another bit of fallout from the meltdown of the relationship between UPMC, which is the region's largest employer, and the city of Pittsburgh, which filed a lawsuit earlier this year challenging the massive hospital network's nonprofit status.

Historically, the city's health care business has been in play every few years; as one of the top 20 employers in the region, its business is sought after.

And from the 1990s through 2007, the contract was divvied up, because the city offered a choice to its employees among Highmark, UPMC Health Plan and HealthAmerica. In previous years, Aetna was also in the mix.

But starting in 2008, Mayor Luke Ravenstahl's administration decided to go with a single provider, Highmark Inc. The three-year contract would save the city $17 million over the duration, the mayor's office said at the time, because the Pittsburgh insurer offered a pricing discount in exchange for the guaranteed book of business.

UPMC and HealthAmerica had joined forces to submit a rival proposal, but that proposal was rejected.

The city's health benefits contract again came up for bid in 2010, for the three-year period running from 2011 through 2013. The city again chose Highmark, at a projected cost of about $132 million over three years (in 2013 alone, the projected cost of health benefits for city employees and retirees is $50 million, making it one of the largest line items in the city budget).

This year, bids were due April 15 for a benefits period beginning in 2014 and running through the end of 2016. The city received four bids.

While the selection of Highmark as the city's exclusive benefits provider might have been a benign event in 2007 and 2010, the stakes are higher in 2013.

That's because of the impending split between Highmark and UPMC. UPMC's board of directors has said it does not plan to enter a new contract with Highmark when the current deal between the two expires at the end of 2014.

If that threatened divorce is carried out, Highmark customers would no longer have access to most UPMC facilities, practices and physicians, with the exception of certain speciality and regionally isolated hospitals.

If the city again selects Highmark as its sole insurance provider, UPMC could lose thousands of customers starting in 2015. Additionally city employees would lose the universal access they now enjoy, and their ability to visit all of the region's health practices.

Most of the city's employees get their coverage through the master insurance agreement, as do their spouses and families -- about 7,900 covered lives in all, said Judy Hill Finegan, director of the city's Personnel and Civil Service Commission.

While Highmark is the incumbent and presumed front-runner, Ms. Hill Finegan said there no guarantee that the insurer will be the sole winner of the city's contract in 2014.

When the city sent out bid solicitations this spring, one of the questions asked of would-be bidders was whether they'd be open to a multi-carrier arrangement, again giving employees a choice among health insurers.

The majority said they would be willing.

"We're not limiting ourselves," Ms. Hill Finegan said. Access to quality care is "an issue for our families. It's an issue to our employees."

Her department is still reviewing the bids, she said. When the review is over, the city may invite select bidders to make a presentation to the city, and will ask the insurers for their "best and final offer."

The city hopes to select a bidder, or bidders, in the next two months, in time to prepare for the open-enrollment period that starts in the autumn.

Ms. Hill Finegan did not reveal the bidders, but in addition to Highmark, national insurers Aetna, Cigna and United Healthcare all have open access to the UPMC network and are seeking to build business in the Pittsburgh region. (HealthAmerica, owned by Coventry, also signed an access deal with UPMC, but Coventry has since been purchased by Aetna.)

Joe King, president of Fire Fighters Local No. 1, said the unions representing city workers are examining the prospective split between UPMC and Highmark, and its effect on the city's health benefits package.

"We're just looking through all the alternatives," Mr. King said, and bracing for lots of queries from membership. When an employee has an issue with benefits or doctor access, he or she will often contact the union before reaching out to the city or its health insurer. "We become the customer service representative," he said.

City Councilman Bill Peduto, the Democratic mayoral nominee in the November election and presumptive favorite to replace Mr. Ravenstahl in 2014, said that he couldn't comment about the city's 2014 health plan until he meets with the city's personnel department sometime in the next two weeks.

Bill Toland: btoland@post-gazette.com or 412-263-2625.

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