UPMC, Highmark reach 10-year deal for patient coverage

Jun. 24--UPMC and Highmark struck a truce Monday that will allow Western Pennsylvanians to maintain access to hospitals and doctors across both rival health systems for at least the next 10 years.

Pennsylvania Attorney General Josh Shapiro hailed the unexpected contract -- inked six days before UPMC and Highmark were scheduled to split insurance networks -- as "an historic, global deal."

"This deal goes beyond UPMC's specialty hospitals -- like Hillman and Children," Shapiro said while announcing the contract during a news conference at the Attorney General's Office in Pittsburgh's Strip District. "All UPMC hospitals and practitioners are now an option for Highmark's insured."

Prior to the deal, which takes effect July 1, UPMC and Highmark were scheduled to split networks next month, and Highmark-insured patients would have lost access to 11 hospitals and been forced to stop using UPMC doctors and facilities without confronting a controversial prepay-in-full rule.

June 30 split called off

The guaranteed access applies not only to Medicare-eligible and cancer patients but also to people of any age enrolled in most individual and employer-based plans within a 29-county region, including greater Pittsburgh and Erie. Blue Cross/Blue Shield patients who travel to the region also will be able to choose UPMC doctors or facilities for care, Highmark spokesman Aaron Billger said.

The boards of both UPMC and Highmark signed the 10-year contract early Monday morning, executives from both health systems said. The document, which was not made public, awaits final approval from the state Department of Insurance.

Gov. Tom Wolf attended Shapiro's news conference, which began shortly before noon. Officials from UPMC and Highmark did not.

Wolf said that his administration and insurance regulators had been striving to reach such a resolution "for many, many years, but it really took the concerted effort, the dedication of Josh (Shapiro) and his team to actually bring them together."

"In the end, they came up with their own solution," Wolf said. "They're still going to be competitors, but because of what the Attorney General did, they're still going to be accessible as they compete."

Highmark CEO David Holmberg said that "not every side got everything that they wanted, but the people of Pennsylvania, I think, got what they asked for, which is that the power be returned to the consumer."

Along with the contract, both systems agreed to drop active litigation against the other, officials from both Highmark and UPMC confirmed.

Highmark agreed to drop a lawsuit filed in 2014 that alleged UPMC doctors had overbilled Highmark Inc. for cancer drugs to the tune of $300 million.

"That's a good-faith effort on their part," UPMC spokesman Paul Wood said.

UPMC said it would end its involvement in an Alabama federal lawsuit alleging that Highmark affiliate Blue Cross/Blue Shield had been wrongfully denying access to UPMC patients.

"This is really a win for the patients," Wood said. "The patients are in control" and now can make health care arrangements "without being worried about being charged more to go to UPMC."

Shapiro's office will end its litigation against UPMC that was tied to a five-year-old consent decree between the two systems.

"Rather than spend the next couple of years working on litigation, we can spend the next couple of years working on innovation and driving the future of health care," Holmberg said.

'New spirit of cooperation'

The celebratory tone of officials on Monday was in stark contrast to months of bitter legal battles and accusations that the taxpayer-subsidized nonprofit health giants were not acting like the purely public charities they are.

Shapiro stood at the same podium in his Pittsburgh conference room more than four months ago, when he announced his office was taking legal action against UPMC and accused the system of violating public charities and consumer protection laws. A controversial prepay-in-full rule that UPMC announced in October was set to take effect on July 1, blocking access to 11 hospitals and UPMC doctors around the region for thousands of patients. In the first week of June, days before a two-day Commonwealth Court hearing in Harrisburg, UPMC announced it would drop the prepay rule for patients seeking oncology care through Hillman Cancer Center facilities and doctors and most Medicare Advantage patients.

A week later, a Commonwealth Court judge ruled in favor of UPMC by deciding that Shapiro could not change or extend the end date of a 2014 state-brokered agreement between the two health systems in the name of public interest.

Shapiro said UPMC had reached out about negotiating a resolution outside the courtroom prior to that June 14 ruling.

"That outreach set in motion intense dialogue over the past week, first between me and (CEO) Jeffrey Romoff of UPMC, subsequently, with David Holmberg of Highmark, and then culminated in talks with the three of us together," Shapiro said. "It was an honest and tough and productive dialogue about the steps we could take together to protect access to care, regardless of what the court might ultimately say."

UPMC had argued for months in court filings that it did not trust Highmark as a business associate and that Highmark had been steering patients away from UPMC while refusing to pay UPMC directly for out-of-network billing, prompting UPMC to turn to the prepay rule.

Wood said that UPMC's recent "victory in Commonwealth Court allowed us to put a lot of the legal issues behind us."

Shapiro said the 10-year contract signals a new era of "increased compromise and collaboration" between the competing systems.

"The Attorney General captured it pretty well today -- it's a new spirit of cooperation," Wood said.

Holmberg said the compromise further will enable Highmark not to worry about funding "duplicative services" or competing with UPMC in certain areas where it already has a strong presence, such as UPMC's lung transplant program for cystic fibrosis patients.

Access not guaranteed for everyone

The new, 10-year agreement applies to the vast majority of patients. It assures UPMC that Highmark will not charge patients on plans that accept UPMC any more than the market rates it charges for similar care provided by Allegheny Health Network.

Some patients still will not have access to both networks, including those who enroll in narrow or exclusive network plans, including Highmark's Medicare Advantage Community Blue HMO plan.

The agreement does not extend to patients elsewhere in Pennsylvania.

A contract for patients in Central Pennsylvania -- where both systems are expanding aggressively -- remains in place through 2025, Billger said. Regional centers in rural areas and other parts of the state also have their own contracts.

Bill McKendree, of Allegheny County's APPRISE program, a state-funded service that offers free guidance to seniors regarding health insurance coverage, said questions still are lingering for patients as officials await details on contract terms.

Last fall and winter, many patients switched plans reluctantly away from Highmark or severed ties with longtime doctors, and now may be stuck with the new insurance plan, even though the prepay rule won't be taking effect.

The 10-year agreement allows UPMC and Highmark both to reserve the right to create additional plans that exclude the other -- so long as every patient has access to at least one plan that includes access to both systems.

"We are thrilled at our office that we literally have a last-minute reprieve," McKendree said. "Let's take pleasure in this small victory tonight, and then we'll roll up our sleeves and begin digging through the muck and unanswered questions."

Highmark formed Allegheny Health Network in 2013 when Highmark acquired the former West Penn Allegheny Health System. The Attorney General's Office intervened when UPMC said it would not contract with an insurer that owned competing hospitals.

AHN now employs more than 19,000 people. It's the region's second-largest health care provider, behind Pennsylvania's biggest private employer, UPMC, which employs more than 85,000.

Both systems each took in more than $18.7 billion in operating revenue last year and continue to advance aggressive growth plans across Pennsylvania and into neighboring states.

Natasha Lindstrom is a Tribune-Review staff writer. You can contact Natasha at 412-380-8514, [email protected] or via Twitter .

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