UPMC sues Gateway Health Plan, claiming steep payment cuts

April 26--UPMC claims in a lawsuit that Gateway Health Plan underpaid UPMC hospitals by millions of dollars over the last four years for treatment the hospitals provided to people with Gateway insurance.

Gateway, which is partly owned by Highmark Inc., violated Medicare Advantage contracts when it cut payments to UPMC and other hospitals by 2 percent in May 2013 for seniors with the plans, according to a civil lawsuit filed Monday in Allegheny County Court.

The insurer also owes UPMC money for underpaying the hospital system for emergency department services from July 2015 to August 2016, according to the lawsuit.

Gateway insures people with Medicare Advantage and Medicaid managed care plans. Mercy Health System, based in a Philadelphia suburb, co-owns it along with Highmark. A Gateway spokeswoman declined to discuss the suit, saying only that Gateway's attorneys are reviewing it.

Gateway reduced payments to hospitals and doctors for Medicare Advantage patients by 2 percent in 2013 after the Centers for Medicare & Medicaid Services cut Gateway's payments by the same percentage, according to the suit. The federal government ordered CMS to reduce payments as part of broad spending cuts known as sequestration.

Gateway has said the federal government meant the cuts to be a "pass-through" to hospitals and doctors, according to the suit. UPMC disagreed, citing a CMS document that said the agency couldn't alter insurer-hospital contracts.

Like Gateway, Highmark reduced payments for Medicare Advantage patients following sequestration, according to the suit. A judge forced Highmark to pay about $5.75 million to a dozen community hospitals that filed a lawsuit over the reductions, the suit states.

Another judge sided with UPMC Altoona after the hospital sued over the reductions, according to the suit.

UPMC declined comment.

In July 2015, Gateway reduced what it paid to UPMC for non-emergent treatment services provided in emergency departments, according to the suit. Instead of paying UPMC based on the standard practice of paying more for more complex services, Gateway paid the lowest rate for any non-emergent services provided in emergency departments, according to the suit.

UPMC said in the suit that Gateway's unilateral change to its billing method violates a contract between the companies.

Gateway resumed paying the contracted amounts in August 2016 but has not reimbursed UPMC for the reduced payments before then, the suit states.

Wes Venteicher is a Tribune-Review staff writer. Reach him at 412-380-5676, wventeicher@tribweb.com or via Twitter @wesventeicher.

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