Written by Michael A. Cassidy, Esq.
History of Transaction
The United States District Court for the Western District of Pennsylvania entered a Final Order on March 23, 2016 approving the acquisition of Jameson Hospital in New Castle, Pennsylvania by UPMC. The Pennsylvania Attorney General’s Office has obviously been paying attention to the disruption and turmoil caused by the Highmark/UPMC dispute in Western Pennsylvania, because the conditions, presumably extracted by the work of the Attorney General and contained in this final order appear to be more thorough and more protective of the third parties, both with respect to access to patients but also with respect to the contracting opportunities for other health plans and independent physicians.
As many of you know, Jameson and UPMC initiated discussion several years ago, but any merger or affiliation at that time was blocked by the Pennsylvania Attorney General, and Jameson was instructed to first seek other suitable white knights. With none forthcoming, the Jameson/UPMC discussions resumed, and the acquisition has now been approved, but subject to the following conditions.
- UPMC Jameson and physician practices controlled by UPMC shall remain accessible to the population of Lawrence County.
- UPMC agrees that Jameson will remain open as an accredited acute care hospital for at least 10 years. There are specific additional provisions contained in the final order.
Third Party Commercial Payors
- UPMC shall maintain existing payor contracts, identified as existing Jameson Payor Contracts, until the end of the current terms of those contracts and, for contracts that are annually renewable, for at least one additional year, excluding termination for just cause.
- UPMC Jameson shall offer the opportunity for 10 year contracts to those third party payors with existing Jameson Payor Contracts, with the following reimbursement provisions:
- Payment terms for the first 5 years of those contracts shall be the existing rates for that portion of the existing term included within the first 5 years and to be adjusted in accordance with inflation thereafter as defined in the Final Order.
- Payment terms for the 5 ensuing years shall be subject to good faith negotiation and, failing resolution through negotiation, Single Last Best Offer Arbitration as defined in the Final Order.
- UPMC shall not condition any health plan contract for hospital services at UPMC Jameson or for physician services from a UPMC physician practice or a health plan’s agreement not to contract with any other health care provider.
Perhaps the best development from the physician perspective gleaned from the earlier contractual dispute is enhanced general awareness of the impact of health plan contracts and medical staff requirements on private practice physicians.
- UPMC shall not prohibit independent physicians who are members of any UPMC affiliated physician hospital network in Lawrence County from holding privileges at a non-UPMC hospital or from participating in any other physician hospital networks, health plans or integrated delivery systems.
- UPMC shall not require a health plan to contract for the services of all or certain UPMC health care providers in order for that health plan to obtain a contract for services at UPMC Jameson or at UPMC physician practice located in Lawrence County.
- If the UPMC health plan includes an independent physician practicing in Lawrence County in it’s network of participating physicians prior to the closing, it may not terminate such physician as a participating UPMC Health Plan physician for a period of at least 3 years after the closing solely because that physician is not employed by UPMC, Jameson or UPMC Jameson, provided such physician meets all of the other requirements to be a participating physician in the UPMC health plan.
- UPMC Jameson shall maintain an open medical staff for all qualified physicians as set forth in the current Jameson Medical Staff Bylaws for at least 10 years from the closing.
- UPMC shall not condition continuing or granting medical staff privileges at UPMC Jameson upon a physician’s agreement not to practice or refer to patients to another health care provider or participation in UPMC health plan.
- UPMC shall not revoke the privileges of any physician at UPMC Jameson solely because that physician is employed by a health system other than UPMC.
- UPMC Jameson shall not require any patient to obtain DME, transportation, or Home Health Services from a UPMC affiliated provider.
All of these additional physician protections are significant improvements from the Consent Decrees entered into between UPMC and Highmark to resolve that contractual dispute. Furthermore, they should give pause to any hospital that attempts to condition medical staff access upon loyalty or non-competition requirements