Highmark- UPMC Contract Update

ACMS Officers have met with leadership representatives  from
Highmark, UPMC, and a number of community and business leaders to
discuss the potential impact of a termination of a contractual
relationship between Highmark and UPMC upon patients, physicians, and
the community.  Much of this has been publicly reported in the
media, but we want to keep you informed of ACMS actions.

To summarize these  meetings:

1) Highmark has stated that they would prefer to negotiate and come to
agreement on a new contract. They  believe that  meeting the
UPMC payment rates sought will result in significant increases in
premiums, and that employers will terminate benefit plans due to
expense.  Highmark views their acquistion /affiliation of WPAHS as
necessary to preserve alternatives to the UPMC network.

2) UPMC adamantly states that it will not sign a contract with
Highmark. With the investment/acquisition of WPAHS, UPMC considers
Highmark a competitor as an IDFS (Integrated Delivery and Finance
System). They see no option where they will sign a contract. ACMS
officers have stated that the Society concern is for the possible
disruption of patient-physician relationships and that ACMS is not
“picking sides.” However,  UPMC  considers the ACMS position
of encouraging a new contract as supportive of Highmark.

3) In the meetings with business group representatives:

They are concerned about the impact upon their employees, and their
businesses. The benefits administration process has in most cases
selected health insurers for the January-December 2012 year. Open
enrollment of employees generally occurs in October. Employers face a
potentially disruptive and expensive change in benefits if the the
systems become non participating in July of 2012. Employees may have
selected a program that will become less than what they had selected to
begin in January. Federal requirements for reporting and qualifying
benefits plans, most of which involve payroll deductions from
employees, will impose a great deal of administrative work and a
financial cost on those firms. They are also concerned about the
financial impact upon employees. Firms are evaluating possible
relocation of work from this area to other locations that are in
operation. Many are angry about a disruption that they did not have
time to plan for, and the potential negative impact upon their
finances, noting that many firms have had employment reductions and
that many employees have not received raises for the past three to four
years due to the recession.

They appreciate physician concern for their patients and recognize that
this will also create a challenging environment for physicians, who may
in the future have to chose a system or be excluded from a
system.  They support a competitive environment for both insurers
and systems/hospitals, believing that competition will spur lower
premium costs and increased focus on quality. Most will be seeking
multiple quotes from insurers for their business in 2012-2013.

4) The Allegheny Conference–the CEO’s of major Pittsburgh companies is
now engaging on this issue. They are “fact finding” now and will be
meeting with Mr Romoff and Dr Melani (both of whom serve on the
Conference Board).

5) Much is still unknown; there are many questions that have not been
answered and there are regulatory and legal issues to be resolved,
including litigation between all three entities  (Highmark, WPAHS,
and UPMC)

6) In meetings with business leaders, since so many questions have not
yet been answered, ACMS has advised “do not panic; wait for information
on possible transitions”. In most cases, larger employers will make
decisions regarding health insurance programs in early 2012.

7) Also, the PA House insurance Committee has scheduled a public
hearing on August 25. The PA Senate Banking Committee has scheduled a
hearing on September 13. ACMS has been invited to testify, or to submit
testimony, in both hearings. Individuals are also invited to submit
testimony: following is the information for the hearings:

House Insurance Committee
Thursday, August 25
9:30 am
Gold Room of the Allegheny County Courthouse (Pittsburgh)

Senate Banking and
Insurance Committee Hearing

Tuesday, September 13
1:00 pm
Ostermayer Room of the Student Community Center
Penn State Greater Allegheny Campus (McKeesport)


To submit written

25 hearing:
Submit to Kathy McCormick at kmccorma@pahousegop.com or
(717) 772-9808.

13 hearing:
Submit to Allison Dutrey at adutrey@pasen.gov or (717)
787-8724. Written testimony is due by September 6.

It appears unlikely that Highmark and UPMC will sign a new contract.
ACMS will focus on providing information to physicians to aid in the
transitions that may occur.

Please provide your thoughts on the ACMS role, and what the Society
might do to assist you.

Leo R. McCafferty MD FACS

Click here to view the testimony
submitted by the Society.


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Allegheny County Medical Society
713 Ridge Avenue
Pittsburgh, PA  15212
412-321-5030  FAX 412-321-5323