- UPMC and rival Highmark have signed a 10-year contract allowing access to UPMC facilities for patients covered by Highmark, Pennsylvania's governor and attorney general announced Monday.
- The reconciliation comes less than a week before a deadline that would cut off Highmark insured patients from access to many UPMC facilities. The contract is effective July 1 so patients won't face any disruption in their care, according to Attorney General Josh Shapiro.
- The deal follows roughly four and a half months of legal battles and private discussions around the contract, along with ongoing legal action as the Pennsylvania attorney general's office accused UPMC of violating the state's unfair trade practices and public charities law.
UPMC and Blue Cross Blue Shield system Highmark have been on the rocks for years now as the two Pittsburgh-based companies vie for market share in Pennsylvania in a dispute reflecting broader disputes between providers and payers.
The two are the areas largest players. UPMC has 40 hospitals with 8,500 beds and covers 3.5 million members under its insurance, while Highmark covers 4.5 million members across Pennsylvania, West Virginia and Delaware.
Though the contracts between UPMC and Highmark were set to expire June 30, now Highmark customers can still use medical services for in-network prices at all UPMC-run facilities.
Shapiro took to Twitter to celebrate the victory for his office:
This momentous achievement is the result of 3 entities coming to the table w/ a vivid understanding of the best interest of the people + the region, putting all other differences aside.— AG Josh Shapiro (@PAAttorneyGen) June 24, 2019
Now, patients are no longer caught in the middle - power is returned to the consumer.
Highmark, UPMC and the then-attorney general last negotiated their contract in 2014: a five-year state-brokered consent decree allowing Highmark insured patients to receive in-network, low-cost services at UPMC.
Earlier this year, Shapiro accused not-for-profit UPMC of "corporate greed" and failing to meet its obligations as a public charity by refusing to agree to new terms with Highmark, which had already agreed to a modified arrangement. UPMC refused to agree to the modified contract which would, among other things, remove a majority of UPMC's board of directors and force the system to contract with any payer.
The state accused UPMC of withholding access to care for patients whose employers have contracts with rival health plans and refusing to negotiate payment terms with self-employed insurers. The integrated health system attempted a counter-suit but it was summarily dismissed by a federal judge.
UPMC reported a strong first quarter of 2019. Revenue spiked up 10% year over year to $5.1 billion from $4.6 billion in the first quarter of 2018, while net income almost doubled to $289 million compared to $97 million last year. However it continues to struggle with operating margin growth and expenses.
UPMC, looking to expand its market share, is in talks to acquire Cumberland, Maryland nonprofit Western Maryland Health System, a small system anchored by a 200-bed hospital.
Highmark's insurance division, coming off record earnings in 2017, saw operating results of over $500 million for the 2018 fiscal year.
Contract terms and conditions between UPMC and Highmark will be finalized over the next few weeks.