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UPMC-Highmark battle for market domination rattles Medicare patients, politicians

October 12, 2018

State-funded health insurance helplines have been slammed in recent weeks by calls from thousands of elderly Western Pennsylvanians.

About six in 10 greater Pittsburgh callers since late August asked about the same underlying uncertainty: how UPMC’s feud with Highmark Health could impact their care and coverage come mid-2019, when a state-mediated consent decree between the two nonprofit health systems expires, said Bill McKendree, coordinator for the Allegheny County APPRISE program of the Department of Aging.

Many seniors report feeling confused and anxious.

They’ve received mixed messages from the competing, $6 billion nonprofit health systems, whose corporate leaders control insurance as well as provider arms.

Seniors don’t know whether they will be allowed -- or able to afford -- to, say, keep their Allegheny Health Network primary care doctor in Pittsburgh’s Squirrel Hill neighborhood and still get specialty care from a top oncologist at the Hillman Cancer Center at UPMC Shadyside.

“Seniors struggle to use our health care system as it is, because it’s not simple; it’s complicated,” said former state lawmaker and U.S. Rep. John E. Peterson, 79, of Pleasantville. “Now, they’re denying coverage to squash the competition.

“And who’s the loser? The senior citizens -- our most fragile, vulnerable people -- who are now more dependent on their health care than they’ve ever been in their life.”

A week before Medicare open enrollment begins for 2019, people who are 65 and older or are living with disabilities across Western and Central Pennsylvania find themselves unwittingly at the center of the latest chapter in a years-long “war” between UPMC and Highmark.

“I find it extremely troubling that these massive institutions have the power that they have,” Peterson said, “and now they’re fighting, and the seniors be damned.”

Observers point to the feud as an example what can transpire amid the extreme consolidation and near-monopolization of health care markets that’s on the rise nationwide.

Proponents of large, integrated systems say their greater size, resources and aligned incentives should lead to greater efficiencies, lower costs and better clinical outcomes.

But critics lament the loss of competition and hurdles confronting patients amid the race for market domination.

“It just looks like it’s a fight to the death, and it’s not obvious what can alter that; there’s no obvious way to improve the situation here in southwestern Pennsylvania,” said Martin Gaynor, an economics and public policy professor at Carnegie Mellon University and the former director of the Bureau of Economics at the Federal Trade Commission. “Greater Pittsburgh is the poster child for the rest of the country about what not to let happen to your health system.”

The latest clash of the region’s nonprofit titans -- a controversial prepay requirement that UPMC will impose on Highmark-insured patients next summer -- has reignited calls to action from local and state politicians for intervention.

“UPMC is trying to test the waters, and if they’re able to do it, it’s going to devour more and more of the market and cause a chain reaction,” said state Rep. Jim Christiana, R-Brighton Township. Christiana joined Allegheny County Rep. Dan Frankel, D-Squirrel Hill, in slamming UPMC’s prepay rule and calling on fellow lawmakers to muster “the guts” to intervene and come up with long-term solutions.

Out-of-network warning

Adding to the confusion of many seniors, last week, Medicare-qualified patients across the region opened their mailboxes to find UPMC postcards confronting them with a question: “After June 30, 2019, are your UPMC doctors and hospitals out-of-network?”

The mailer said that for anyone who enrolls in a Highmark Medicare Advantage plan, the answer is yes -- they will lose in-network access to most UPMC doctors and hospitals.

What’s more, if a Highmark-insured Medicare Advantage plan member seeks nonemergency care from UPMC providers on July 1 or later, he or she will have to prepay, in full, the cost of a treatment or procedure prior to scheduling it.

Partial payments and payment plans will not be accepted, and patients may be charged again should additional costs arise during treatment.

“It appears like UPMC is determined it just wants to crush Highmark, and they’ll do pretty much anything they can to do that,” Gaynor said.

The prepay requirement clashes with assurances from Highmark that members of two of its 2019 Medicare Advantage Plans -- Freedom Blue and Security Blue -- would be able to see out-of-network doctors through the end of 2019 for the same cost as in-network coverage via a “simple and straightforward” transition.

Highmark had pledged to cover the extra out-of-network costs for the second six months of the year so patients wouldn’t have to pay more to continue seeing UPMC providers next year.

“We want to make sure that whether you choose an in- or out-of-network doctor, Highmark will have you covered in 2019,” said Ellen Galardy, Highmark’s vice president of Medicare products. “Those out- of-network benefits can be used at any out-of-network provider.”

The confusion coincided with Monday’s release of the 2019 rates for Medicare Advantage plans nationwide, sending Highmark Health officials scrambling to get clarity over what they called a “highly unusual” prepay requirement.

UPMC says it has no obligation to treat Highmark members for non­emergency services once the consent decree ends. Officials described the prepay requirement as an accommodation for Highmark enrollees.

After patients pay their bills in full in advance and get billed for any additional costs that arise during treatment, “whether the insurer reimburses the patient is between the insurer and the patient,” UPMC wrote in a newly published “frequently asked questions” online post for patients.

Patients must schedule all appointments -- including followup visits -- through a centralized scheduling system and obtain cost estimates prior to treatment.

Squashing the competition?

The solution that UPMC officials recommend for Medicare patients who want to retain access to UPMC providers? Choose an insurer other than Highmark.

Members can retain full UPMC in-network access through UPMC insurance or plans by Aetna, Coventry, Cigna and United Healthcare, UPMC spokesman Paul Wood said. All providers still must accept traditional Medicare as well as privately offered Medigap supplemental coverage plans.”

The Pennsylvania Department of Insurance said it’s up to the federal Centers for Medicare and Medicaid Services to oversee Medicare Advantage plans. A CMS official could not be reached to discuss UPMC’s new prepay rule.

But federal law and CMS regulations do provide protections for consumers who enroll in Medicare Advantage plans, which are private alternatives to traditional Medicare with added benefits such as dental and vision care, hearing aids, home equipment and SilverSneakers exercise classes.

Rules prevent providers from forcing a patient to pay more than they would for treatment under a traditional Medicare plan issued directly by the federal government.

“Non-contract providers are required to accept as payment, in full, the amounts that the provider could collect if the beneficiary were enrolled in original Medicare,” CMS documents show.

Non-contract providers are subject to penalties if they accept payments from Medicare Advantage enrollees that are higher than what traditional Medicare plans charge.

“UPMC will follow CMS guidelines, charge the legally permissible Medicare rates and expect payment in full and in advance of services delivered,” Wood said.

Two hospitals will be exempt from the prepay rule and treated as in-network: Western Psychiatric Hospital and UPMC Children’s Hospital of Pittsburgh.

Aggression on both sides

The feud between UPMC and Highmark dates back years and reached a peak in 2014 when their longstanding commercial contract expired. The contract gave Highmark insurance customers in-network access to UPMC doctors and hospitals.

A state-brokered consent decree signed that year sought to smooth the transition and shield patients from the fallout, but the rivals clashed over its interpretation.

Four years later, not much has changed in terms of consumers feeling left in the lurch as UPMC and Highmark vie for patients and territory and move on aggressive expansion plans.

Peterson, the former congressman, said “the reason we are in this mess today is state government did not pay enough attention to what was happening between these behemoths.”

“State government failed us -- to allow them to become what they are: two warring giants,” Peterson said. “What’s happening in Pennsylvania puts a dark cloud over our health care future.”

During the height of the dispute, Highmark formed its own hospital system, Allegheny Health Network.

“They’d target one company, put them out of business and then target the next one,” Peterson said. “So that’s what put the fear of God into UPMC.”

Though the decree provided temporary assurance for patients, it did little too quell the corporate feuding. They’ve since each taken the other to court repeatedly over disputes about reimbursements, over-billing, cancer care, Highmark’s non-UPMC plans and the increasingly popular Medicare Advantage offerings.

Christiana said he fears the local health care marketplace is headed toward an oligopoly that threatens to limit options and access for consumers -- such as retirees who wish it’d be easier to see doctors within UPMC as well as Highmark’s Allegheny Health Network.

Christiana says he sees three possible remedies: a contract agreement between UPMC and Highmark, which seems unlikely amid the fierce rivalry; state intervention to encourage competition and address price control and marketplace fairness issues; or revisiting whether health care behemoths that operate similarly to their for-profit counterparts should be stripped of their nonprofit status altogether.

“If they want to run like Amazon, Google and Apple,” Christiana said, “they should pay taxes like Amazon, Google and Apple.”

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