A bitter contract dispute between the dominant hospital system in Pittsburgh and the region's largest insurer may foreshadow similar fights across the country, as health systems and insurers increasingly move into each other's territory.
The contract between UPMC, a not-for-profit health system that runs 22 hospitals and has a large insurance arm, and Highmark, a Blue Cross and Blue Shield insurer serving 4.2 million members in Pennsylvania, expires at the end of 2014. UPMC says it will not renew the agreement because Highmark purchased a regional health system in 2013 and is now a competitor. If the contract ends, Highmark members are expected to face high out-of-network costs for seeing UPMC doctors.
The deadlock shows no signs of easing. “The fiduciary duty of UPMC's board is not to allow management to enter into a contract that would diminish all the great things that UPMC does for this community,” said Paul Wood, a UPMC spokesman. “As long as Highmark has a vested interested in shifting patients from where they would prefer to go—UPMC—and into their own hospital system, there cannot be a contract.”
But last week, Allegheny County announced it would continue its contract with Highmark through 2015 for its 6,700 employees, regardless of what happens in the contract dispute. County Executive Rich Fitzgerald said in a written statement that he hopes this “makes it clear to UPMC that we want to see a contractual relationship between these two organizations.”
Similar decisions by other major employers could increase pressure on UPMC to reach an agreement. According to Highmark spokesman Aaron Billger, “there are numerous large, fairly prominent accounts in the marketplace that will be doing the same. They're not public yet.” Highmark must also contend with the ongoing turnaround of its provider network, Allegheny Health Network.