UPMC-Highmark feud prompts company to drop insurer

Erie Indemnity Co., an Erie, Pa.-based company that provides automobile, home and life insurance, has decided to drop Highmark as the health plan for its 4,600 employees because of the ongoing blood feud between insurer Highmark and hospital giant UPMC. Its decision could be a harbinger of what other Western Pennsylvania employers will do next year as they seek to find shelter from the fallout of the battle.

Erie will switch to UnitedHealthcare, the largest health insurer in the country. Becky Dudenhoeffer, vice president of company benefits, said in a memo the change will go into effect Jan. 1. “The ongoing UPMC-Highmark dispute in western PA has concerned many of our employees,” according to the memo. “As members of the UnitedHealthcare network, employees will no longer have to worry that they would be restricted to either Highmark or UPMC providers.”

This month, Highmark and UPMC outlined terms of a government-brokered agreement. Effective Jan. 1, the contract between UPMC and Highmark expires. Although seven UPMC hospitals and thousands of UPMC-employed specialists will still be considered in-network for Highmark members, UPMC's six major hospitals and doctors who perform procedures there will be out of network.

Erie is not the first employer to drop Highmark recently. Last year, Westinghouse Electric Co., based in Cranberry Township, Pa., just north of Pittsburgh, switched from Highmark to Aetna.

Follow Bob Herman on Twitter: @MHbherman