Broadening the stakes in a long-running battle, the Hospital Association of Pennsylvania has joined UPMC in challenging the state attorney general's effort to force UPMC to keep its provider network open to Highmark Health and other health plans.
In its motion Monday to intervene in UPMC's federal lawsuit, the hospital association said Democratic Attorney General Josh Shapiro has proposed a plan that would potentially force all not-for-profit hospitals in the state to do business with any insurer regardless of payment or other contract terms.
HAP said the proposal would violate federal law on Medicare Advantage plans and would destabilize hospitals financially.
"This new healthcare regime, hastily imposed through litigation, will force cost cutting over improving quality and outcomes," warned HAP CEO Andy Carter in a written statement.
These legal skirmishes are the latest moves in the bitter battle that began in 2011 when Highmark became UPMC's competitor in the Western Pennsylvania hospital market. The two powerful integrated systems have moved to establish exclusive plan-provider networks.
But now the ripples are spreading to the rest of the state's hospitals and health plans. The attorney general's requirements would ostensibly apply to all not-for-profit Pennsylvania providers, the Hospital Association of Pennsylvania said in its motion to intervene.
"Failing a meeting of the minds between the provider and the insurer, a panel of arbitrators—the majority of whom will have strong incentives simply to adopt the lowest rate proposal without regard for quality or innovation—would then impose contractual and payment terms on unwilling healthcare nonprofit providers," HAP argued.
Last month, UPMC sued to block Shapiro's effort in state court to require UPMC to continue making its network available to Highmark Health enrollees after a five-year consent decree between the two systems expires on June 30, 2019. It called Shapiro's actions "anti-competitive," "irrational" and in violation of UPMC's federal due process rights.
Shapiro argued in Commonwealth Court that UPMC has violated its charitable obligations to the state. He wants the court to enable open and affordable access to UPMC's provider network through negotiated contracts; require baseball-style arbitration if negotiations fail; and bar UPMC from engaging in excessive and unreasonable billing practices. He also seeks to replace UPMC's and Highmark's boards.
In a Dec. 14, 2018 letter to UPMC's and Highmark's CEOs, Shapiro's office wrote that "if we reach agreement with you on a modified consent decree, we will announce that the consent decree embodies the principles we expect to apply to all nonprofit charitable health systems."
UPMC, which owns more than 30 hospitals and a health plan, objected to the attorney general's petition last month to extend the 2014 consent decree indefinitely. It said the five-year transition provided by the decree has allowed businesses and consumers adequate time to prepare for the end of the UPMC-Highmark relationship in Western Pennsylvania.
Highmark, which owns eight hospitals and a large health plan, backs Shapiro's proposal to extend the consent decree.
Highmark also supports applying the attorney general's proposed contracting rules to all not-for-profit providers in the state, and is committed to having its own hospitals negotiate in good faith with all health plans, said spokesman Aaron Billger.
"Our board of directors affirmed that every patient has a fundamental right to seek and receive treatment from the physicians and hospitals of the patient's choice, and that every charitable, tax-exempt organization has a fundamental obligation to ensure that the community has open access to assets that the community has funded and supported," Billger said.
Shapiro alleged last month that UPMC has withheld access to its physicians in Williamsport for patients whose employers have contracts with a competing health plan and refused to negotiate reasonable payment terms with self-insured employers. In addition, he alleged UPMC requires out-of-network patients to pay all estimated charges up front and in full before receiving treatment for non-emergency services.
UPMC will end its in-network coverage of Highmark's Medicare Advantage members in June.
Siding with UPMC, Pennsylvania Senate Republicans filed a motion earlier this month in the state court case accusing Shapiro of usurping the Legislature and violating the state constitution in seeking to set contracting rules for UPMC.
Shapiro's spokesman, Joe Grace, said "we're very confident in our position. We look forward to making our case on behalf of healthcare consumers who are getting an unfair deal from UPMC."
UPMC alleges in its federal suit that Shapiro has singled it out for enforcement of the state's charitable obligation laws while ignoring other providers, in violation of equal protection laws.
The attorney general's proposal to apply the new contracting rules to all not-for-profit providers could be an effort to cure that possible equal-protection problem, some observers believe.
Stuart Fine, an associate professor of health administration at Temple University, said Shapiro also may be trying to "leverage providers across the Commonwealth in an effort to force a 'voluntary' compromise between warring Highmark and UPMC."
Clarification: The original headline on this article omitted a reference to the state attorney general.
