DeLuca Plans Legislation to Break Stalled UPMC, Highmark Talks

After hearing testimony at a House Insurance Committee hearing Thursday, state Rep. Tony DeLuca, D-Penn Hills, said he believes legislation will be necessary to break the stalled contract negotiations between Highmark Inc. and UPMC and ensure that western Pennsylvania residents continue to have affordable access to the health care provider’s 2,700 doctors and 20 hospitals.

"I plan on taking testimony from today back to Harrisburg to craft legislation so millions of western Pennsylvanians will no longer be caught in the middle of this dispute," said DeLuca, Democratic chairman of the House Insurance Committee. "We have to take action now, before residents are left with no coverage or incredibly expensive health care bills."

DeLuca, whose district includes , said he hoped Highmark and UPMC would remember their primary mission is to serve the health care needs of the community, but he believes that won’t happen because UPMC President Jeffrey Romoff testified his organization is done negotiating.

The contract between Highmark, which covers about 3 million people in western Pennsylvania, and UPMC, expires June 30. If the health care giants cannot come to terms, Highmark members would pay out-of-network rates for UPMC services. Those rates are four to five times more costly, and Pennsylvania Deputy Insurance Commissioner Randy Rohrbach said they are unaffordable. 

Negotiations between the nonprofits broke down this year when UPMC learned Highmark was trying to acquire the second-leading health care system in western Pennsylvania, West Allegheny Health System.

If the contract expires, there would be a one-year runoff where Highmark customers could access UPMC hospitals at in-network rates, but they would have to pay more costly out-of-network rates to see UPMC doctors. 

During testimony, the committee heard that a Pennsylvania law, Act 94, allows the state Insurance Department to take steps to extend the contract by an additional six months.

State Rep. Dan Frankel, D-Allegheny, questioned if legislation to improve Act 94, including mandating binding arbitration between the two providers, is needed. He also said there should be increased transparency so people know how rates are determined.

Lawmakers at the hearing peppered Romoff, Highmark President Kenneth R. Melani and Highmark Vice President Deborah L. Rice with questions as they sought ways to break the stalemate and create competition in the health care industry.

"The evidence seems to show the more power a provider has in an area, the more it grows rates and costs," Frankel said.

The committee also heard from representatives of the Pittsburgh Business Group on Health, the Allegheny County Bar Association and Service Manufacturing and Commercial Business Council about the impact of the impasse, and what could happen if they are unable to reach an agreement.

Christine Whipple, executive director of the Pittsburgh Business Group on Health, testified that many are trapped in the dispute.

"For many employers, benefit plans and options already have been determined for the 2012 open enrollment periods," Whipple said. "In fact, for a number of employers their decisions were already made before the contract dispute between UPMC and Highmark broke this spring. Employers were unable to make changes to decisions which had already been set in motion."

Two local attorneys also testified that solo practices are only able to obtain health insurance through Highmark. 

The committee is expected to hold additional hearings on this dispute.

Meanwhile, DeLuca urged residents to contact Highmark and UPMC to voice their concerns directly. He also said those with health questions should contact the state Insurance Department’s toll-free hotline at 1-877-881-6388.