Highmark filed a lawsuit Wednesday against University of Pittsburgh Medical Center (UPMC) for allegedly overbilling the insurer by $300 million for cancer drugs. If Highmark wins, the case could be a "landmark and precedent-setting event" for insurers seeking to block providers from overcharging on procedures, medical billing expert Rebecca Reier told the Pittsburgh Post-Gazette.
Pittsburgh-based Highmark claims that UPMC has been engaging in "pricing manipulation" by charging overly expensive prices for oncology and cancer-related treatments. The insurer is seeking to recover the overbilled amount plus interest and will return the money to its members, Highmark spokesman Aaron Billger said, according to the Pittsburgh Tribune-Review.
The crux of the matter is that Highmark claims UPMC and three physician groups have been shifting the billing of cancer-related claims from a doctor's office service to a hospital outpatient service, which costs more. As a result, Highmark says, UPMC has "profited enormously" without increasing the quality of care it delivers, the Pittsburgh Business Times reported.
"Highmark is taking legal action in a continued effort to safeguard cancer patients from irrational billing practices," Billger said.
But UPMC says Highmark is breaching payment agreements that stipulate the two organizations will settle billing differences by way of arbitration, reports the Pittsburgh Post-Gazette.
UPMC spokesman Paul Wood said that Highmark's seven-hospital Allegheny Health Network bills for cancer treatments the same way UPMC does and that Highmark is trying to circumvent a court-approved consent decree between the two Pittsburgh-based healthcare giants by filing the lawsuit, according to Pittsburgh news station, WTAE.
"Highmark's latest lawsuit is not only a meritless attack on a reimbursement system Highmark itself designed and endorsed but also a blatant violation of the consent decree," Wood told WTAE.
This isn't the first time the two organizations have clashed. Last summer, UPMC filed a lawsuit against Highmark for an advertising campaign that UPMC claims had false advertising. Highmark allegedly advertised that UPMC hospitals were refusing to admit Highmark's members, denying care to thousands of people, FierceHealthPayer previously reported.
Highmark's lawsuit is on the leading edge of similar cases, said Alwyn Cassil, a health policy expert and consultant with Policy Translation in Silver Spring, Maryland. "Highmark appears to be at the forefront in confronting hospitals about these facility payments," she told the Tribune-Review.
"Changing the facility type from office to hospital-outpatient often results" in providers profiting from increased medication costs and facility fee differential, "without changing the nature or requirements of the service," Reier said. "In some circumstances, the Office of the Inspector General has considered this fraud."