Pennsylvania AG sues UPMC, aiming to push healthcare giant into new deal with Highmark

Pittsburgh
Pennsylvania AG Josh Shapiro has waded into the ongoing dispute between UPMC and Highmark. (Getty/Joecho-16)

Pennsylvania’s attorney general has filed suit against healthcare giant University of Pittsburgh Medical Center (UPMC), questioning whether it has adhered to the state’s charity laws as its breakup with Highmark looms. 

In the lawsuit, AG Josh Shapiro argues that UPMC is not living up to its charitable obligations as a Pennsylvania nonprofit amid the ongoing spat. Shapiro said his office proposed modifications to the 2014 consent decree between the two parties that would resolve the state's concerns, which Highmark Health agreed to but UPMC rejected. 

Shapiro said during a press conference he is moving forward with legal action not to interfere in the physician-patient relationship but to help Pennsylvanians who “suffer from corporate greed.” 

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“UPMC could still change its mind,” he said. “They can still do the right thing and agree to these modifications, … but until then I have no choice but to act to protect Pennsylvanians.” 

RELATED: UPMC, Highmark breakup making it hard to do enrollment for seniors 

The drama between UPMC and Highmark over market share in both the payer and provider space in western Pennsylvania has been heated since 2011. That year, Highmark purchased what is now Allegheny Health Network to challenge UPMC in the regional provider market. 

UPMC also operates a health plan, and the dispute escalated to the point where both had excluded one another’s facilities from their health coverage. State officials stepped in to mitigate the situation in 2014, and both parties agreed to a consent decree that restored coverage. 

However, that decree is set to expire on June 30, which could potentially reinstate the exclusions on both sides. Highmark has agreed to pay for care at UPMC facilities through the end of 2019. 

In a statement emailed to FierceHealthcare, UPMC said that five years under the consent decree has provided ample time for patients in the region to prepare for the breakup this year. 

“During that period, the region’s insurance marketplace transformed from one of the nation’s most highly-concentrated and least competitive to one of the most competitive and pro-consumer markets in the nation, with some of the lowest costs available anywhere,” it said in the statement. 

RELATED: Pennsylvania insurers eliminate prior authorization for substance abuse treatment 

This extends to the Medicare Advantage market, UPMC said, which has been a key focus in the debate leading up to the end of the consent decree. 

Shapiro said, however, that part of the motivation for filing the lawsuit is that UPMC’s alleged behavior extends beyond the Pittsburgh and western Pennsylvania market. For example, he said the health system is withholding access to physicians in Williamsport, a town nearly four hours away in the eastern part of the state, for members of competing employer plans. Because UPMC is a nonprofit, and thus receives significant tax breaks and state funding, actions like these violate the bargain between the health system and state taxpayers, Shapiro said. 

"My office recognized that without legal intervention more people would be harmed as a result of UPMC and Highmark’s commercial competition,” he said. 

RELATED: Penn State Health, Highmark Health sign $1B value-based care network deal 

In a statement, Highmark confirmed its support for the modified consent decree but added that it does not intend to back down on its investments in Allegheny Health Network and expansion in the provider space. The modified agreement, Highmark said, is in the “best interest of the communities we serve.” 

“We’ve always believed that a level playing field should exist among health insurance companies and healthcare providers,” CEO David Holmberg said. “We believe that all health plans and health systems should compete based on their value to the consumer. We welcome working with all healthcare providers.”

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