Kris B. Mamula- Pittsburgh Business Times

The University of Pittsburgh Medical Center has mobilized a “disinformation campaign” to derail Highmark’s plan to become a health care provider, the insurer charged on Monday.

Highmark is trying to acquire the ailing West Penn Allegheny Health System, a deal that’s undergoing review by the state Insurance Department. The review bogged down Feb. 22 with the department’s request for a raft of new information, nine weeks before the expiration of Highmark’s affiliation agreement with WPAHS.

“The reason for UPMC’s actions is clear: UPMC views a Highmark-WPAHS affiliation as a threat to its monopolistic power in the western Pennsylvania health care market and to its ability to maintain pricing at levels that are detrimental to affordable health care for people in the region,” Highmark said in statement. The insurer has the fiscal wherewithal to complete the transaction without jeopardizing its ability to pay claims – the insurance department’s primary consideration.

Also on Feb. 22, UPMC issued an analysis of the Highmark-WPAHS deal, a document that Highmark Chief Legal Counsel Tom VanKirk believed had been widely distributed. UPMC officials have said the document was being provided “upon request” to community leaders, legislators and others.

Creating the provider network envisioned by Highmark will cost $2.4 billion, according to UPMC, well above the $1.6 billion Highmark estimate contained in Insurance Department filings. UPMC called the insurer’s transition a “remarkable and extremely high-risk commitment.”

Highmark CFO Nanette DeTurk expressed confidence that the Insurance Department’s review could be completed before the acquisition agreement expires April 30. Most recently, the department requested financial projections from Highmark if a provider agreement is reached with UPMC.

Highmark’s provider agreement with UPMC expires Dec. 31, 2014, and UPMC has said it will not be renewed, but Highmark continues to press for a new contract. Without a new agreement, UPMC doctors and hospitals are out-of-network for Highmark members.

Highmark has already provided in-network projections sought by the department, DeTurk said, and the Blues affiliate will provide additional information as requested by the March 8 deadline.

“UPMC’s recent efforts to defeat the Highmark-WPAHS affiliation come against a backdrop of UPMC’s own recent declining financial performance,” Highmark said in the statement. “The mere threat of meaningful choice in the market has forced UPMC to behave more rationally in pricing its insurance and health care products, which has had a negative effect on its bottom line.”

“In the second half of 2012, UPMC saw its operating income decrease by over 60 percent from the prior year.”

UPMC has never been opposed to Highmark’s acquisition of WPAHS, spokesman Paul Wood said.

“It’s not going to be a bad thing for UPMC necessarily, but it may not be the best thing for the community,” he said. “It seems Highmark is making its own future financial viability the central issue.”

“If UPMC is accessible to Highmark subscribers, West Penn is certain to fail,” he said. “If UPMC is not accessible to Highmark, Highmark will lose membership and put itself at significant financial risk.”

Highmark filed the statement with the insurance department, governor’s office and state and federal elected officials. Copies were also emailed to all WPAHS employees on Monday.

Highmark outlined plans for an accountable care alliance with community hospitals, which will provide value-based incentives for reimbursement and result in better coordinated care. The initiative could result in 20 percent of services now provided by UPMC to be shifted back to community hospitals “where they belong.”

Jefferson Regional Medical Center, for example, could expect to improve its net operating margin by more than $25 million, Highmark said. The insurer has announced plans to acquire the Jefferson Hills hospital system.

Highmark officials have said a reinvigorated WPAHS will draw an additional 20,000 patients – a number UPMC has said will come at the expense of community hospital admissions. But Highmark said that more than $3 billion worth of health care services have been shifted to UPMC from community hospitals in the region since 2007, according to its claims data.

Link: http://www.bizjournals.com/pittsburgh/news/2013/02/25/highmark-upmc-trying-to-kill-wpahs-deal.html?page=all