Highmark Blue Cross to Buy West Penn Allegheny Health Insurer Plans to Employ Doctors Rather than Negotiate Fees

Highmark Blue Cross to Buy West Penn Allegheny Health

Insurer Plans to Employ Doctors Rather than Negotiate Fees 

Highmark Blue Cross Blue Shield announced in June that it plans to purchase West Penn Allegheny Health, one of the region’s biggest hospital systems known as the institutional home of the Temple University School of Medicine.  

The acquisition, officers say, provides the insurer an opportunity to replace negotiated fees for services with an employment-based model that pays doctors salaries.  The company seeks higher quality and efficiency through greater control of patient care, which it believes will allow it to shrink unnecessary and duplicate services.  Primary care physicians will coordinate patient care and encourage preventive health practices.

The announcement added hot sauce to an already bitter argument between Highmark and the University of Pittsburgh Medical Center (UPMC), a large integrated hospital network, over rates Highmark pays UPMC hospitals and its physicians for medical care. West Penn Allegheny Health, which Highmark plans to acquire, is UPMC’s largest competitor in the Pittsburgh area.  Current Highmark contracts for most UPMC hospitals expire June 30, 2012.  Negotiations between Highmark and UPMC broke down in March.
 
In mid-July, Highmark filed a lawsuit against UPMC and most of its hospitals claiming that UPMC breached its contract and aired misleading advertisements against Highmark.  Highmark accuses UPMC of seeking excessive rate increases, and UPMC claims that it cannot work with Highmark now that the insurer has announced plans to purchase UPMC rival West Penn Allegheny Health System.

Physicians and others watching the acquisition talk – and the impasse between Highmark and UPMC – fear damage to healthcare in Pennsylvania from a dispute intensified by Highmark’s plans.

What will a merger do to affected physicians, who lose control over how much they may work and earn?   How will this affect patient care?

In the state senate, Pennsylvania’s political leaders are thinking about intervening in the contract standoff.  On July 18 two Republican state senators, Don White and Kim Ward, called for hearings on Highmark and UPMC to determine Pennsylvania’s regulatory role in the conflict.

"I'm not picking a side in this dispute," Ms. Ward said in her statement, "but I am asking them both to get back to their mission of taking care of the people of southwestern Pennsylvania who depend on them for their healthcare."

Mr. White's staff said at least some of the hearings would be held in Pittsburgh.  None have been scheduled as yet.

For now, all observers can do is to watch and wonder – as do we all.