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UPMC continues battle with Highmark

Provider, payer face-off in western Pennsylvania

The University of Pittsburgh Medical Center and health insurer Highmark have been engaged in contentious litigation for some time, amid a contract set to end in 2014, and now a series of advertising campaigns has brought Pennsylvania's governor into the debate.

The public attention comes as Pittsburgh-based Highmark is nurturing the newly-branded Allegheny Health Network, the five-hospital network created after the health plan's acquisition of the financially-beleaguered Western Pennsylvania Hospital, and a direct competitor with UPMC facilities. The 500-bed West Penn, Pittsburgh's first public hospital, is located within a mile of UPMC Shadyside, a 520-bed tertiary care hospital. Allegheny Health Network's Forbes Regional Hospital, in the eastern suburbs, is within a mile of UPMC East, a facility opened in 2012 with 156 private rooms, 140 medical beds and 16 ICU beds, and Highmark is also set to build a surgery center in a former shopping center nearby.

About 30 miles away, north of Pittsburgh, Highmark is building a 174,000 square foot medical mall, with medical offices, diagnostic and imaging services, a four-bay surgery suite, and retail outlets.

The competition also extends to the insurance side, as UPMC health plan is now the second largest health plan in western Pennsylvania and continues to grow, adding about 46,000 members during the recently-ended 2013 fiscal year. It currently serves about 468,000 commercial members. UPMC's health plan accounted for less than 10 percent of its revenue in the last fiscal year, a bit less than national insurers, while Highmark accounted for about 20 percent, Medicare accounted for 42 percent and Medicaid 15 percent, according to the organization's annual report.

The current public skirmish involves a contract extension between the two organizations, brokered by Gov. Tom Corbett, which comes to a close at the end of 2014. The University of Pittsburgh Medical Center has said it should expire, while Highmark has favored an idea several lawmakers are considering -- legally requiring integrated delivery network hospitals to contract with any insurer.

Corbett, a Republican from the Pittsburgh suburbs, recently directed the insurance and health departments to create an interagency task force to "monitor the ongoing communications and maintain the state's role in protecting consumers."

The friciton between UPMC and Highmark increased this summer, as UPMC filed a false advertising lawsuit against Highmark. UPMC Health Plan has also run media advertising recently, particularly to businesses.

In a press release, Corbett said he thought the advertising is "causing confusion" among consumers. He said his administration has been "directly involved in overseeing a transition to the new healthcare landscape developing in western Pennsylvania," and he urged the two organizations to focus on common goals.

"As non-profit entities with an obligation to their community, I expect that Highmark and UPMC will maintain a focus on their higher social mission, to responsibly serve the healthcare needs of thousands of western Pennsylvanians," Corbett said.

Meanwhile, UPMC Health Plan and Highmark are likely to be the largest health plans available for western Pennsylvania residents on the public insurance exchange.

Highmark is the nation's fourth-largest Blue Cross and Blue Shield-affiliated company, with about 5.3 million across Pennsylvania, Delaware and West Virginia, and diversified health business lines such as reinsurance, retail optical stores and now providing direct patient care.

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