Senators Vulakovich & Costa Introduce Legislation to Resolve UPMC-Highmark Contract Dispute

State Senators Randy Vulakovich (R-40) and Jay Costa (D-43) announced today (March 24) during a press conference in the Allegheny County Courthouse that they have introduced legislation intended to resolve the ongoing contractual dispute between UPMC and Highmark.

UPMC and Highmark currently have a contract that expires on December 31, 2014.  At that time, individuals with Highmark health insurance could be denied access to UPMC facilities or be forced to pay higher out-of-network expenses.  The bipartisan legislation introduced by Senators Vulakovich and Costa would require institutions like UPMC, Highmark Health (Allegheny Health Network) and the Geisinger Health System — which are considered “Integrated Delivery Networks” (IDN) that operate hospitals and doctors as well as provide insurance — to contract with any willing insurer.

“I believe there are strong consumer protection and public policy reasons for adopting this legislation,” Senator Vulakovich said.  “By requiring hospitals and physicians operating as part of an IDN to contract with all insurers, consumers will not be denied care, or worse, abandoned mid-treatment simply because they hold one type of insurance over another. This legislation will also eliminate the ability of any dominant hospital system from demanding unreasonable rates for services from insurers, and in turn raising the overall cost of health care because they are the ‘must have’ system in the area.

“Our top priority is to ensure that patients have access to their physician and the health care facility that best fits their needs,” Senator Costa said.  “Those who need medical treatment should not be caught up in a dispute about coverage and payments for services or have insurance issues impact their treatment.  The legislation we have introduced provides a real solution that would alleviate the stress and anxiety that too many health care consumers face in the Pittsburgh area.”

Allegheny County Executive Rich Fitzgerald, who was unable to attend the press conference, issued the following statement in support of the Senators’ efforts:  “Western Pennsylvania is unique, compared to most markets in the U.S., in that we have one dominant provider system.  This region has a higher utilization of outpatient services compared with the average of the Mid-Atlantic region.  Compared to other cities, our residents spend a high percentage of their income on insurance premiums.  Consumer choice in health care providers must be preserved by ensuring so that our residents, as patients, have a choice in their health care provider.  I commend Senators Vulakovich and Costa for working to ensure that continued competition and patient choice through their introduction of this legislation.”

Senate Bill 1247 would amend the Health Care Facilities Act with the following provisions:

  • Require hospitals operating as part of an IDN to contract with any willing insurer.
  • Permit hospitals operating as part of an IDN to contract for its services at any price or discount that results in adequate reimbursement rates.
  • Prohibit hospitals operating as part of an IDN when contracting with insurers from using contractual provisions and engaging in business practices that impede the availability of quality health care.
  • If a mutually agreeable contract cannot be reached, a contract will be imposed on the parties through mandatory binding arbitration.
  • Establish a Health Care Competition and Oversight Board to ensure that an effectively operating competitive marketplace exists in Pennsylvania.

Senate Bill 1248 — the Patient Access and Consumer Choice Act — would require hospital-owned physician practices operating as part of an IDN to enter into a contract with any willing health insurance carrier.  If a mutually agreeable contract cannot be reached, a contract will be imposed upon the parties through binding arbitration.  It further addresses contract requirements by prohibiting the use of restrictive covenants in employment contracts.  Typically a non-compete clause limits the duration, scope of activity, and geographic areas available to the employee when he leaves his employer. Such clauses are harmful to the personal nature of the doctor-patient relationship.

SB 1247 and SB 1248 have been referred to the Senate Banking and Insurance Committee for consideration.

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Contact:  Melissa Farabaugh (412) 487-6600