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PA Attorney General Intervenes in UPMC, Highmark Health Dispute

Attorney General Josh Shapiro is taking legal action against UPMC, claiming that the organization has neglected its charitable obligations.

PA Attorney General intervenes in UPMC, Highmark Health dispute

Source: Thinkstock

By Jessica Kent

- Pennsylvania Attorney General Josh Shapiro has filed a petition in Commonwealth Court to modify the consent decrees that govern the relationship between UPMC and Highmark Health, two of western Pennsylvania’s largest provider and payer entities.

The petition asks that the Court implement modifications to protect the public interest by ensuring that UPMC is abiding by its charitable obligations to the Commonwealth of Pennsylvania.

“Our petition today has a simple goal: to restore fairness to the healthcare system in western Pennsylvania and promote the public interest by ensuring patient access to affordable care and facilities which they have funded through their tax dollars,” Shapiro said at a recent press conference. 

“As the Chief Law Enforcement officer for the Commonwealth of Pennsylvania, it is my constitutional mandate to ensure that charitable organizations like UPMC comply with our laws governing their conduct. We have concluded that UPMC is not fulfilling its obligation as a public charity.”

The conflict between UPMC and Highmark Health began in 2011, when Highmark became UPMC’s competitor in the healthcare provider market. In the same year, UPMC announced that it would stop accepting Highmark-insured patients at the end of their contract, leading to many individuals in western Pennsylvania losing access to their doctors and care.

READ MORE: Highmark BCBS Saves $260M Using Value-Based Reimbursement

In 2014, the Commonwealth of Pennsylvania intervened, and entered into consent decrees with both organizations to protect patients’ access to care. These protections are set to expire on June 30, 2019, and without further legal intervention, patients could be left without care access once again.

The Commonwealth presented agreement modifications to UPMC and Highmark in late 2018, and these changes were developed to bring both organizations into compliance with their charitable obligations. While Highmark agreed to the modifications, UPMC did not, leading Shapiro to take further legal action.

“Given the effect this dispute between UPMC and Highmark is having on Pennsylvanians, and the imminent expiration of the existing consent decree, we are asking the court to take action,” said Shapiro. 

“These changes are absolutely necessary to prevent UPMC from inflicting further harm on the public by forsaking its charitable obligations in pursuit of commercial success.”

The petition filed by Shapiro asks the Commonwealth Court to enable open, affordable access to UPMC’s healthcare services and products through negotiated contracts with any health plan. Additionally, the petition requests that the Commonwealth necessitate last, best-offer arbitration when contract negotiations between providers and insurers fail.

READ MORE: UPMC, AstraZeneca Enter Value-Based Pharmaceutical Contract

The petition also asks that the court prohibit excessive and unreasonable billing practices that are inconsistent with UPMC’s status as a non-profit organization.

UPMC, as a charitable, public institution, receives significant public support from tax benefits, donations, and public financing. In exchange, the organization has a legal responsibility to perform services that are valuable to the public. As a result, UPMC saves nearly $40 million in taxes each year.

The organization also received a total of $12.7 billion in public and private contributions between 2005 and 2017 to support its healthcare and research missions, Shapiro stated.

However, a legal review by the Office of the Attorney General found that even while operating under the current consent decree agreement, UPMC continues to engage in conduct that violates its charitable obligations.

This includes withholding access to doctors for Williamsport, Pennsylvania patients whose employers have contracts with competing health plans, as well as refusing to negotiate reasonable payment terms with self-insured employers. This has resulted in UPMC receiving excess reimbursements for the value of its services, Shapiro said.

READ MORE: Commercial, Public Payer Healthcare Fraud Cases Total $21.6M

“As a public charity, especially one enjoying perpetual tax-exempt status, UPMC must behave in a manner consistent with its charitable mission in all facets of its operation,” said Shapiro. “By law, it is a give-and-take relationship between UPMC and Pennsylvanians, and UPMC is taking more than its fair share from taxpayers.”

More than a dozen individuals showed their support for Shapiro’s legal action, including patients and representatives from business and labor union communities. Shapiro hopes that this motion will help protect individuals and maintain their access to care.

“UPMC has an obligation to the people of Pennsylvania to offer charitable services in exchange for the benefits it receives, and right now the taxpayers aren’t receiving a fair deal,” Shapiro concluded. 

“It is incumbent upon me to ensure that UPMC lives up to its end of the bargain, and therefore I am asking the court to do what is necessary to protect millions of Pennsylvanians who rely on this public charity for their health and well-being.”

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