Several Western Pennsylvania businesses have received unexpected bills from Highmark Inc. in recent weeks, demonstrating that the conflict between Highmark and UPMC still affects customers despite legal resolutions in November.
Highmark is collecting from employers a portion of the approximately $188 million an arbitration panel ruled the insurer owes UPMC for unpaid cancer care claims. Affected are Highmark’s self-insured clients, generally businesses with hundreds of employees that take on the risk of employees’ medical costs in exchange for lower fees.
The bills ranged from a few thousand dollars to more than $1 million, said Tom Tomczyk, principal at Downtown benefits firm Buck Consultants.
“For many clients, it was quite a shock,” he said.
Most of the businesses acknowledge Highmark has a legal right to collect the money, but some are frustrated with the insurer, according to insurance consultants who work with some of the businesses.
“I just think it was handled poorly, and this is a result of it being handled poorly,” Tomczyk said. “But hindsight is 20-20. It’s easy to say that now.”
Highmark declined to say how much it is billing self-insured clients, or how many businesses it is billing. A portion of the money that Highmark owes UPMC is for oncology claims from fully insured clients — generally smaller businesses for which Highmark takes on claims risk but charges higher administrative fees — and its Medicare Advantage members.
A state arbitration panel ruled Nov. 6 that Highmark violated contracts when the insurer reduced what it was paying UPMC for oncology in April 2014 and paid the lower rates through October 2015. The $188 million is UPMC’s estimate of what Highmark owes.
Highmark officials have said the insurer took a stand against unfair billing. Highmark decreased what it was paying UPMC because the hospital system started billing much higher rates at some clinics for what the insurer says is the same treatment.
UPMC increased the charges by changing the way it billed, designating the cancer treatment as hospital-based rather than physician-based.
“Highmark’s stand on oncology exposed UPMC’s high costs for cancer care, making possible the much more favorable reimbursement level set in a separate UPMC rate arbitration, which will save Highmark consumers substantial amounts on cancer care,” spokesman Aaron Billger said in a statement.
The arbitration panel did not evaluate whether UPMC was within its rights to make the billing change, but noted in its decision that Highmark paid the higher rates for a time before reducing them.
“I really don’t think anybody’s necessarily mad that (Highmark) fought it,” said Vince Wolf, a director at broker Cowden Associates Inc. “But there’s a way it could’ve been handled, from (the businesses’) perspective, that would have allowed them to save a lot of heartache in the process.”
When Highmark decreased what it was paying UPMC for the cancer care, it decreased what it was billing self-insured clients, Wolf said. He suggested the insurer could have continued billing clients the higher rate that UPMC was charging and reserved the difference in case the arbitration panel sided with UPMC. That would have avoided the unexpected bills and some of the confusion, he said.
“It basically backfired on them because they lost the case,” Wolf said.
Billger said Highmark would not have been able to charge different amounts to customers with different types of insurance.
Highmark did send letters to self-insured clients estimating what they might owe if the arbitration panel sided with UPMC, but in many cases the bills ended up being more than the estimates, Tomczyk said.
Since the arbitration panel’s ruling, Highmark has agreed to set up payment plans with some businesses rather than collect the money within 60 days as initially planned, said Jessica Brooks, executive director of the Pittsburgh Business Group on Health.
The group represents 82 employers, about 40 percent of which offer Highmark insurance, Brooks said.
Highmark’s bills have prompted the group to take a closer look at UPMC’s billing practices to determine whether the switch to hospital-based billing has any impact on quality, Brooks said.
“Nobody’s going to take ‘he said, she said’ anymore when we’re getting $100 million bills as a community,” she said.
Member businesses with other insurance carriers were affected by having to pay UPMC’s higher rates for cancer care, Brooks said.
“It’s so easy to make this a Highmark-UPMC issue,” she said. “At the end of the day, they’re not the winners or losers. It’s the employers and the employees in the community. We just want fair care, fair access to high-quality care.”
Despite some frustration, Tomczyk said, he doubts the bills will prompt major change.
“I think, generally, clients are going to stay with Highmark,” he said. “This is a blip, albeit a big one. But I’m not sure that’s going to change this market.”
Date: December 26, 2015