Recap of the PA Senate Banking and Insurance Committee Hearing

There has been a great deal of feedback and response to the September 8 Town Hall meeting, thanks in part to action items such as the below post card (which I encourage you to print and mail to Attorney General Kelly) and ongoing media coverage. Please take a moment to view additional Town Hall pictures.

On September 13, the Pennsylvania Senate Banking and Insurance Committee held a hearing about UPMC vs. Highmark at the University of Pittsburgh. Senator Don White (R-Armstrong) Chairs the Committee and deserves credit for planning and conducting a very informative session. Most of the Committee attended, in addition to myself and Senators Costa, Fontana, and Pippy. 

Among those who provided testimony were officials from West Penn Allegheny Health System (WPAHS), Pennsylvania Insurance Commissioner Michael Consedine, and Chief Deputy Attorney Generals James Donahue III and Mark Pacella (Antitrust Section and Charitable Trusts and Organizations Section, respectively). 


Please take a moment to view full testimony, video, and pictures of the hearing. A lot of new information was provided, particularly by the office of the Attorney General, which gave a thorough description of its legal powers and review protocol for transaction such as the proposed Highmark acquisition of WPAHS.

Chief Deputy Attorney General Donahue confirmed the Charitable status' of Highmark and UPMC,  and went on to describe the elements that his office will evaluate when reviewing the proposed Highmark acquisition of WPAHS:

"The scope of review varies with the specifics of each transaction, but generally seeks to ensure that the transaction is the product of due diligence after consideration of all other available alternatives; that it is free of private inurement; that full and fair value is being paid when any sale of charitable assets is implicated; that any restricted assets will remain segregated and committed to the intended charitable purposes; and that the transaction will not unduly impact the community's access and availability to health care." [emphasis added]

UPMC has said repeatedly that if Highmark acquires WPAHS, there will not be a new provider contract between UPMC and Highmark. Is UPMC effectively opposing the merger on legal grounds by refusing to negotiate?

We still have nearly a year before the UPMC-Highmark provider contract expires - this was an overarching theme of the September 13 hearing. But if the state approves Highmark's acquisition of WPAHS, how likely is it that UPMC will challenge the merger in court? 

jferlo

Town Hall Meeting Recap, Pressure Points, Next Steps

Thank you to the 350 + community leaders and citizens who attended the UPMC and Highmark: Purely Public Charities? Town Hall meeting last Thursday. Media coverage by the PG, Trib, and WTAE was certainly appreciated, although lacking and inaccurate in some respects. In the end they all got the message:

Mr. Ferlo said he brought the parties together before members of the public, elected officials and labor leaders so they could discuss what was at stake. Representatives of each side sat at tables flanking the podium, sometimes shaking their heads while the other side addressed the audience... 

Mr. Ferlo said the session was the beginning of what he hopes will be greater input and influence from the community. He said there are ways to impact the situation, including getting the state attorney general and insurance commissioner involved. There also might be cause for legislation. (PG - Dan Majors) 

"What's been missing is the people in this room," said state Sen. Jim Ferlo, D-Highland Park, who sponsored the town hall meeting on Thursday night at Soldiers & Sailors Memorial Hall & Museum in Oakland. "I think it will be a very ugly divorce unless we are involved." (Trib - Tony LaRussa)

As I outlined at the Town Hall, we need to build a campaign of actions over the next few months and they should include all pressure points:

1. Corporate campaign exposing current Board membership - most people may not be aware that 1/3 of UPMC Board is selected by Pitt and includes Chancellor Nordenburg and they have all been silent;
2. Pressure and actions aimed at PA Insurance Commissioner Michael Consedine and PA Attorney General Linda Kelly relating to Act 55 and Act 94;
3. Pressure and actions aimed at the PA House and Senate (Sen. Fontana's "tax them" proposal, etc...). Also, the Legislature has the power to re-write the 5 provisions of Act 55 to call into question UPMC's violations and leave less room for the Pa Supreme Court to wiggle;
4. Pressure on the Allegheny County Medical Society to start defending physicians who are being intimidated into silence due to restrictive contract provisions with UPMC;
5. Continued public outreach and post card campaigns. Post cards were distributed at the Town Hall, which I will share through my website and this blog in the coming days;
6. Pressure and due diligence regarding civil rights and anti-trust actions, given U.S. Justice Dept. recent decision to not get involved.

To be clear, I will be supporting Highmark's acquistion of the WPAHS and work to re-establish an ER and other critcal services at West Penn Hospital. Highmark-WPAHS need to develop an Integrated Finance and Delivery System (IFDS) similar to the UPMC model. All this remains in question until Highmark submits a formal acquisition filing with the Commonwealth (to the PA Insurance Department, specifically) and takes significant actions to consumate their deal which will cost Highmark an estimated $2 Billion. 

Throughout the process, I will continue to be advocate for single payer sustainable solutions and fight cuts in Social Security and Medicare (I believe Obama will lead effort to initiate these cuts).

jferlo

Town Hall Agenda

I look forward to the Town Hall meeting tomorrow and hope that you can join me, UPMC and Highmark officials, and what I expect will be over 300 citizens and stakeholders. Meeting agenda posted below:

UPMC and Highmark: Purely Public Charities?

TOWN HALL MEETING

Soldiers and Sailors Memorial Hall Ballroom

4141 Fifth Avenue

Pittsburgh, Pennsylvania

Thursday, September 8, 2011

7:00 p.m.

AGENDA

7:00 p.m.                 Opening comments by Senator Jim Ferlo (PA-38)

7:10 p.m.                 Daniel O’Malley, Highmark

                                 Market President for Regional Markets and Provider Contracting

7:20 p.m.                 W. Thomas McGough, UPMC

                                 Senior Vice President, Chief Legal Officer

7:30 p.m.                 Public comments and questions (3 minutes per speaker)

8:50 p.m.                 Closing comments by Senator Ferlo and adjourn

Special thanks to goes out the the organizations and stakeholder that have been organizing and educating the community about this issue (Community Collaborative Stakeholders, SEIU Healthcare PA, Consumer Health Coalition, Pennsylvania Health Access Network, the Western Pennsylvania Coalition for Single Payer Heathcare - HR 676, Healthcare for All PA, and many more). A number of them will be tabling at the Town Hall. Try to arrive early and visit their educational displays. 

jferlo

This Thursday, your voice matters

My Town Hall meeting at Soldiers and Sailors Memorial Hall ballroom is this Thursday, and I hope that you can join me for a what will be both a lively and educational event, as well as a watershed moment in the story of UPMC vs. Highmark.

On August 25, the House Insurance Committee hosted a hearing in the Allegheny County Courthouse located in Downtown Pittsburgh, to gather testimony from UPMC, Highmark, the Pennsylvania Insurance Department, the Pittsburgh Business Group on Health, the Allegheny County Bar Association, and Service Manufacturing and Commercial Business Council. 


UPMC CEO and President Jeffrey Romoff and Highmark CEO and President Dr. Kenneth Melani made rare personal appearances and provided testimony that reiterated their respective positions. To summarize: UPMC will not negotiate or enter into a new provider contract with Highmark if it acquires West Penn Allegheny Health System (WPAHS), and Highmark fully intends to acquire WPAHS.

With this as our current context, I am preparing for the Town Hall meeting with a few clear positions in mind:

1) At this time I support the Highmark-WPAHS merger, which as it has been described to date, will breathe new life into the financially distressed WPAHS and save thousands of jobs in Allegheny County.

2) I believe that morally, ethically, and legally in order to fulfill their obligations as charitable organizations under PA Act 55 of 1997, UPMC and Highmark should find common ground and reach a new provider contract that increases healthcare access and reduces healthcare costs for the residents and employers of our region.

3) Thinking long term, UPMC vs. Highmark is the symptom of failing health care and health insurance markets in Western Pennsylvania. Therefore, statutory remedies are justifiable and necessary in order correct the market. Among these remedies are reforms in the areas of the Pennsylvania charitable organization law, Certificate of Need (CON), and limiting health insurance premium increases.

My colleagues in the Pennsylvania General Assembly are clearly prepared to act decisively, and are considering the various approaches that might be taken to enact a solution if UPMC and Highmark cannot reach one voluntarily. When the citizens of Allegheny County have their say on Thursday, Harrisburg will be listening and assured that there is a groundswell of support from Western Pennsylvania residents. This Thursday your voice will make all the difference.

jferlo