State reviewing Highmark-WPAHS deal: Public Comment Period Open

This week has seen a flurry UPMC v. Highmark activity. Namely, after months of anticipation and delays, Highmark and WPAHS finally sealed the deal and signed their Affiliation Agreement. The Pennsylvania Insurance Commissioner, the Pennsylvania Attorney General, and the Internal Revenue Service (IRS) will review the proposed affiliation, so there are still a number of bridges to cross before the deal is final. 


Public input is a necessary part of the review process, and Commissioner Consedine has committed to host two public hearings in Western Pennsylvania as part of the review. Members of the general public and interested parties can review agreement documents and submit public comment at the Pennsylvania Insurance Department website. 


Instead of attempting to summarize the entire agreement, I want to share two observations in particular. First, I have referenced the need for intervention by public officials, to remedy a Western Pennsylvania health care market that appears to be broken. Interestingly, the counter argument suggests that if the Highmark-WPAHS deal succeeds, it just might be unique enough to constitute a private market solution.


Maybe it's simply the case that drastic times and markets call for drastic measures and maneuvers. Necessity is the mother of invention, so to speak.


Second, I found Tab E of the Affiliation Agreement particularly interesting. It describes Highmark's Vision at length, specifically within the context of the need for their Affiliation. The document lists several reasons "Why the System Needs to Change," including "Overinvestment in physical assets and clinical technology." (page 11). 


Pennsylvania is one of 13 states that no longer maintains a state Certificate of Need (CON) program to regulate the capital investments of health care providers. I believe that Pennsylvania needs to reinvent and implement a new CON program, to meet the demands of the modern health care market place, while prioritizing and the health needs of communities. It seems that its Affiliation with WPAHS is leading Highmark to a similar conclusion. 


jferlo

Senator Costa forges bipartisan effort, sponsors new legislation

Senator Jay Costa has provided consistent and outstanding leadership throughout the UPMC vs. Highmark battle. A Western Pennsylvania Democrat and Leader of the Pennsylvania Senate Democratic Caucus, Senator Costa brought state Senate and House leaders together in July to initiate dialogue with UPMC and Highmark officials. 


To his credit, Senator Costa has played a critical role in keeping leaders together and moving forward with common purpose. As previously mentioned in this blog, Rep. DeLuca and Rep. Frankel have sponsored legislation to address UPMC vs. Highmark, and their bills include dozens of Republican co-sponsors. As Senator Don White recently commented, "This is about as nonpartisan a project as your going to see come out of Harrisburg." (PG Sean D. Hamill)


A couple of weeks ago, Senator Costa sponsored companion legislation to the DeLuca and Frankel bills, along with an additional proposal that forces UPMC and Highmark to reapply for their Charitable Organization status in the event that their contract terminates,

I think there is a legitimate question about [UPMC's] charitable status in part because of their concern about competition," Mr. Costa said. "Because that infers that there's a profit concern on their part, and that's not charitable."(PG Hamill)

What does UPMC think about the proposal? According to UPMC spokesman Paul Wood:

The central piece of Sen. Costa's legislation is to regulate the rates hospitals are paid for their services. This would represent a massive governmental intrusion into the healthcare marketplace...

Usually a free-market argument like this would resonate with state officials, especially Republicans. After all, Western Pennsylvania is a model 21st century "Eds and Meds" economy and we want growing industries to take root here, prosper, create jobs, and contribute to the vitality of our region. 


But not at the expense of the people's fundamental right to health care. Mr. Wood's argument duly noted,  it seems that state officials on both sides of the aisle may be willing to make an exception in this case. 


jferlo