May 30, 2019

The saga continues: Pennsylvania Supreme Court kicks UPMC-Highmark case back to lower court

Daily Briefing

    The Pennsylvania Supreme Court on Tuesday ruled 4-3 to order a lower court to reconsider its decision to allow a consent decree mandating that UPMC hospitals accept patients insured by Highmark Health to expire on June 30.

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    Background

    The tension between UPMC, a health system known for groundbreaking research and university-affiliated hospitals, and Highmark, one of the biggest insurers in the country, dates back to 2011.

    That year, as Highmark faced a request for a major rate increase from UPMC, it announced it would enter the provider space itself by acquiring a hospital system, now known as Allegheny Health Network.

    UPMC fired back, announcing that it would stop accepting Highmark-insured patients at the end of the health system's and insurer's existing contract. UPMC also moved to expand its own health plan.

    Pennsylvania officials warned the dispute could reduce patients' access to care. In 2014, state regulators brokered a consent decree between the two organizations that provided certain Highmark-insured patients with in-network access to UPMC providers. The 2014 deal aimed to ensure vulnerable populations, such as the 227,000 people enrolled in Highmark's Medicare Advantage plans and several thousand enrolled in an employer-based Highmark plan, were able to continue seeing their UPMC providers at in-network rates.

    However, that consent decree is set to expire June 30. UPMC has said Highmark enrollees will no longer have in-network access to its providers after that date.

    Earlier this year, the state again sought to compel UPMC to continue accepting Highmark patients after the consent decree's expiration date.

    On Feb. 7, Pennsylvania's Attorney General Josh Shapiro (D) filed motions requesting the Commonwealth Court modify and extend the existing consent to require UPMC to contract with any insurer, including Highmark, that seeks access. Shapiro requested that the court mediate the process if the companies fail to agree to the changes. Highmark ultimately supported the changes and the extension, while UPMC contested them.

    In April, the Pennsylvania Commonwealth Court sided with UPMC and denied Shapiro's motion, saying the companies should adhere to the June 30 expiration date.

    Shapiro appealed the ruling to the Pennsylvania Supreme Court.

    Pennsylvania Supreme Court defers ruling

    The Pennsylvania Supreme Court on Tuesday deferred ruling on the consent decree expiration date, stating that the Commonwealth Court has the authority to rule on the issue.

    Justice David Wecht in the majority opinion said, the state Supreme Court does "not deem it necessary to extend the termination date of the Consent Decrees through the extraordinary powers that [Shapiro] asks us to invoke."

    However, the state Supreme Court noted that the Commonwealth Court incorrectly applied a previous Supreme Court ruling when considering the matter and must review it.

    The state Supreme Court clarified that its earlier decision narrowly applied to a provision about the end of Highmark and UPMC Medicare Advantage's relationship, and could not be used to when considering the broader issue of whether to modify the existing consent decree in the ways Shapiro is requesting.

    The ruling sends the matter of whether to extend the consent decree back down to the lower court to reconsider based on the state Supreme Court's latest clarification.

    Dissent

    Three justices dissented with the majority's assessment.

    In a dissent, Justice Max Baer said he agreed with UPMC's argument that the consent decree had an end date that was determined by all parties involved. "This is not an attempt to 'modify' the Termination Provision [of the consent decree], but rather an attempt to eliminate the Termination Provision and substitute language to allow the consent decree to continue into perpetuity, contrary to the clear intent of the parties," Baer wrote.

    Reaction

    Highmark, in a statement, praised the ruling, saying it is "a critical step in preserving health care choice for consumers." Highmark added, "In sending the case back to Commonwealth Court, the Supreme Court has expressly authorized the Commonwealth Court to promptly conduct a hearing to determine the scope and intent of the modification provision and the relief the attorney general seeks through his proposed modified consent decree."

    In a statement, Shapiro said, "As directed by the Supreme Court, my Office will now make our case in Commonwealth Court on an expedited basis that modification of the end date is not just permitted—but necessary to ensure UPMC fulfills its role as a public charity and isn’t able to shun the very taxpayers whose tax dollars built their business."

    Meanwhile, a spokesperson for UPMC noted that the high court decision did not explicitly extend the consent decree. "None of the justices, notably, accepted the [state attorney general's] position that the modification clause was unlimited, deciding this issue was a matter for Commonwealth Court to resolve after receiving additional evidence," the spokesperson said. "Importantly, all the justices agreed that it was not necessary for them to extend the termination date of the consent decrees through their extraordinary powers" (Gough, Pittsburgh Business Times, 5/28; Mamula, Pittsburgh Post-Gazette, 5/28; WPXI, 5/28).

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