Saturday, December 1, 2012

Highmark admits that it pays different rates to different providers for the same services

I took some flak here about two weeks ago for reporting that local doctors had told me that Highmark is paying higher rates to physicians at (partly Highmark-owned) Med Express than it does to other physicians at other facilities providing exactly the same services.

Now, in a lawsuit being heard in Pennsylvania, Highmark has admitted that such is its practice, by agreeing not to do it again for two years as part of a proposed settlement:
Highmark would pledge not to give some medical providers higher reimbursements than others through 2014, thus enhancing competition, Mr. Hare said.
So, we come back again to exactly what Insurance Commissioner Karin Weldin Stewart has allowed to begin happening in Delaware.

But, one wonders, does anybody in the Markell administration or the General Assembly actually care?


Nancy Willing said...

I cc'd you on my email to Stewart, Kowalko and Jaques. I will be following up with phone calls next week. I haven't heard back from anyone yet but I do intend to meet with the IC on this and get answers. Again, try to persuade those who did meet with her to publish their report. That would be helpful.

Anonymous said...

To say that they "admit" that they pay different rates to different providers is a bit odd. I am not aware that anyone ever denied that, nor that they find it all that controversial. Every hospital and provider in the country negotiates rates with all payors. These are super-secret negotiations. In most cases, it's actually illegal for the providers to reveal what they get paid. This presupposes different rates for different providers, I would think. Highmark recently got into a scuffle with Altoona Regional over their contract. If it was supposed that all hospitals got paid the same, would have just paid them, the same that they pay nason and Tyron and UPMC and Conemaugh. But all these places get paid different amounts, and everyone knows it.

Are you assuming that national insures such as Aetna and Cigna pay the same to every hospital with which they have a contract? They don't. Neither does UPMC.

You can make the case that transparency in payments would be a good thing. In fact, you could make a good case. But this isn't a Highmark problem. It'a problem with the system.

Steven H. Newton said...

Nice try.

The point here is that, in Delaware as in Pennsylvania, the MedExpress entity that Highmark is "negotiating" with, is partly owned by Highmark.

To pretend that Highmark is seriously negotiating with its partner entity MedExpress in the same fashion that Highmark negotiates with Christiana Care or any of the independents is sheer self-interested fantasy.

But keep them coming.

Anonymous said...

"The point here is that, in Delaware as in Pennsylvania, the MedExpress entity that Highmark is 'negotiating' with, is partly owned by Highmark."

Again, you can contend thatthis is a problem, but it's hardly a Hignmark problem. Geisinger is both an insurer and a provider. UPMC is both an insurer and a provider. You appear to have a concern with the whole idea of an IDFS. That's legitimate. But Highmark is hardly the only one giving this a shot.

Look at the State College market. Geisinger owns Grays Woods, which is like a MedExpress on steroids. Geisinger presumably pays that facility money when a patient goes there. It also pays Mount Nittany when patients go there. I guess you can assume that they are paying the same amount to each facility. But I assume they don't.

In Pittsburgh, I had UPMC insurance. I lived right next to West Penn Allegheny. When my wife had a baby I had to drive past it and go to Magee. Why? Because UPMC paid NOTHING for a baby delivered at WPAHS. The difference being that Gray's Woods and magee aren't partially owned by insurers, they are ENTIRELY owned by them.

Same service. Different payment. It's how an IDFS works.

Anonymous said...

PS: If you think that disparate payments are the biggest issue, try this on for size:

If you walk up to almost any hospital in the country, they will take care of you regardless of insurance. Even if you have no insurance and you want to pay cash, you can. This is true at UPMC hospitals, too. But not if you have Highmark's Community Blue product.

Let's say you are an Amish person and you buggy up to a UPMC facility and ask for a CT scan. They will give you one and charge you for it. But if you reveal at some stage that, actually, you have Community Blue, they not only won't honor that insurance. They will ask you to leave the facility without giving you a CT scan.

Again, there are legitimate complaints to be made about this arrangement. But to pretend that Highmark is uniquely villianous here strikes me as wrong.

Anonymous said...

Actually, take a look at the settlement agreement. It's available through Pacer. Attorney hare got it wrong, or the reporter did:

"(a) From the date of entry of the Final Judgment through December 31, 2014, Highmark will not enter into any contract with any provider of health care services in Western
Pennsylvania that requires the provider, during the time specified in this subparagraph 31(a), to
charge Highmark more favorable payment rates than it charges any other healthcare insurer;"

That is, Highmark can charge different providers different rates. What Highmark can't do is demand that a provider offer Highmark better rates than the provider is charging other insurers. These are different things. That is, they can agree to pay MedExpress $100 for a a drug screen but only pay Acme Urgent Care $50 for the same thing. What they can't do is demand that Acme and MedExpress charge Highmark less than they charge UPMC or Aetna.
Highmark can continue paying medExpress more than it is paying Acme. Nobody finds this very controversial, as everyone knows that's exactly what an IDFS does. They also know that the whole reason there are separate contract negotiations between insurers and providers is that some providers get paid more than others.

Delaware Watch said...

Why isn't their ability to negotiate different pay rates and reimburse their providers at higher rates a function of liberty, Mr. Libertarian?

Steven H. Newton said...


You clearly don't understand Libertarian theory, but there is no need to be snotty about it.

Paying yourself (Highmark/MedExpress) different rates that you pay other facilities in the same category in a government controlled market a lower rate to gain an unfair competitive advantage constitutes fraud.

What part of that don't you get?

Anonymous said...

"Paying yourself (Highmark/MedExpress) different rates that you pay other facilities in the same category in a government controlled market a lower rate to gain an unfair competitive advantage constitutes fraud."

Does it? Do you think GM charges the same amount for a fuel pump shipped to AutoZone as they charge for a fuel pump shipped to one of their factories? They don't. You can go to an auto parts store and buy everything you need to build a Chevy Malibu. it will cost you well over $50,000, minus the labor. Even without the retail mark-up.

have you ever been to a fqactory outlet store? That's how it works. You pay less for, say, a Patagonia shirt at the Patagonia store than you would if you paid for it at REI. Because patagonia gives it's own store preferential pricing. It's vertical integration.

Moreover, if you want to demand that Highmark pays all providers the sme amount ofr the same procedure, you have a lot of work to do. Right now, Highmark pays a different rate to every single provider in the market. You have two hospitals in your city, plus three different retail clinics? Highmmark is paying five different rates for a flu shot delivered at each of these sites.

If your standard is that Highmark pay MedExpress the same as it pays everyone else, you will first need a law that forces Highmark to pay all these providers the same thing, regardless of independently negotiated contracts.

Maybe that sounds easy, but it's not. Cisco doesn't charge the same amount for the frozen pizzas it delivers to Safeway and Giant and 7-11. Ford doesn't charge the same amount for cars it delivers to me, to Hertz, to its dealers and to Avis.

Let's make this simple. In a fair and just world, in your mind, how much should MedExpress charge Highmark for a flu shot? How should they arrive at that price?