UPMC, Highmark Feud Leads Employer To Switch Insurers

By Christine Kern, contributing writer

Is the move a harbinger of things to come or an isolated incident?

Erie Indemnity Co. – a provider of automobile, home, and life insurance – has decided to drop Highmark as the health plan for its 4,600 employees due in large part an ongoing feud between the two. The decision could be a harbinger of what other Western Pennsylvania employers will do next year as they seek to find shelter from the fallout of the battle.

According to Erie Indemnity VP of company benefits Becky Dudenhoeffer, the move is a response to, “The ongoing UPMC-Highmark dispute in western PA (which) has concerned many of our employees. As members of the UnitedHealthcare network, employees will no longer have to worry that they would be restricted to either Highmark or UPMC providers.”

"We felt United will give our employees access to more providers where they live and work across our entire footprint," Erie Insurance spokeswoman Leah Knapp said in an e-mail to the Erie-Times News. "We also felt its wellness offerings will best support employees' and their families' efforts to lead healthy lives."

According to the company, UnitedHealthcare will cover at least nine of 10 medical providers, and offers access to Highmark and UPMC doctors and hospitals, whereas many Highmark members in the Pittsburgh area will not be covered at UPMC facilities starting in 2015.

Highmark has been the dominant private insurer in the Erie market, covering about 150,000 lives, said Highmark spokesman Aaron Billger. "We are certainly disappointed (Erie Insurance) has elected to go with an out-of-state carrier," Billger said. "But Highmark is proud of our roots in Erie."

Erie Insurance is self-insured, but Highmark – and soon United Healthcare – is the plan's administrator.

Erie Insurance's decision comes on the heels of the release of Highmark’s transition plan by the Pennsylvania Insurance Department. Earlier this month, Highmark and UPMC outlined terms of a government-brokered agreement.

Effective January 1, the contract between UPMC and Highmark expires. Although seven UPMC hospitals and thousands of UPMC-employed specialists will still be considered in-network for Highmark members, UPMC's six major hospitals and doctors who perform procedures there will be out of network. UPMC declined to negotiate a whole-system contract with Highmark after the insurer created the Allegheny Health Network, a health system which competes with UPMC.

Highmark members will no longer be covered at most UPMC hospitals, though they will be covered at UPMC Hamot and UPMC Northwest. Highmark and UPMC Health Plan also advertise lower-cost, narrow-network plans that require patients to pay more if they visit their competitor's hospitals or physicians.

In contrast, United Healthcare doesn't offer narrow-network plans, said Jeff Evans Jr., an employee benefits consultant for Northwest Insurance Services. United Healthcare is accepted by about 90 percent of Erie County hospitals and physicians, according to a memo Erie Insurance sent to its employees.

"Erie Insurance's decision is a big red flag to major insurance carriers that they can't rely on brand loyalty," Evans said. "I anticipate that United Healthcare sees this as an opening, that now is the time to spread the word about its plan."