Commonwealth v. UPMC, Appeal of: UPMC

129 A.3d 441, 634 Pa. 97, 2015 Pa. LEXIS 2722, 2015 WL 7721632
Supreme Court of Pennsylvania·Decided November 30, 2015·No. 48 MAP 2015·Published·Cited by 85 cases

Opinions

OPINION

Justice TODD.

In this case, our Court is principally tasked with reviewing the order of the Commonwealth Court interpreting a provision of a consent decree, negotiated by the Office of Attorney General of Pennsylvania (“OAG”)1 and approved by the Com[103] monwealth Court, between Appellant UPMC, a nonprofit health care corporation, and Appellee Highmark,2 a nonprofit medical insurance corporation, which establishes the obligations of both parties with respect to certain health care plans serving vulnerable populations—i.e., children, the elderly, and the poor. Specifically, we consider whether the Commonwealth Court erroneously interpreted this “vulnerable populations” provision as creating a contractual obligation for UPMC to treat all participants in Highmark’s “Medicare Advantage Plans,”3—for which Highmark and UPMC currently have provider contracts which UPMC has indicated it will terminate as of December 31, 2015—as “in-network” for purposes of determining the rates it is permitted to charge these individuals for physician, hospital, and other medical services during the duration of the consent decree—until 2019.4

After careful review, we affirm the order of the Commonwealth Court finding that the vulnerable populations clause of the consent decree requires UPMC to “be in a contract” with Highmark for the duration of the consent decree, and, thus, that UPMC physicians, hospitals, and other services shall be [104] treated as “in-network” for participants in Highmark Medicare Advantage plans which are subject to provider contracts between Highmark and UPMC set to be terminated by UPMC on December 31, 2015. We also affirm the portion of the Commonwealth Court’s order requiring judicial approval for any further changes in business relationships between these parties which are governed by the consent decree, but quash as not yet ripe for review the portion of the order which directs the OAG to file a request for supplemental relief to effectuate compliance with the consent decree.

I. Background and Procedural History

As developed by the Commonwealth in the proceedings below, UPMC, which was incorporated in 1982 as a nonprofit corporation under our Nonprofit Corporation Law,5 is the dominant provider of health care services in western Pennsylvania, occupying nearly 60 percent of the “medical-surgical market” in Allegheny County and, overall, 35.7 percent of this market in the entire 29 county region of western Pennsylvania. Commonwealth Petition for Review, 6/27/14, at 4. UPMC also maintains a controlling interest in an “insurance holding company” which includes the “UPMC Health Plan” which covers approximately 2 million people in western Pennsylvania. Id. As explained by the Commonwealth, under this arrangement, UPMC operates an “integrated health care delivery system” whereby one entity provides health insurance, and, also, delivers health care services through physicians, hospitals, and other ancillary medical care facilities. Id. at 6.

Highmark possesses a controlling interest in an insurance company holding system in which two of its subsidiaries operate not-for-profit health care insurance plans. One subsidiary—Highmark Blue Cross—is a nonprofit hospital insurance plan, and another—Highmark Blue Shield—is a nonprofit health care insurance plan. Commonwealth Court Opinion, 6/29/15, at 3 n. 3; Commonwealth Petition for Review, 6/27/14, at 5. Highmark’s health care insurance plans are sold, commercially, to businesses and individuals, and, at the time of the [105] filings in this matter, were utilized by more than 60 percent of the people in the western Pennsylvania region's health care market. Commonwealth Petition for Review, 6/27/14, at 5.

In 2002, UPMC entered into a ten-year “provider agreement” with Highmark under which it furnished health care services on an in-patient or out-patient basis to subscribers of Highmark’s commercial insurance plans and billed Highmark for those services at specified, negotiated rates. Id, Under the terms of other separate provider agreements covering Highmark’s Medicare Advantage products, Highmark and UPMC mutually agreed that UPMC would be considered “in-network” for those products. Stipulations Between the Commonwealth and UPMC, 5/27/15, at 1, However, in the Spring of 2011, UPMC announced it would not agree to renew or renegotiate these provider agreements with Highmark, the majority of which were set to expire on June 30, 2012. Id. UPMC cited as its reason Highmark’s proposed affiliation with the West Penn Allegheny Health System, which would create another integrated health care delivery system in competition with the UPMC system. Commonwealth Petition for Review, 6/27/14, at 5-6. The Commonwealth considered the expiration of these agreements as having deleterious consequences for members of Highmark’s health insurance plans because, according to the Commonwealth, these members would be subjected to “significantly higher out-of-network charges for their health care needs unless they either switched their health care provider away from UPMC or their health plan away from Highmark to one of the health insurers with which UPMC had contracted, albeit at higher prices.” Id. at 6.

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Commonwealth v. UPMC, Appeal of: UPMC, 129 A.3d 441, 634 Pa. 97, 2015 Pa. LEXIS 2722, 2015 WL 7721632 (Pa. 2015).

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