Highmark, an insurer with its own health system, is challenging a growing and controversial billing practice that also happens to be a central part of some health system integration strategies.
Around August 2010, a lawsuit filed by Highmark contends, University of Pittsburgh Medical Centers hospitals and physician groups started charging "significantly higher prices for oncology drugs and related oncology services," without any changes in treatment settings or outcomes.
Since then, Highmark alleges that it has been overcharged some $300 million. The cost of oncology drugs has tripled in the ensuing four years, the company argues, as office-based treatment has been billed as hospital outpatient services.
There have not been changes in the nature or quality of the drugs or services, locations, or physicians and clinicians, only changes in billing, "scheme to avoid established contractual arrangements," Highmark alleges in the lawsuit.
UPMC-employed and -affiliated physicians had a contract with Highmark, first set in 2006, requiring infusion chemotherapy services to be billed with physician office rates, but after the summer of 2010, the physicians billing came from hospitals, which submitted claims for the services on an outpatient basis, according to the lawsuit.
One Highmark member began chemotherapy in October 2010 under the direction of a specialist at UPMC's Hematology Oncology Association, which was reimbursed according to the physicians contract. In December, though, the member's claims were submitted by UPMC Presbyterian-Shadyside and billed as outpatient hospital services, at "significantly higher rates," under the hospital's agreement with Highmark.
In other cases, according to the lawsuit, Highmark members treated at UPMC's Hillman Cancer Center were being billed from UPMC's Magee-Women's hospital, a speciality facility with higher rates.
"This irrational billing practice is forcing cancer patients and group customers to pay more than they should for infusion chemotherapy," Highmark said in a statement.
In April, Highmark started reimbursing all infusion chemotherapy services at the same level across settings, for UPMC and other providers. Under the new same service, same reimbursement framework, a Highmark-insured cancer patient could save as much as $3,500 in out-of-pocket costs for treatment, along with the insurer avoiding higher outpatient costs.
Now, the insurer is taking legal action to try to recoup the "markups" from UPMC. "We believe it is our responsibility to bring this issue to light," the company said. "This is fundamental to a market-based health care system, and it is vital to delivering affordable coverage options."
Responding to allegations in the lawsuit, UPMC chief communication officer Paul Wood said that Highmark "itself designed and endorsed" the reimbursement system.
"It should be noted," he added, "that Highmark's own Allegheny Health Network has long engaged in these same billing practices, making this lawsuit another in the long line of duplicitous acts and bad behavior by Highmark."
Highmark public relations director Aaron Billger conceded that two facilities at the insurer-owned Allegheny Health Network used the billing practice, but said that it has been ended at one and will no longer be used at the other by year's end.
The issue of providers billing different rates for the same services across different care settings has become an issue for concern for both commercial and public payers amid the wave of hospital-acquired physician practices. In Medicare especially, the trend has recently worrisome to the Medicare Payment Advisory Commission.
MedPAC is now advocating for site neutral payments -- the same rate for the same services, regardless of the location -- and Highmark's moves may give some momentum to reigning in the practice.
However, the insurer's lawsuit may stoke old acrimony as Highmark and UPMC finalize a consent decree for how certain Highmark members can access UPMC facilities when their in-network contract expires in 2015.
In a transition plan filed with state regulators, Highmark maintains that as many as 80 percent of Highmark members will have network access to UPMC physicians and hospitals, although UPMC is calling that exaggerated. Highmark members in certain geographic areas, for instance, will have guaranteed access to local UPMC facilities, and UPMC oncology providers, including the Hillman Cancer Center, will be in-network based on a physician's judgement of the availability of treatment choices.