Justice Dept. ends examination of Pittsburgh health system

The U.S. Dept. of Justice Antitrust Division appears to be done with its assessment of the market power held by the University of Pittsburgh Medical Center without taking any action against the health system. The investigation dated back to 2007, according to UPMC, but never resulted in any specific allegations or claims by the department.

But that doesn't mean that UPMC will stay clear of government scrutiny, because Pennsylvania state lawmakers said they will continue to pressure UPMC to end its standoff with the region's largest health insurer, Highmark.

As part of a UPMC financial statement for bond holders, dated Aug. 26, the hospital system said it believed the investigation was closed without any action by federal officials.

"In July 2011, the DOJ contacted counsel for UPMC to advise that the DOJ had formally closed its investigation of UPMC," the statement said. "Accordingly, UPMC believes that the matter has been resolved with no material adverse effect on UPMC's financial position or results of operations."

A Justice Dept. spokeswoman said the department would not comment one way or the other.

Highmark spokesman Michael Weinstein said the Justice Dept. also notified it about the conclusion of the investigation, but he declined further comment.

UPMC has refused to negotiate a new contract with Highmark after Highmark's purchase of its only major competition, West-Penn Allegheny Health System. Highmark defended the deal as the only way to save the system from a shaky financial situation, preserving competition across the region.

When UPMC launched an advertising campaign over the pending contract expiration, Highmark sued UPMC, accusing it of publicly advising its patients to find new health insurance coverage.

The impasse has left patients and physicians wary that UPMC physicians and hospitals will become out-of-network for Highmark members on Jan. 1, 2013, when the contract expires.

West-Penn Allegheny had sued UPMC in 2009, alleging that UPMC and Highmark had violated antitrust laws by cooperatively fixing prices and shutting out competition. The lawsuit is still pending but is expected to be settled as part of the terms by which Highmark will take over the system.

At an Aug. 25 public hearing before the state House Insurance Committee, Deborah Rice, executive vice president of Highmark's health services division, suggested that UPMC is responsible for the escalating cost of health care locally.

"The bottom line is that our region needs a choice of financially sound health care delivery systems and independent community providers to effectively let market forces hold down cost increases," Rice said in prepared remarks. "Otherwise, as we are already seeing, a single, dominant system can demand unreasonable payment increases from all private health insurance companies, which this region can't afford."

UPMC CEO Jeffrey Romoff testified that Highmark's market power was actually the problem. "By renewing its contract with Highmark, UPMC would also be renewing Highmark's monopolistic lock on the insurance market, a state of affairs that no one except Highmark finds acceptable."

If UPMC won't agree to talk about a new contract with Highmark, some state legislators are ready to force the issue. Rep. Dan Frankel, the state House Democratic Caucus chair, released a statement at the hearing that said, "If UPMC continues to refuse to negotiate, I and other members are prepared to look at legislative remedies."