Opinion ID: 3158793
Heading Depth: 4
Heading Rank: 1

Heading: For the period, January 1, 2015 to December 31,

Text: 2015, rates for all In-Network services covered in this Consent Decree, except for those rates currently being arbitrated by UPMC and Highmark, shall revert to the last mutually agreed upon rates or fees by UPMC and Highmark with the applicable medical market basket index (MBI) increase applied January 1, 2015. ii. For rates currently being arbitrated, in the event that the current arbitration between UPMC and Highmark finds in favor of UPMC, then the rates and fees under the Consent Decree will revert to the rates in effect before April 1, 2014 as of the date of the arbitral award and shall remain in place through December 31, 2015. If as a consequence of the arbitral award, Highmark owes UPMC for underpayments, Highmark shall pay UPMC appropriate interest. If as a consequence of the arbitral award, UPMC owes Highmark for overpayments, UPMC shall pay Highmark appropriate interest. If an arbitral award is not decided before January 1, 2015, Highmark shall increase its payments by one-half the difference between Highmark’s April 1, 2014 schedule and its rate schedule in effect before April 1, 2014 for the period 10 January 1, 2015 to December 31, 2015.[ ] iii. For the period beginning January 1, 2016 to the expiration of the Consent Decree or the expiration of any agreements between UPMC and Highmark for all In-Network Services, whichever is later, the rates shall be the rates 10 As discussed, infra, these two provisions refer to the recently concluded AHLA arbitration proceeding which was in progress at the time of the entry of the Consent Decree. [J-77-2015] - 11 mutually agreed to by Highmark and UPMC, or UPMC and Highmark shall engage in a single last best offer binding arbitration to resolve any dispute as to rates after December 31, 2015 as set forth in paragraph C(2) below. Consent Decree, § IV(C)(1). The Consent Decree also specified that the Commonwealth was to mediate any “[d]isputed terms set forth in [the] Consent Decree and related to the Consent Decree and unrelated to rate reimbursement” and, if that was unsuccessful, then the dispute was to be submitted to binding arbitration. Id. at § IV(C)(1)(b). The Commonwealth also was given the exclusive “jurisdiction” to enforce the decree. Id. § IV(C)(4). Additionally, the Consent Decree provides that the Commonwealth Court is to retain jurisdiction, for the duration of its existence, “to enable any party to apply to [the Commonwealth Court] for such further orders and directions as may be necessary and appropriate for the interpretation, modification, and enforcement of this Consent Decree.” Consent Decree, § IV (C)(11). President Judge Pellegrini of the Commonwealth Court entered both decrees as orders of court on July 2, 2014, and they remain in effect until July 2, 2019. On August 29, 2014, Highmark filed its transition plan with the Pennsylvania Department of Insurance which provided, inter alia, that “[u]nder the Consent Decrees Highmark and UPMC agreed that UPMC would continue to contract with Highmark at in-network rates for senior care.” Highmark Transition Plan, 8/29/14, at 12. With respect to “[c]urrent Medicare Advantage Products,” the plan described Highmark’s view of the effect of the interplay between the Consent Decrees and these products: “[u]nder the Consent Decrees, seniors in the current broad network Medicare Advantage products will continue to have in-network access to UPMC facilities and physicians after December 31, 2014. The current broad network contracts with UPMC extend until December 31, 2015 and renew annually unless either party provides prior notice.” Id. [J-77-2015] - 12 On September 3, 2014, Highmark commenced a civil lawsuit against UPMC, as well as eight individual UPMC hospitals and three physician group practices, in the Court of Common Pleas of Allegheny County (the “Allegheny County lawsuit”). This suit alleged that UPMC had engaged in unlawful billing practices beginning in August 2010 until the time of the suit by changing the manner in which billing for oncology supplies and services as if they were delivered on a hospital outpatient basis, when, according to Highmark, they were, in actuality, delivered at a physician’s office as was the previously established practice. Complaint, 9/3/14, at 4. Highmark also alleged in the suit that UPMC had “begun transferring the billing of oncology services among UPMC hospitals in order to further increase their prices and profits.” Id. at 5. Highmark contended these practices “breached the terms of the hospital contracts UPMC and the UPMC Hospitals executed with Highmark.” Id. at 4-5. UPMC denied these allegations in its answer to Highmark’s complaint. Additionally, Highmark recited in this complaint the circumstances surrounding its April 1, 2014, adjustment of the fee schedule for reimbursement of the administration of oncology drugs. Related thereto, Highmark asserted that it was “the custom and practice under the UPMC Agreements that Highmark . . . make unilateral changes to the fee schedules to reflect changes in conditions” without prior approval of UPMC; that the UPMC Agreements did not limit Highmark’s ability to adjust these fee schedules; that Highmark reserved the right to adjust the fee schedules and rates “at any time,” and, when it had done so prior to 2013, UPMC had acquiesced in its action. Id. at 43-44. As relief, Highmark sought a declaratory judgment that its “April 1, 2014 adjustments to the fee schedule rates for Subject Oncology Services under the UPMC Agreements were proper and appropriate under each of the respective UPMC Agreements.” Id. at 45. In an amended complaint filed on November 21, 2014, Highmark replaced this declaratory [J-77-2015] - 13 action count with a claim for unjust enrichment based on the amount it had previously paid for the alleged overbilling by UPMC in the administration of the oncology drugs.11 Later in September of 2014, Highmark began marketing a new Medicare Advantage program known as Community Blue, which it had previously invited UPMC to join as an in-network provider in February 2014, but UPMC had declined. As UPMC was not considered an in-network provider under Community Blue, it wrote to Highmark on September 25, 2014, and informed Highmark that it considered this offering to be a breach of the Consent Decree which it viewed as requiring “all UPMC hospitals and physicians to be in network for the ‘vulnerable populations’ served by Highmark, including Medicare Advantage subscribers.” UPMC Letter to Highmark, 9/26/14. After being made aware of UPMC’s objections, the Commonwealth filed a petition for contempt against Highmark contending, inter alia, that Highmark had breached the vulnerable populations clause of its Consent Decree, which, as discussed above, is identical to that contained in UPMC’s decree. The matter was assigned to Judge Pellegrini for disposition, and he rejected this contention as being unsupported by the plain language of the terms of the vulnerable populations clause: Nowhere in the text of the [vulnerable populations clause] provision is there a requirement that Highmark include UPMC in all of its Medicare-Advantage products. Further, while [the vulnerable populations clause] requires UPMC to continue contracting with Highmark at in-network rates for CHIP, Highmark Signature 65, Medigap, and commercial retiree carve-out programs, it does not impose such 11 UPMC thereafter filed preliminary objections to this complaint, accompanied by a motion to compel arbitration based on its contention that Highmark’s claims were subject to mandatory arbitration under arbitration provisions in the contracts at issue. In response, Highmark filed a petition to stay arbitration. The trial court overruled UPMC’s preliminary objections and granted Highmark’s petition. UPMC subsequently appealed this decision, and that appeal remains pending in the Superior Court. [J-77-2015] - 14 requirements with regard to the Community Blue Program or future products. Although the [vulnerable populations clause] requires UPMC to ‘treat’ all participating Medicare beneficiaries as in-network, it does not impose any corresponding requirement on Highmark to provide for such in-network care, and we are unwilling to impose such a requirement where none exists. Commonwealth Court Opinion, 10/30/14, at 17-18. Thereafter, “serial disputes” continued between the parties over compliance with the decrees which the Commonwealth attempted to mediate, pursuant to the Consent Decrees, but to no avail. Commonwealth Petition to Enforce Consent Decree, filed 4/27/15, at 2-3. On March 20, 2015, UPMC informed Highmark and the Pennsylvania Insurance Department that it would terminate all of its Medicare Advantage hospital contracts on December 31, 2015 based on Highmark’s assertion in its Allegheny County lawsuit that it had the right to change the rates under its contracts with UPMC for the administration of the oncology drugs and its claim that UPMC had overcharged it for that and other medical services from August 2010 forward. UPMC claimed that the language of the vulnerable populations clause gave it the right to engage in such unilateral termination. In response, the Commonwealth filed with the Commonwealth Court a motion to enforce the Consent Decrees which was the genesis of the litigation spawning the instant appeal. On May 27, 2015, Judge Pellegrini conducted a ten-hour hearing on this motion. In order to determine UPMC’s obligations with respect to Highmark’s Medicare Advantage programs, Judge Pellegrini received extensive testimony describing the general characteristics and function of Medicare Advantage programs in delivering [J-77-2015] - 15 health care to seniors, and the coverage of the specific Highmark Medicare Advantage programs at issue in this case. In this regard, he heard from Darlene Sampson, who is the Director of the Pennsylvania Department of Aging’s Apprise Program, Pennsylvania’s state health insurance assistance program, in which capacity she was responsible for educating Medicare beneficiaries and assisting them in understanding Medicare coverage. N.T. Hearing, 5/27/15, at 41, 43. Sampson described the structure of the federal Medicare Program as consisting of four parts — A through D — with Part A providing coverage for hospital services, Part B providing coverage for outpatient and physician services, Part C establishing the Medicare Advantage Programs, and Part D providing prescription drug coverage. Id. at 53. Sampson explained that, if an individual is enrolled in Medicare Advantage, he or she is still considered to be a part of the federal Medicare program and receives Medicare Part A and B benefits through the Medicare Advantage program. Id. at 66. Sampson testified that the principal difference between the traditional Medicare Part A and B programs and Medicare Advantage is in how the plans are administered: when an individual receives Medicare Part A and B, the federal government manages the administration of the Medicare benefits, whereas a Medicare Advantage program is run by a private insurance company which contracts with the federal government (the Centers for Medicare and Medicaid Services (“CMS”)), and the insurance company manages the administration of Medicare benefits and pays claims. Id. at 53-54. The Commonwealth also called Barbara Gray — Highmark’s Senior Vice President of Senior Markets — who is responsible for Highmark’s Medicare Advantage and Medigap insurance products. She agreed with Sampson’s description of the [J-77-2015] - 16 Medicare Advantage program, opining that it is “a type of Medicare product,” and that “if you’re in Medicare Advantage you’re still covered by Medicare and you’re afforded all the rights and privileges and protections . . . of Medicare.” Id. at 82. Gray testified further that those who are enrolled in Medicare Advantage plans are members of Medicare, and that such Medicare Advantage programs are required to provide, at a minimum, the same benefit amounts which are provided by Medicare Parts A and B. Gray noted that, frequently, Medicare Advantage programs furnished a greater monetary benefit value to an enrollee; however, Medicare Advantage programs also restrict a participant’s choice of hospital or doctor to those who are part of networks specified by the insurer administering the plan.12 Id. at 108-09. Gray noted that Highmark offered two types of Medicare Advantage plans which had UPMC hospitals in their networks: Security Blue, which is an HMO that pays no outof-network benefits, and Freedom Blue, which is a Preferred Provider Organization (“PPO”) offering some out-of-network coverage under which members pay the difference between the, lower, covered amount and the actual cost of treatment.13 Id. at 98. Gray related that such plans automatically renew each year unless the plan participant takes affirmative steps to change them, and she estimated that there are approximately 145,000 current subscribers to both plans. Id. at 103. 12 The insurer offering such Medicare Advantage plans is required to submit information regarding the plan to CMS for initial approval, and annual bids detailing policy and rate changes. Such plans must describe the physicians and hospitals, which will be part of the plan’s network. Commonwealth Court Opinion, 6/29/15, at 16; N.T. Hearing, 5/27/15, at 83-84. 13Highmark continues to offer Community Blue which does not include UPMC within its network of hospitals. [J-77-2015] - 17 On this matter, UPMC presented the testimony of the only witness it called at the hearing — Shawn Maree Bishop, the owner of a Washington D.C. based consulting firm which provides representation to organizations and companies which use Medicare Advantage plans, and companies which perform outsourced services for such plans. Id. at 318. Bishop, who was qualified as an expert based on her work as a consultant and prior service in the federal government, including for CMS, opined that, while it was true that Medicare Advantage was part of the Medicare program, it was a distinct program governed by different statutes and regulations, and that a person could not have traditional Medicare and Medicare Advantage at the same time. Id. at 323-24. She testified that she had not encountered the terms “Medicare participating consumers” in the Medicare statutes or regulations, but opined that this phrase meant traditional Medicare, not Medicare Advantage, and that she viewed the requirement of the vulnerable populations clause requiring “Medicare participating consumers” to be treated as “in-network” to refer to a commercial insurance product which is not part of the Medicare program. Id. at 328-29, 331. Bishop acknowledged that, under Medicare Advantage, the reimbursement rates are negotiated directly between the insurer and the provider; whereas, under Medicare Part A and B, CMS sets the reimbursement rates. Hence, if a provider chooses to participate in the Medicare Part A and B program, those are the rates which it receives, and there is no negotiation. Id. at 359. None of these witnesses — Sampson, Gray, or Bishop — participated in the negotiation of the Consent Decree. The only witness who participated in that process, and testified as to the circumstances surrounding the choice of its language, was Deborah Rice-Johnson, the President of Highmark. She testified that the vulnerable [J-77-2015] - 18 populations clause was structured in the manner in which Highmark had proposed it — as including Medicare Advantage members within the definition of all Medicare participating consumers so that they would be treated in-network. Id. at 208. President Rice-Johnson testified that the vulnerable populations clause was the subject of extensive back and forth negotiations between the parties, and that the second sentence of that clause had originally included Medicare Advantage, but that Highmark requested that program be deleted from that sentence because Highmark wanted to ensure that it was protected if it offered other Medicare Advantage programs such as its Community Blue program. Id. at 210-11, 215. Rice-Johnson indicated that her understanding of the term “Medicare participating consumers” in the third sentence during the negotiations was that it included all of Highmark’s Medicare members, i.e., those of its customers in Medicare Advantage contracts with Highmark, and not those individuals enrolled in Medicare Parts A and B, for which Highmark has no contractual relationship. Id. at 255, 274-75. Consequently, in her view, because the third sentence of the vulnerable populations clause obligated UPMC to treat all Medicare participating consumers as “In-Network,” and the Consent Decree further defined “In-Network” as when a health care provider “has contracted” with the insurer to provide health care services at negotiated rates, this sentence required UPMC to be in contract with Highmark for the duration of the Consent Decree. Id. at 215, 270, 273-74. RiceJohnson further testified that, because the term “In-Network” refers to negotiated rates, and because the government does not negotiate rates for Medicare Part A and B, this term has no meaning as applied to Medicare Part A and B. Id. at 273-74. [J-77-2015] - 19 Rice-Johnson also testified regarding the impact of the Allegheny County lawsuit. She claimed that this complaint addressed the period of time prior to March 14, 2014, and it was not an effort to change the rates that it would be required to pay UPMC under Medicare Advantage from January 1, 2016 forward, as such rates would be set by binding arbitration under the terms of the Consent Decree. She noted that Highmark had claimed only that it had the right to change fee schedules under the provider agreements in April 2014, when those agreements were renewed with those changed fee schedules, but she denied that Highmark took the position that it had the right to change such rates under the Medicare Advantage contracts during the term of the Consent Decree. She testified that Highmark viewed the Consent Decree as limiting its ability to make any further such changes: “Once we entered into the arrangement with the Consent Decree, that limited our ability to do so. So during the period of the Consent Decree forward, we will not change rates unless they are mutually agreed upon or agreed through arbitration.” Id. at 186. She further stated, “[o]nce we entered into the Consent Decree, we agreed we would not change fee schedules until the end of that Consent Decree.” Id. at 198. President Rice-Johnson also related that Highmark considered the arbitration clause in the Consent Decree as preserving the right for Highmark and UPMC to arbitrate the question of whether Highmark was entitled to make the change in the oncology fee schedules in 2014. Id. at 221, 256-57. Two days after the hearing, on May 29, 2015, based on the filings and responses of the parties and the evidence presented at the hearing, Judge Pellegrini issued an order granting the Commonwealth’s Motion to Enforce the Decree in which he made the following findings and directives to the parties: [J-77-2015] - 20