The firing of Highmark CEO Kenneth Melani may have come at an inopportune time for the health insurer, as it prepares to take over the struggling West Penn Allegheny Health System and wages a contract war with UPMC.
Highmark was dealt a blow when Moody's Investors Services downgraded its credit rating in response to the leadership tumult. However, the co-chair of the Pennsylvania House Insurance Committee doesn't see Melani's dismissal as a major factor in contract negotiations between Highmark and UPMC.
Melani was removed from Highmark's top executive office on Sunday, a week after being arrested for fighting with the husband of an employee with whom he was having an affair. His interim replacement is Highmark Board Chair J. Robert Baum.
But State Representative Tony DeLuca (D-Penn Hills) said Melani's ouster won't change contract talks between UPMC and Highmark. DeLuca said it's UPMC CEO Jeffrey Romoff who is the major obstacle to a contract renewal.
"I think that the CEO of UPMC has a grand plan for UPMC. I think his plan is to control the insurance market, control the facilities," said DeLuca.
Contract Mediation Bill Remains Stagnant in Senate
DeLuca is the sponsor of HB 2052, which would expand the powers of the state Insurance Commissioner to resolve the dispute. Under the bill, the Insurance Commissioner would have the authority to terminate, create, or extend health insurance contracts when the Department of Health raises concerns.
After bipartisan passage through the lower chamber, the legislation has stalled in the Senate Banking & Insurance Committee. Instead, DeLuca is asking local elected officials in western Pennsylvania to issue resolutions that would put pressure on UPMC and Highmark to extend their contract.
DeLuca said he thinks the public was placated when UPMC and Highmark announced a one-year extension of in-network rates for Highmark subscribers.
"But 2013's going to roll around, and we're going to have the same situation when these individuals are not going to be able to utilize UPMC's facilities or the physicians," said DeLuca.
Highmark subscribers will pay in-network rates at most UPMC facilities through June 30, 2013.