Surgery center raises issues with UPMC

Chairman alleges health network steering patients to other providers

At a health care hearing Wednesday in Altoona, the head of a local independent surgery center lambasted UPMC for allegedly denying his center access to patients — by shutting it out of UPMC Health Plan’s provider network and by steering patients to other providers.

The “predatory and monopolistic” behavior of the integrated health care system — which offers both medical care and insurance — damages independent medical providers by depriving them of income and hurts patients by denying them quality care and by swelling health care costs, Advanced Center for Surgery Chairman Joshua Port told state Auditor General Eugene DePasquale.

Speaking generally after the meeting, a Penn State health care analyst outlined arguments that integrated systems like UPMC often make to justify the kinds of policies that Port criticized.

The arguments on both sides center around the ability of patients to choose among providers.

“In most markets (where integrated health care systems like UPMC operate), some independent providers feel shut out,” said Dennis Scanlon, one of several experts who testified at the hearing, speaking afterward — but not about UPMC or Port in particular. “As a result, there is often bad blood.”

There’s a fine line between subscribers for an integrated system’s health plan having adequate choice and those health plans’ doctor networks being “narrow” enough to be efficient, Scanlon said.

Integrated health care systems include medical providers who are part of the system, and they also can include independent providers, which the systems’ health plans contract with on favorable terms — using the leverage of the multitude of patients they can send to those providers, Scanlon indicated.

If independent providers insist on higher payments than the integrated system’s health plan is willing to pay, they may get shut out.

But even if they are willing to accept payments competitive with the system’s own providers, they may get shut out, Scanlon said.

That can happen because an integrated system may want to keep providers — both those whom it has under contract and those who have been shut out — “a little on edge,” he said.

That preserves “tension” — and pricing leverage for the integrated system, he said.

He analogized the situation to high school basketball.

If the coach cuts no one, there’s not as much incentive for players on the team, and players who want to make the team work out and get better, he said.

In the case of the integrated system, such selectivity can keep providers anxious enough to keep their costs down, while keeping those without contracts willing to lower their bids when the next opportunity comes to negotiate, he said.

Integrated systems also argue sometimes that they don’t need to contract with all available providers because they already have enough “capacity” to serve their patients, Scanlon said.

Port indicated in his presentation to DePasquale that his center has been denied a place in the UPMC network in spite of its willingness to accept competitive reimbursements.

That denial has taken place in spite of his center’s advanced surgical techniques, which have minimized patient pain, and in turn, minimized the risk of opioid addiction, Port said.

The denial has taken place also in spite of the center’s low risk of patient infection, compared to the hospital, because of the sicker patients in the hospital, and in spite of the center’s cost-efficiency, which enables it to charge a facility fee that is 40 percent less than that of the hospital, he told DePasquale.

And the denial has taken place in spite of the greater continuity of care the center provides, in comparison to UPMC’s own Elite Orthopedics, which has been employing temporary doctors to deal with doctors who have left the practice, Port said.

Still, patient choice is hardly the be-all and end-all, according to Scanlon.

If subscribers to an integrated system’s health plan don’t need to wait for appointments, if the quality of their care is good and if the cost — to them and to organizations helping to pay on their behalf — is reasonable, it’s hard to argue that choice is compromised, he said.

In theory, integrated health care systems — entirely self-contained, with all providers owned by the system — can be cost-efficient because of the alleged superior coordination among all components — as patients move from primary care through various specialties, with communications made easier by the same electronic system, interactions all covered by the same policies and care covered by the system’s insurance plan, Scanlon said.

In practice, however, such seamless coordination doesn’t always occur, especially during interim periods after systems gobble up hospitals and providers, before the varying cultures begin to mesh with the culture of the system as a whole, he said.

Conversely, when integrated systems reach out and place independent medical providers in their networks, those independent providers are often quite capable of meshing nicely with the policies and procedures of the organization they’re working with, Scanlon said.

Generally, Scanlon doesn’t have a problem with providers working for integrated systems — for example, primary care doctors — steering patients to other providers owned by the system.

It is a violation of the Social Security Act for a doctor to refer patients for certain health services payable by Medicare and provided by a company in which the doctor or an immediate family member has an ownership stake, including lab, physical therapy, imaging and durable medical equipment, according to CMS.gov.

But the referrals within integrated health care systems are not equivalent to such illegal self-dealing, Scanlon said.

When an individual or employer subscribes to a health plan that is part of an integrated system, the subscriber knows what he or she is getting into, and expects that referrals will be within the system network, Scanlon said.

“It’s transparent,” he said. “It’s their business model.”

It’s analogous to General Motors buying its mufflers from a preferred company, he said.

Port, who created his surgery center with colleagues only after Altoona Hospital refused multiple times to do it for them, questioned the feasibility of the integrated system model.

“Integrated health care systems (health care provider and insurer in same entity) do not favor patients and health care providers,” he told DePasquale.

They especially damage independent provider practices, facilities and services like pharmacies and imaging centers, possibly lowering costs for a while, but causing price increases and quality declines due to lack of competition after the systems achieve market dominance, he said.

Pennsylvania would be better off with an anti-trust law that could stop them, he said.

UPMC didn’t provide a comment on Port’s criticisms by mid-evening Wednesday, but its local predecessor, Altoona Regional Health System, in 2008, criticized stand-alone surgery centers like Port’s facility for competing with the hospital and depriving it of facility fee income.


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