The 10-year pact benefits Erie by letting patients at UPMC Hamot, Saint Vincent get in-network care at either hospital.

Patients in Erie who already switched physicians as they waited for a June 30 deadline to pass now have more options.

They can decide if they might want to go back to UPMC, which includes UPMC Hamot, or Highmark's Allegheny Health Network, which includes Saint Vincent Hospital.

At the very least, customers of the competing insurance providers — Highmark and UPMC Health Plan — can now seek treatment at in-network rates at the competing health-care systems.

None of that sounded possible a month ago to David Holmberg, CEO of Allegheny Health Network.

But the health-care landscape in western Pennsylvania changed on Monday.

Pennsylvania Attorney General Josh Shapiro announced that he had brokered a deal between the two health-care systems that will ensure that patients of Saint Vincent and UPMC Hamot can continue to get treatment at in-network prices at either Erie facility for the next 10 years.

The deal extends the arrangement established in the consent decrees that expire June 30 between UPMC and Highmark.

The 10-year agreement guarantees that all UPMC facilities, including Hamot, "are now an option for Highmark's insured," Shapiro said.

Shapiro called the 10-year pact "unprecedented" due to its length and said it is the longest deal that UPMC has reached with an insurer.

Holmberg said he certainly didn't predict this ending to the longstanding impasse between the two health-care systems.

"I think it's the best of all worlds for the people of northwestern Pennsylvania," Holmberg said in an interview with the Erie Times-News. "Now, they have the ability to choose insurance and health care based on their lifestyle and their needs."

Patient choices

As recently as a few weeks ago, there was little to hint that a settlement might be reached.

"A few months ago, I would have said it's going to be divided," Holmberg said. "I think now we have the opportunity for healthy competition versus destructive competition. I am cautiously optimistic that we have entered a new day in western Pennsylvania and that both organizations will thrive."

Shapiro called the deal "global," and said it applies to all aspects of health care, including Medicare Advantage. And he said that the deal is a new contract between UPMC and Highmark and does not involve the state as a party, as was the case with the consent decrees, which the state enforced.

To have full in-network access to UPMC as of July 1, Highmark members' health plans must include UPMC in their healthcare provider network.

"Today, millions of Pennsylvanians and their families can rest easier knowing they don't have to worry about their care changing after June 30," Shapiro said. "This agreement has eliminated angst from the marketplace and from the hearts of Pennsylvania families. It has reinjected real choice back into the marketplace."

Shapiro acknowledged that some patients might have already switched physicians or hospitals in anticipation of the June 30 deadline. Without getting into specifics, Shapiro said UPMC and Highmark have assured him that no patient will be left in "the lurch" after the new deal goes into effect July 1.

"Both institutions are going to work together to smooth the process for patients," he said.

Holmberg said he expects that patients will be able to return to their previous physicians.

"I think every situation is a little bit different," Holmberg said. But in most cases, a patient who changed physicians in anticipation of the expiration of the consent decree should be able to switch back, he said.

Paul Wood, vice president and chief spokesman for UPMC, agreed in an interview Monday that patients will be able to return to their doctor of choice.

"We never wanted to lose a single patient," he said. "I hope we can find a way to make this patient switch transparent and painless. We don't intend to throw up any roadblocks for that."

A long dispute

Shapiro announced the agreement at an 11:35 a.m. news conference on Monday in Pittsburgh with fellow Democrat Gov. Tom Wolf.

"This is a really, really big deal," Wolf said. "This has been something that has been dividing this community and really served as a potential problem for all of Pennsylvania."

He said most agreements of the kind between UPMC and Highmark usually last five years, and he credited Shapiro with getting a 10-year deal.

"Western Pennsylvanians now have 10 years of consistency," Wolf said. "They know what to expect."

The attorney general's announcement came after a Commonwealth Court judge ruled June 14 that the consent decrees be allowed to expire on June 30. Shapiro on Monday said that UPMC contacted his office before Simpon issued his ruling to talk about negotiating a deal.

If the consent decrees had expired as scheduled, Highmark would no longer have been in-network for most UPMC hospitals and physician offices, forcing Highmark subscribers to pay significantly more out of pocket to receive treatment at those locations.

Shapiro sued UPMC over the consent decrees in Commonwealth Court in February after negotiations to modify and extend the decrees were unsuccessful, though Highmark did reach an agreement with the attorney general.

Simpson granted a portion of UPMC's motion to dismiss the attorney general's petition in April, ruling that Commonwealth Court lacked the authority to grant the request to extend the decrees. The state Supreme Court heard an appeal of that ruling on May 28 and remanded the case to Commonwealth Court.

Problems over access to health care between Highmark and UPMC date back to 2011, though each side interpreted the issue differently.

UPMC officials said problems started when Highmark announced a $475 million takeover of the West Penn Allegheny Health System, UPMC's primary competitor in Pittsburgh. Highmark officials said they were forced to buy the financially-troubled health system because of UPMC's rapidly increasing medical costs and a concern that Pittsburgh would turn into a single health-system town.

Highmark's negotiations on a new provider contract with UPMC, which would set the payment rates for its doctors and hospitals, stagnated because UPMC now viewed Highmark's new Allegheny Health System as a competitor. Then-Gov. Tom Corbett was able to convince the two sides to extend UPMC's contract with Highmark until the end of 2014.

State officials then brokered a deal in June 2014 between the two health-care giants in which they signed five-year consent decrees that gave Highmark subscribers in-network access to Hamot and "rural" hospitals in western Pennsylvania.

Those were the consent decrees set to expire June 30. The 10-year contract between UPMC and Highmark replaces them.

'Fair playing field'

According to a statement from UPMC's Wood, UPMC and Highmark held what he described as a congenial meeting following the June 14 Commonwealth Court decision. The chief agenda item, he said, was to outline UPMC's offer to provide "in-network access to the UPMC Hillman Cancer Center for Highmark members with a suspected or confirmed cancer or hematologic diagnosis."

"Highmark recognized — as do all — that the UPMC Hillman Cancer Center is as essential to the region's well-being as specialty hospitals UPMC Children's and UPMC Western Psychiatric. Those discussions then quickly expanded to other areas, and an agreement in the best interests of the patients and communities we serve was reached."

Wood continued: "UPMC believes in the importance of informed consumer choice and has always sought to ensure that when UPMC is part of any insurance network, those members have full access to UPMC without contractual terms used to discourage or limit the use of UPMC's physicians and facilities. This important consumer issue was resolved in a collaborative fashion and UPMC's network will now be available to Highmark members."

Wood said a key to reaching the settlement was Highmark agreeing that it would agree to the same reimbursement levels for a patient who used the Hillman Cancer Center as one who used an Allegheny Health Network facility.

Wood said negative publicity did not play a role in UPMC extending the agreement.

"Negative PR has never motivated UPMC's actions in the past and it will not motivate our actions in the future," he said. "I think we were at a good time with a goal of reaching an agreement."

Holmberg said the agreement will enable the two hospital systems to avoid expensive and wasteful duplication of services.

"We have always been open to choice," he said. "Let's have a fair playing field and let them (the public) choose."

Staff writer David Bruce contributed to this report.

Ed Palattella can be reached at 870-1813 or by email. Follow him on Twitter at www.Twitter.com/ETNpalattella

Jim Martin can be reached at 870-1668 or by email. Follow him on Twitter at www.twitter.com/ETNMartin.