A contract dispute set to push Philadelphia-based Rothman Orthopaedics out of Highmark Blue Shield’s Pennsylvania network Oct. 1 has escalated into a broader fight over out-of-network physician assistants and the federal process designed to resolve certain payment disputes without putting patients in the middle.
At the center of the disagreement are out-of-network PAs used by some Rothman-employed surgeons and claims that have gone through the No Surprises Act’s independent dispute resolution process.
Highmark alleges the arrangement has generated excessive payments and violated its contract with Rothman. Rothman President Alexander Vaccaro, MD, PhD, disputes that characterization and says the practice itself does not own, control or employ the out-of-network PA entity at issue.
In an emailed statement to Becker’s, Highmark disputed Rothman’s characterization of its relationship with the entity. The insurer said its investigation found the entity is owned and operated by Rothman-employed surgeons who choose to use its out-of-network PAs.
That disagreement — over the relationship between Rothman and the PA entity, whether the resulting IDR awards reflect legitimate reimbursement or abuse of the federal process and what responsibility Rothman bears for its surgeons’ use of the PAs — is at the heart of the contract fight.
About 10,200 Highmark members used Rothman services in the past year, according to the insurer. Unless the dispute is resolved, Rothman will leave Highmark’s Pennsylvania network Oct. 1. The network change applies only to care provided in Pennsylvania. Rothman will remain in network with Highmark for appointments in New Jersey.
Two versions of the same dispute
Highmark told Becker’s its decision to terminate the Pennsylvania contract is rooted in concerns about billing and referral practices involving several Rothman-employed surgeons and out-of-network PAs.
The insurer said its investigation found the out-of-network PA entity at the center of the dispute is owned and operated by Rothman-employed surgeons. According to Highmark, those surgeons have used out-of-network PAs for Highmark members despite the availability of in-network PAs, including for scheduled procedures at Rothman-affiliated facilities.
Highmark also said the out-of-network PAs have sought and received IDR payments substantially higher than what the same assistants previously received through Rothman’s in-network agreement and, in some cases, higher than what the operating surgeon was paid.
Highmark considers the arrangement an abuse of IDR and a breach of its provider contract with Rothman.
Dr. Vaccaro sees it differently.
He said Rothman itself does not own or control the outside entity and does not employ its out-of-network PAs. He said physicians established the arrangement to provide PA support at hospitals where those physicians did not have residents or fellows.
“They want us to use our power to stop these out-of-network doctors from doing what they’re doing, and that is not our responsibility,” Dr. Vaccaro told Becker’s. “It’s their responsibility.”
Highmark rejects that position. The insurer said it proposed alternatives that could have allowed the parties to avoid contract termination, noting that Rothman employs PAs who participate in Highmark’s network. Highmark said Rothman declined to take the steps it requested.
A fight over what IDR is supposed to do
Underlying the contract dispute are sharply different views of the federal IDR process.
The No Surprises Act protects patients from certain unexpected out-of-network bills and established a process for resolving qualifying payment disputes between health plans and providers. After an unsuccessful 30-business-day open negotiation period, either party can initiate federal IDR. The parties submit payment offers and supporting information to a certified IDR entity, which selects between the offers.
Dr. Vaccaro argues that independent review is fundamental to the process. In his view, IDR prevents any one party, including an insurer or provider, from unilaterally determining what an eligible out-of-network service is worth when the sides cannot agree.
“What that did was that took the power away from the physician, it took the power away from the hospital, took the power away from the insurance company,” he said.
That distinction is central to Rothman’s position. Dr. Vaccaro argues eligible disputes over PA reimbursement should be resolved through the process Congress established rather than by making Rothman responsible for intervening in its surgeons’ arrangements with outside providers.
Highmark sees the disputed claims differently. The insurer told Becker’s that the law was intended to protect patients from unexpected medical bills, not create what it considers new avenues for excessive reimbursement.
Highmark said its concern is not simply that the PAs are out of network. It alleges that Rothman-employed surgeons are choosing to use those PAs despite in-network alternatives and that the resulting IDR payments have imposed unnecessary costs on members and self-insured clients.
Dr. Vaccaro does not view the size of the awards as evidence that IDR is being abused. He argues the outcomes instead raise questions about the payment offers insurers bring to the process.
“If they come to the table with a legitimate payment, the arbitrators will take that,” he said.
The dispute comes as use of federal IDR continues to grow. More than 7 million disputes were initiated between the process’s April 2022 launch and July 31, 2026, according to CMS.
A reimbursement fight underneath the IDR fight
The disagreement over PAs is not the only source of tension between the organizations.
Dr. Vaccaro told Becker’s that Rothman also believes Highmark’s reimbursement for orthopedic care is below market and said the organizations have disagreed over rates.
“We have an issue, which we have at times with different insurance companies who are negotiating,” he said. Dr. Vaccaro said he is willing to discuss the PA issue with Highmark and offered to speak with the physicians involved. But he said Rothman should not be required to stop the outside arrangement as a condition of negotiating reimbursement with Highmark.
“I’m willing to sit down with them any time,” he said.
Highmark said it has communicated its concerns to Rothman and offered alternatives that would have allowed the organizations to avoid contract termination. The insurer said its focus is protecting members and employers from what it considers avoidable healthcare costs.
Dan Tropeano, Highmark’s southeastern Pennsylvania segment president, separately told the Philadelphia Business Journal that Rothman should not be taking the disputed claims to arbitration because a payment methodology already exists under the organizations’ current contract. He said payments sought for PAs through arbitration have, in some cases, exceeded what surgeons were paid for the procedures.
The Business Journal also reported that Highmark would rescind its termination notice if Rothman cures what the insurer considers the contract breach before Oct. 1.
What it means for patients
Unless the organizations resolve the dispute, Rothman will be out of network with Highmark Blue Shield and Federal Employee Program plans for care provided in Pennsylvania beginning Oct. 1.
The change does not apply to appointments in New Jersey, where Rothman will remain in network. Other Blue Cross and Blue Shield plans, including Independence Blue Cross and Horizon, will also remain in network.
Highmark said roughly 10,200 of its members used Rothman services during the past year and that it will work with affected members to find alternative in-network care. The Philadelphia Inquirer also reported that Highmark plans to help Pennsylvania patients identify alternative sites of care.
Rothman said it will continue accepting out-of-network benefits where available and advised patients to contact their health plans to confirm coverage, out-of-network benefits and potential cost-sharing.
Dr. Vaccaro similarly urged patients with existing Rothman relationships to determine whether their plans include out-of-network benefits. He also pointed to New Jersey as an option for patients whose plans cover Rothman there.
For patients without those options, the two sides offer fundamentally different assessments of what the Oct. 1 change represents.
Dr. Vaccaro argues Highmark’s decision will unnecessarily restrict access to Rothman’s physicians. Highmark says ending the contract is necessary to address practices it believes are driving unnecessary costs and that affected members will continue to have access to in-network orthopedic providers.
Both sides say they are willing to resolve the dispute. What they disagree on is what needs to happen first.
Highmark maintains that Rothman must address the out-of-network PA practices the insurer believes violate their contract. Rothman maintains that eligible payment disputes should be resolved through the federal IDR process and that the practice should not be required to stop an outside arrangement it says it does not control as a condition of negotiating reimbursement with Highmark.
For now, neither side has resolved that fundamental disagreement. And unless they do, Rothman’s Pennsylvania physicians will leave Highmark’s network Oct. 1.
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