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The PR Campaign to Hide the Real Cause of those Sky-High Surprise Medical Bills

Most people assume that if they are treated at a hospital in their insurance network, the doctors they see will accept their insurance. But that’s not always the case. Since 2010, an increasing number of hospitals have outsourced their emergency rooms, radiology, anesthesiology, and other specialized services to physician staffing firms. Patients who need these critical services may inadvertently receive care from a doctor outside of their insurance network and find that they owe thousands or even tens of thousands of dollars in surprise medical bills.

Rates of surprise billing are highest for insured patients treated in emergency rooms. A Stanford University study of millions of ER visits found that more than 2-in-5 (43%) visits resulted in a surprise medical bill in 2016. A person who urgently needs care is in no position to argue and has no choice about either the ambulance, the hospital, or the ER they are taken to. One estimate is that almost 65 percent of U.S. hospitals have ERs staffed by outside firms. As might be expected, surprise billing is most likely to occur in these hospitals.

Horror stories abound. A woman in Hoboken left the emergency room of a hospital when she discovered that the plastic surgeon who would see her was not in her insurance network, and sought treatment at an in-network facility instead. Despite not having received a diagnosis at the first hospital and having left the ER without receiving any treatment, she got a bill from the hospital for $5,751. Her insurance plan paid the hospital $862, which it deemed a “reasonable and appropriate” fee for the services the woman received. That left her stuck with a bill for $4,989.

Patients stuck with surprise bills from out of network doctors are likely to be shocked at the fees they are being charged and angry at their insurance company. But they are unlikely to be aware of the Wall Street firms behind these bills.

Private equity firms have been busy gobbling up physicians’ practices and consolidating them into large national staffing firms. The two biggest physician staffing firms – Envision and TeamHealth – are owned by two of the biggest private equity firms – KKR and Blackstone Group. By 2013, these private equity-owned staffing firms had cornered 30 percent of the market for outsourced doctors, and private equity ownership of doctors’ groups has continued to grow. Private equity firms also own two of the three largest emergency ambulance and emergency air transport services – another major source of surprise medical billing.

Private equity loads these staffing firms up with debt and it promises its investors high returns. It keeps the doctors’ practices it owns out of insurance networks so it can collect high fees from patients. Or it uses the threat that its doctors will go out of network to bully insurance companies into paying its doctors much more for procedures than is paid to other doctors. Either way, health care costs and insurance premiums go up, and consumers pay the price.

Recently, bipartisan legislation passed through committees in both the House and the Senate that would prevent doctors and hospitals from sending big bills to patients for care provided by out-of-network doctors, most often by emergency room physicians. President Donald Trump called on Congress to protect patients from surprise medical bills. It looked like patients were going to be protected from surprise medical bills.

But legislation to roll back surprise medical bills will cut into the heady profits enjoyed by the Wall Street firms behind surprise billing. It didn’t take long for Envision and TeamHealth to reach into the deep pockets of their private equity owners to fund a dark money campaign and spend $28 million on ads intended to keep any legislation from passing. The ads don’t mention surprise billing. Instead, they claim that patients will be harmed if the government steps in to set rates – that is, limit how much out-of-network doctors can charge. Or they claim that big insurance doesn’t want to pay doctors and hospitals, without mentioning that these providers are out-of-network and can charge however much they want.

Medical debt is a leading cause of bankruptcy for families, and surprise medical bills are a major contributor to rising levels of medical debt. Patients need to be protected from unreasonable fees that don’t improve medical care but simply line the pockets of Wall Street investors. Congress needs to act.

This column originally appeared in the Star-Ledger.

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