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It’s not just the insurers who are causing sky-high surprise medical bills

October 21, 2019

Topics: Quote of the Day

By Eileen Appelbaum
CounterPunch, October 18, 2019

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.

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.

https://www.counterpunch.org…


Comment:

By Don McCanne, M.D.

Advocates of single payer Medicare for All are outraged by the fact that the problem of surprise medical bills – medical bills for which patients are personally responsible because some of their providers were not included in the insurers’ networks – are being approached as an isolated problem when the real defect is due to the fragmentation of our health care financing system. Private insurance contracting and publicly administered pricing are two very different methods of controlling excessive prices that do not mesh well when both are applied to different segments of a single clinical encounter. It is no wonder that huge sums are being spent to try to influence legislation on surprise bills, especially when the interests of various stakeholders are in conflict.

An obvious fault with our health care financing system is that private insurers are allowed to establish contracted networks of providers with controls on prices and patient cost sharing while failing to provide adequate financial protection for patients who inadvertently or unavoidably receive care outside of the networks. We certainly blame the private insurers for their role in this health care injustice, but, as today’s article points out, there are two other players that are involved as well – the health care providers themselves, and Wall Street.

Much has been written about provider consolidation and the creation of oligopolies that give them leverage to charge higher prices, sometimes much higher prices. Many hospitals are now outsourcing their emergency rooms, anesthesiology, radiology, pathology, laboratory and other specialized services to physician staffing firms. These staffing firms usually have greater negotiating power through further consolidation.

And now Wall Street has entered the picture: “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.”

Further, “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.”

How many times have we seen private equity firms acquire companies only to draw out of them as much funds as possible by loading them up with debt, and passing those extracted funds on to their investors and, of course, their own executives? Buried under debt, there is an even greater need to push prices to the max, and beyond. Greed is driving our health care system.

We can eliminate the private insurers and reduce the profound administrative waste associated with their model of health care financing. We can eliminate the need to divert health care dollars to passive investors by converting our health care delivery system to not-for-profit status. And we can replace our financing system with a single, efficient, equitable, publicly-financed and publicly-administered system that would ensure affordable health care for everyone – Single Payer Medicare for All – with no surprise bills or any of the other evils associated with our current dysfunctional system. What’s stopping us?

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About the Commentator, Don McCanne

Don McCanne is a retired family practitioner who dedicated the 2nd phase of his career to speaking and writing extensively on single payer and related issues. He served as Physicians for a National Health Program president in 2002 and 2003, then as Senior Health Policy Fellow. For two decades, Don wrote "Quote of the Day", a daily health policy update which inspired HJM.

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