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'Surprise billing' talks in Congress take negative turn for medical providers


Essential IR Insights Newsletter Fall - 2023

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'Surprise billing' talks in Congress take negative turn for medical providers

The highly charged issue of surprise medical billing looks to be closer to a resolution by year-end, as legislators will meet over the next two weeks regarding a bill that includes language less favorable to healthcare providers, such as high-profile leveraged loan issuers Envision Healthcare Corp. and TeamHealth Medical Call Center.

Surprise medical billing, also referred to as balance billing, can come into play when patients unexpectedly receive care from an out-of-network health provider.

Language in an upcoming bill could create headwinds for providers Envision Healthcare and TeamHealth, as reimbursements would be benchmarked to a "median in-network rate" while arbitration, which has been viewed as more provider-friendly, will be limited, legislative sources told LCD.

"We believe there will be a $4 billion to $6 billion reduction in the amount payers reimburse providers and doctors' groups," analysts at policy research firm Capstone LLC wrote on Oct. 15, following an Oct. 10 event held in Washington, D.C., attended by staffers from the offices of Sens. Chuck Schumer, D-N.Y., and Lindsey Graham, R-S.C., and Rep. Kevin Brady, R-Tex., among others.

The nonpartisan Congressional Budget Office estimated in July that if Senate Bill 1895 and House Bill 3630 were enacted, healthcare providers would see an average reduction of rates of anywhere from 12% to 20%.

However, as a concession to lobbyists of healthcare providers, the bill may push back the implementation date a year, to January 2022, said Capstone.

Capstone estimates a 70% chance that a bill will pass by the end of the year, up 10% from earlier in the month.

The loans of Envision and Team Health had fallen below 80 over the course of the summer before stabilizing on hopes that the final bill would include language allowing for an arbitration mechanism. As of the morning of Oct. 21, Envision was quoted at 80.25/81.5 while TeamHealth was around 77/78.75.

Yet Capstone did not seem entirely optimistic.

"Although a form of arbitration is likely to be included in the final legislative package, it will likely not be 'provider-friendly' as ... Senator Bill Cassidy (R-LA) and Senator Maggie Hassan (D-NH) proposed under SB 1531," the firm wrote to its clients.

That is because any sort of arbitration, Capstone believes, would still be referenced against the median in-network rate benchmark.

A wary eye on PE?

Certain members of Congress also are going out of their way to include specific language preventing the physician staffing firms backed by private equity concerns from using any sort of arbitration mechanism.

This follows revelations that both Envision and TeamHealth were behind a dark money campaign led by a group called Doctor Patient Unity, which spent over $28 million on ads trying to target vulnerable members of Congress supporting early versions of the bill.

As a result, House Energy and Commerce Committee Chairman Frank Pallone Jr., D-N.J., and ranking member Greg Walden, R-Ore., also sent letters on Sept. 16 to Blackstone, KKR, and Welsh Carson Anderson & Stowe requesting by Sept. 30 more details regarding the private equity firms' ownership of healthcare providers, including a breakdown of revenue earned from out-of-network versus in-network billing and negotiation processes with insurance companies.

So far, only Blackstone has submitted a response to the committee.

"Blackstone's portfolio company TeamHealth fully supports legislation to end surprise medical bills through ... independent arbitration that has proven successful in New York and Texas," a spokesperson for the firm told LCD.

But a spokesperson for the House Committee on Energy and Commerce was not impressed with the response.

"It's not an actual response, it's a [public relations] document. The chairman and ranking member expect full compliance with the committee's oversight requests, and will be following up," the spokesperson said.

Meanwhile, the House Education and Labor Committee is moving this week to mark up House Bill 3630, called the "No Surprises Act."