Firms that staff hospitals around Virginia behind mysterious push to defend surprise medical bills

For months, a mysterious group called “Doctor Patient Unity” has targeted U.S. Rep. Ben Cline, R-Rockbridge, in a steady barrage of social media ads encouraging him to oppose bipartisan legislation to end surprise medical bills.

At the end of last week, The New York Times reported that two private equity-backed doctor staffing companies that work in hospitals around the country, including Virginia, are behind the $28 million ad campaign aimed at influencing the constituents of Cline and about 50 other members of Congress.

U.S. Rep. Ben Cline, R-Rockbridge, is one of about 50 members of Congress targeted in ad campaign financed by private equity-backed physician staffing firms.

The companies, TeamHealth and Envision Healthcare, told The Times they oppose the legislation because it would lead to what they consider “government rate setting.” But recent reports suggest these profit-driven firms also have a strong financial motive to continue hitting patients with surprise bills.

Patients get surprise bills in part because hospitals and other medical practices have increasingly turned to outside staffing firms to help fill shifts. The result: A hospital that accepts a patient’s insurance might have doctors working in it who don’t. When insurance companies reject the bills from those medical providers, the doctor staffing firms send them to patients. The practice is sometimes called balance billing.

Kaiser Health News reported last week that the staffing companies can make a lot of money in the process:

“These physician-staffing companies are benefiting tremendously from the ability to bill out-of-network,” said Zack Cooper, an associate professor of public health at Yale, who has studied physician-staffing firms and balance billing. “It’s a small but profitable sliver of the health care system that these firms are using to make pretty significant amounts of money.”

Cooper said the business models are built on the ability to get profits from balance billing.

“Private equity firms are buying up physician practices that allow them to bill out-of-network, cloaking themselves in the halo that physicians generally receive and then actively watering down any legislation that would both protect patients but affect their bottom line,” Cooper said.

The staffing firm Envision disputed this assessment of its business model. An emailed statement said more than 90% of its business comes from in-network agreements and that the company continues “actively advocating for a federal solution to surprise medical bills.”

Cline’s office did not respond to an email seeking comment about the advertisements targeting him and his position on the legislation working its way through Congress.

But the role of private equity firms in surprise billing has not escaped notice at either the federal or the state level. On Monday, House leaders launched an investigation aiming to determine whether the companies are using surprise bills to drive up profits.

And a representative of the insurance industry, which generally backs proposals to stop surprise bills currently working their way through Congress, raised the issue Tuesday at a meeting of Virginia’s Health Insurance Reform Commission.

“Little did we know when we started this process that deep-pocketed private equity groups would sort of come out of the woodwork,” Jeanette Thornton, senior vice president of America’s Health Insurance Plans, told the committee of Virginia lawmakers. “I don’t know if you’ve seen some of these ads … It’s private-equity groups who often staff emergency room facilities who are really benefiting from the ability to send patients bills above and beyond what plans pay, and it’s been really disheartening to see — as someone who’s so supportive of seeing federal action — that some of these groups just want to maintain the status quo.”

Del. Kathy Byron, R-Bedford, who chairs the commission, said she was indeed aware of the marketing campaign: “Some of us have been watching and receiving some of that mail you’re referring to.”

The legislation being debated in Congress would address surprise bills by setting benchmarks under which “out-of-network physician charges are paid by the patient’s health plan based on an average of what other in-network doctors in the area are paid,” according to Kaiser Health News.

Hospital and doctors groups, including “Doctor Patient Unity,” oppose the plan and instead support legislation that would call for arbitration between providers and insurance companies “to determine a fair price in the event of a balance bill.”

The insurance industry argues arbitration would further raise the cost of health care, while hospital and doctors groups generally argue benchmarking would give the insurance industry too much leverage in negotiations with health providers.

At the state level, regulators are weighing new rules that aim to end some surprise medical bills by requiring hospitals to warn patients coming in for non-emergency care if they’re likely to encounter an out-of-network provider and allow them to decline that out-of-network-care in advance.