As Coronavirus Spreads, Surprise Medical Bills Kept in Place by Private Equity-Backed Democrat

Rep. Richard Neal (D-Mass.) torpedoed a fix tp surprise medical billing that threatened his private equity donors' profits. The coronavirus outbreak makes this potentially deadly.

As Coronavirus Spreads, Surprise Medical Bills Kept in Place by Private Equity-Backed Democrat
Concerned about the spread of COVID-19 in large gatherings, students wear respiratory masks as they wait for Democratic presidential candidate Sen. Bernie Sanders (D-VT) to speak at a rally in North Carolina.

The American Prospect is a nonprofit, independent magazine covering public policy and politics. Sludge is re-publishing this article.

Osmel Martinez Azcue was feeling sick and run-down a couple of weeks after a business trip to China. With coronavirus fears mounting, he visited a hospital in Miami, getting a blood test that revealed he just had the flu. But a couple of weeks later, Azcue got the bill: $3,270.

Azcue’s junk insurance, which the Trump administration established as Obamacare-compliant, is fundamentally useless as coverage, shifting the medical burden to the patient. But Azcue also faced a more obscure problem that will add to America’s challenges in confronting a worldwide public-health crisis. “[T]here are more bills for Azcue on the way,” the Miami Herald reported, “but it’s unclear what those will total, as they are going to be issued by the University of Miami Health System … for treatment provided by their staff physicians who work at Jackson [Memorial Hospital].”

In other words, Azcue will soon become another victim of surprise billing. Outside companies separate from the hospital involved in his treatment get to charge him for care, which is inevitably expensive because it’s outside the insurance network he’s paid for.

It’s shocking that surprise billing still exists in this country. Americans spend roughly $40 billion per year in excess charges from surprise billing, according to a 2019 Health Affairs report. Everyone unaffiliated with the insurance companies or physician groups involved sees this as a moral abomination. It’s been at the top of Congress’s agenda for years. And last year, it looked like there was finally enough political will to end this depravity.

But an all-out advertising assault from the private equity firms most invested in physician staffing groups delayed the effort. And right when we don’t need hefty markups and billing games preventing people at risk of a viral outbreak from going to the hospital, right when we should powerfully understand how this crisis reinforces the need for quality and affordable medical treatment for all, along comes one legislator with an inadequate and appallingly generous surprise billing “fix.”

That legislator’s name is Richie Neal.

The chair of the House Ways and Means Committee, Neal was not the lead sponsor on the deal that both parties were coalescing around on surprise billing. Instead, he blew up that consensus by working with the architect of the Trump tax cuts, Ways and Means ranking member Kevin Brady (R-TX), on a completely new measure. For Neal, it’s the best of both worlds: If his bill wins, the special interests that fund his campaigns get a windfall. If it loses, his efforts have still fractured the coalition enough to make it unlikely that anything will pass, which protects those same special interests.

Let’s back up a second. Like far too many issues in Washington, the surprise billing fiasco involves mediating between opposing corporate interests. In this case, it’s the insurers against the health care providers. Insurers can reduce their obligation to pay provider bills (such as doctor bills) by placing them out of their network. This has become more commonplace as networks narrow. Last week, UnitedHealth pushed a large physician staffing group, Mednax, out of its network in four Southern states, a move that was “without warning and unprecedented” according to Mednax’s CEO. UnitedHealth complained that Mednax was overcharging—so better to have it overcharge patients than overcharge the insurer.

Mednax includes thousands of anesthesiologists and obstetricians, and it’s not unusual for these types of services to be performed by nonstaff providers. The physician groups can charge more outside of networks than under the lower terms insurers demand. Private equity has seen how lucrative it can be to slap a surprise bill on a patient and load them with medical debt; the industry has scooped up many staffing groups for this very reason. The two largest staffing firms, TeamHealth and Envision, are both private equity–owned by two of the giants of that world, Blackstone (TeamHealth) and KKR (Envision). When the Trump administration started grumbling about surprise billing, experts noted that the president would have to tread lightly, since his friend Stephen Schwarzman runs Blackstone.

In consequence, insurers are kicking providers out of networks, and opportunists are using this to build an empire of double-billing. Patients get stuck with the financial hardship, and so do communities—narrow networks can lead to doctor shortages, closed hospitals, and worse medical outcomes.

Right when we don’t need hefty markups and billing games preventing people at risk of a viral outbreak from going to the hospital, along comes one legislator with an inadequate and appallingly generous surprise billing ‘fix.’

The lead senators on the Health, Education, Labor and Pensions (HELP) Committee, Democrat Patty Murray and Republican Lamar Alexander, fashioned a compromise solution to surprise billing that mostly involved setting a fair “benchmark” rate for out-of-network bills to prevent windfall profits for providers. An arbitration system to resolve billing disputes was added at the last minute, but with limits on its purview, as the benchmark negotiated rates would serve as the basis for the resolution.

It was a suboptimal solution, but could have managed to make things less confusing and marginally better for patients. Then Neal and Brady entered the picture with a bill that ruined everything. With Democrats unwilling to push the Murray-Alexander compromise through, it collapsed.

Their bill sets up a required 30-day arbitration process to mediate disputes. This strayed from the best practice for the consumer; arbitration is a second bite at the apple for providers to maximize returns. However, the insurers would not need to make any initial payment. Plus, the bill has no network adequacy clause, enabling insurers to continue canceling provider contracts. It’s a corporate double shot, in other words. The providers and private equity firms seem to like Neal-Brady because it avoids government rate-setting. While insurers have nominally opposed Neal-Brady, it allows for consistent deferral of payments, and the continued narrowing of networks.

This allows Neal to continue fundraising from both sides of the dispute. He’s received $31,800 from Blackstone, owner of one of the top two physician staffing groups. And he’s also received $145,600 from the insurance industry, $95,000 of that in corporate PAC funds. (Neal is the leading recipient of corporate PAC donations in Congress.)

And inaction, which appears to be where this is headed, is Neal’s friend. Providers love the status quo, and insurers can continue to narrow their networks to push the pain onto their patients. Every day of delay means more charges rung up on people like Azcue. Surprise billing wouldn’t exist with a government-run single-payer system committed to full coverage—nor should it exist now. But sellouts and weak compromises keep the campaign contributions flowing.

Now, the threat of coronavirus makes this deadly dangerous. We need relentless testing and treatment during a pandemic, without financial barriers that keep carriers hidden and circulating within a community. The CDC has not deployed a simple COVID-19 lab test to many hospitals because of faults with the testing kit. Only 445 people have been tested nationwide. A prepared nation would make these tests widely available and free; instead, they are run through the nightmarish private-hospital system, where any treatment creates the sound of a ringing cash register.

Democrats have vowed to highlight health care as a top priority in the 2020 elections, forsaking investigations into Trump corruption. Yet the one piece of legislation that would tangibly ease the horror show that is our corporatized medical system has now been torpedoed by a leading Democrat.


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