Neal Took Big Bucks From Lobbyists While Killing a Surprise Medical Bills Fix

Rep. Richard Neal (D-Mass.) received $54,000 from lobbyists for private equity and pharmaceutical interests that opposed a bipartisan surprise medical billing deal in the weeks after he stymied the deal with a last-minute counterproposal.

Neal Took Big Bucks From Lobbyists While Killing a Surprise Medical Bills Fix
House Ways and Means Committee Chairman Richard Neal (D-Mass.) attends a hearing in the Longworth House Office Building on Capitol Hill, May 16, 2019

Late last year, a bipartisan group of senators and representatives struck a deal to include legislation to lower health care costs in a year-end appropriations package. Their bill, the Lower Health Care Costs Act, would limit the costs of surprise out-of-network medical bills to the amount patients would pay for equivalent in-network care, require pharmaceutical companies to disclose information about drug price hikes, and more. 

But the measure was tanked after House Ways and Means Committee Chairman Rep. Richard Neal (D-Mass.) announced his own last-minute counterproposal. Neal’s proposal, which he announced three days after bipartisan Senate HELP Committee and House Energy and Commerce Committee leaders announced the Lower Health Care Costs Act deal, consisted of a one-page document outlining an agreement with Ways and Means Committee Ranking Member Rep. Kevin Brady (R-Texas) to move forward with legislation on the matter. The document contained a broad outline of what they would pursue, but he had not yet drafted a bill. 

Despite the lack of details, Neal’s announcement was enough to halt the momentum for including the Lower Health Care Costs Act in the end-of-the-year bill. 

“Conversations with half a dozen politicians and aides across both parties and chambers with knowledge of the process concluded that the proposal from [Neal] fractured the unsteady coalition and killed chances for surprise billing to be solved in 2019,” Buzzfeed reported at the time. 

[Related from Sludge: Hospital Lobby Shells Out For Its ‘Friend in Washington’ Richie Neal]

When Neal and Brady released the text of their bill in February 2020, some of the strongest measures from the Lower Health Care Costs Act had been weakened or omitted. Rather than using benchmark prices based on in-network fees for determining what insurers would pay out-of-network providers, the bill calls for voluntary negotiations backed up by an independent arbitration process. Another provision of the Lower Health Care Costs Act requiring drug companies to report to the government 30 days prior to substantially hiking drug prices, including details on company profits, marketing costs, and research and development expenditures, was left out completely by Neal and Brady.

During the period between his Dec. 11 announcement and when he finished his bill on Feb. 7, Neal received $54,000 from more than a dozen lobbyists for companies and interest groups that opposed the Lower Health Care Costs Act, a Sludge review of Federal Election Commission records found. 

The Neal Victory Fund, a joint fundraising committee affiliated with Neal’s campaign committee and leadership PAC, received all of its funding in the first quarter of 2020 from corporate lobbyists, according to its most recent FEC filing. Of the 18 lobbyists who comprised all of the committee’s donors that quarter, 12 worked for clients who opposed the Lower Health Care Costs Act. None of the committee’s past quarterly filings show a similar level of lobbyist-donor dominance; joint fundraising committees typically take funds from a mix of businesspeople, wealthy individuals, PACs, and lobbyists.  

A top opponent of the Lower Health Care Costs Act’s provisions on surprise medical bills has been the private equity giant Blackstone, which owns Team Health, a large national physician staffing firm. Private equity-owned companies like Team Health lead to dramatic increases in charges for caring for patients when they take over management of hospital emergency departments, according to researchers from Yale University. The researchers also found that Team Health has threatened to send expensive out-of-network bills in order to pressure insurance companies to accept higher in-network fees.  

Three of Neal’s recent lobbyist donors represent Blackstone, including Courtney Johnson of Alpine Group, who donated $2,500; Cedric Grant of Subject Matter, who donated $500, and Steve Elmendorf of Subject Matter, who donated $5,000. A lobbyist for another private equity firm that owns a large physician staffing company, KKR (owner of Envision Healthcare), also donated to Neal—Sean D’Arcy of Akin Gump Strauss Hauer & Feld, who gave $5,000. 

Blackstone Group has been Neal’s top donor this election cycle, according to the Center for Responsive Politics, with individuals affiliated with the company giving his campaign $48,600 so far. 

“It is no coincidence that Neal’s largest campaign contributor this cycle has been Blackstone, a private-equity firm that profits by saddling consumers with unfair health care bills,” Alex Morse, the mayor of Holyoke, Massachusetts who is mounting a primary run against Neal from the left, told Sludge. “Richard Neal’s decision to tank the Lower Healthcare Costs Act is emblematic of his 31-year career in Congress and exactly what we can expect from any representative in the pocket of corporate donors.”

The pharmaceutical industry’s top trade group, the Pharmaceutical Research and Manufacturers of America (PhRMA), is another leading lobbying force opposing the Lower Health Care Costs Act. PhRMA’s senior vice president for insurance and state issues, Lisa Joldersma, testified against the bill’s drug price hike reporting provision at a May 2019 House hearing, warning against market distortions and “overly broad policies that may seem designed to ‘shame’ manufacturers while doing little to make prescriptions more affordable for patients.”

At least eight of Neal’s Q1 lobbyist donors represent PhRMA in discussions before Congress. They include Mike McKay of Empire Consulting Group, who gave $5,000; Cynthia Brown of Forbes Tate Partners, who gave $5,000; and Charles Mellody of Capitol Legislative Strategies, who gave $5,000. 

Lobbyists vary widely in how much detail about their activities they disclose in their filings, so it’s not possible to determine if all of these lobbyists worked on the Lower Health Care Costs Act or its constituent provisions. Some forms list the bill by name and number—for example this 2019 Q4 filing covering Courtney Johnson’s work on behalf of Blackstone Group—while others describe the specific issues lobbied on with vague phrases like “general health issues.”  

In 2019, Neal was the congressman with the most contributions from PACs that represent corporations and business interests, bringing in $1.4 million from them, over half of his total amount raised. 

“Neal sacrificed legislation that could’ve saved countless lives and relieved thousands from medical debt to appease his big pharma donors who care more about their bottom line than the lives of the people the representative serves,” Morse said. “I’m running a campaign that refuses all corporate PAC and lobbyist money to ensure the people of MA-01 can be confident that their well-being is my top priority.”

Richard Neal’s office did not respond to a request for comment.

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