The Senate's health committee has proposed three options to ban surprise medical bills. But one of them—the technically named "in-network matching guarantee" policy—has raised especial rancor from specialty physician groups and some hospitals for how it could shake up industry practices that have taken root over years.
The intensity of the criticism shows how high the stakes have gotten. Under the in-network matching guarantee—as outlined in the 165-page draft legislation from Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.)—any doctor or clinician who treats a patient in an in-network hospital would have to accept the patient's in-network rate.
This is a policy that would "eradicate the vast majority of surprise medical bills before they happen," according to James Gelfand of the ERISA Industry Committee, which represents large employer plans, in a comment letter to the committee.
Network matching wouldn't outright force hospitals to employ in-network physicians only. But hospitals would have to wrap out-of-network physician charges into an in-network hospital rate, even if the doctors they employ want to stay out of network.
The policy throws down the gauntlet for certain physician-staffing groups, whose business model could undergo transformation if Congress adopts it.
Wall Street investor analysis, which describes one business model where a staffing firm takes over billing for health systems and then splits the profits, hints at how big the transformation might be. In one document from 2013, analysts from Deutsche Bank Securities discussed the joint venture between the physician-staffing firm EmCare and the HCA Healthcare chain, which began in 2012. Essentially, HCA eschewed high physicians fees for a 50-50 profit split with EmCare once EmCare hit about a 13% margin threshold, Deutsche Bank estimated. EmCare meanwhile was able to "penetrate HCA's 160+ hospital portfolio more deeply with its physician offerings."
An EmCare spokeswoman declined to discuss how and where revenue in the joint ventures is derived and allocated. "We have joint ventures in place," she said. "While we do not discuss reimbursement specifics, our focus is on collaborating with our partners to deliver the highest quality of patient-centered care."
HCA responded to an inquiry with the following statement: "Our partnership organizations with hospital-based physicians companies, as a practice, do not balance bill. We are supportive of efforts by the American Hospital Association, the Federation of American Hospitals, and others to work with lawmakers to find a federal legislative solution to this issue while ensuring patient access to emergency care."
The HCA joint venture as of 2014 was valued at a net of about $124 million, with assets of $155 million and liabilities of $31 million, according to an EmCare Securities and Exchange Commission filing.
Investment house William Blair & Co. told its clients that EmCare was "gaining traction with its joint venture model" with HCA, "where the company manages a variety of facilities (and specialties) and then splits the profits" with HCA.
"The relationship also appears to have created some buzz in the industry, with management commenting that several other large entities are interested in developing a similar relationship," the William Blair analysis said.
EmCare's joint ventures weren't limited to HCA. Securities and Exchange Commission filings disclosed similar partnerships between Evolution Health (a sister company of EmCare), Universal Health Services and Ascension.
Healthcare economists say it's relationships like these that have helped drive outsourcing of emergency department staff and other specialties, increased the instances of high balance bills, raised bargaining leverage for physicians to get higher in-network pay rates, and increased U.S. healthcare spending overall.
"Right now, EmCare surprise bills patients and hospitals effectively turn a blind eye," said Benedic Ippolito of the American Enterprise Institute, who has worked on the network matching policy.
One consultant working with employer plans and patients, who spoke on condition of anonymity, argued that out-of-network care has further proliferated as an unintended result of the Affordable Care Act's requirement that health plans reimburse for out-of-network emergency care at one of three prescribed rates.
"The effect has been that physician groups who contract to work in ERs have gone out of network in droves," the consultant said. "They then jack up their rates, knowing that the law requires plans to pay them at much higher rates than they would receive if in-network."
But physician-staffing companies say network matching would hand too much leverage to insurers. Some of these companies, with contracts in hospitals across the country, have delved into the congressional policy debate through a group called the Physicians for Fair Coverage.
One of the companies in this group is US Acute Care Solutions, a physician-owned firm that staffs emergency rooms as well as obstetrics and other hospital departments.
Dr. L. Anthony Cirillo, the company's director of government affairs, said network matching would be "highly disruptive to the healthcare system, ultimately hurting patients."
He argued that network matching would give insurers the leverage "to dictate take-it-or-leave-it rates with the threat of physicians and hospitals being left out of the 'match.' "
"It's the government picking winners and losers," he said.
As the Senate health committee gears up for a hearing on its draft proposals next week, reaction has been strong from all sides.
On the one hand employers—whose burgeoning costs Alexander and Murray want to cut with their legislation—are urging lawmakers to support the network matching policy. Gelfand of the ERISA Industry Committee argued this option would "eliminate any and all confusion, as well as any and all gaming of the system—including that done by outsourced medical and emergency room staffing firms."
On the opposite end, Chip Kahn, CEO of the Federation of American Hospitals, blasted the idea as an "overly complex, untested approach that will fundamentally change the relationship between hospitals and their physician partners and on its own, will have no impact on protecting patients from surprise bills."
He framed it as an approach that "allows insurers to abdicate their fundamental responsibility—to design and build provider networks for patients."
EmCare is no longer public and so no longer subject to public Wall Street scrutiny. Envision Healthcare, its mother company, did not directly confirm whether EmCare's joint ventures with the various health systems are still in place. As of deadline, representatives for UHS and Ascension did not respond to a request for comment.
In a statement, an Envision representative described health system partnerships as collaborations with hospitals "to improve clinical outcomes, enhance the quality of care and streamline the patient experience."
"Together, we have increased patient satisfaction and reduced wait times and readmission rates while exceeding national clinical quality benchmarks," the statement said. "Our physicians and clinicians treat all Emergency Department patients regardless of their insurance status or ability to pay."
The company also blamed high-deductible health plans, narrow networks and insurance denials for their share in surprise medical costs, but said it has "taken steps to protect patients from surprise billing."
"Today, more than 90% of our business comes from treating patients through in-network arrangements," the statement said. "We continue to work with all stakeholders to make sure patients have access to quality, in-network care when they need it most."
The statement noted that Envision in February 2017 "committed to being in-network with as many insurers as possible ... but doing so also requires insurers engage in good-faith negotiations."
The Senate health committee has a backstop to look into physician-staffing arrangements even if Congress opts for a different policy on surprise medical bills.
Under a provision in the committee's draft legislation, the Government Accountability Office would be tasked with a study of industry partnerships and ventures between physician groups and hospitals that could drive up prices—such as joint ventures. The GAO would be required to look at lab, radiology, surgery and pharmacy services delivered in a hospital, and more, and then report to Congress about the "potential" of various partnerships to drive up patient costs.
In 2014, Envision acknowledged that the joint ventures could bring trouble with the government.
"(J)oint ventures may raise fraud and abuse issues," the company said. "For example, the OIG has taken the position that certain contractual joint ventures between a party which makes referrals and a party which receives referrals for a specific type of service may violate the federal anti-kickback statute if one purpose of the arrangement is to encourage referrals."
