House leaders launched an investigation Monday into private equity firms that own physician-staffing companies to determine whether they use out-of-network billing as a strategy to drive up their pay rates.
Energy and Commerce Chair Frank Pallone (D-N.J.) and ranking member Greg Walden (R-Ore.), whose proposal to ban surprise medical bills has been under fierce attack by provider groups, sent letters to the CEOs of Kohlberg Kravis Roberts & Co., the Blackstone Group and Welsh, Carson, Anderson & Stowe. They are seeking detailed financial evaluations of the physician-staffing companies and air and ground ambulance companies owned by these firms.
"Evidence indicates that these physician-staffing firms charge significantly higher in-network rates than their counterparts, thereby driving reimbursement upwards as they enter into staffing arrangements with hospitals," Pallone and Walden wrote to the CEOs. "We are concerned about the increasing role that private equity firms appear to be playing in physician staffing in our nation's hospitals, and the potential impact these firms are having on our rising healthcare costs."
The investigation shows that Pallone and Walden are ready to go on the offense on behalf of their proposal while investigating the often-murky role private equity can play in driving up healthcare costs. They have faced grassroots and corporate advertising and lobbying campaigns on all fronts this summer over their proposal to end surprise billing with a cap on charges for out-of-network treatment.
Pallone and Walden have asked CEOs to report their annual revenue from out-of-network billing, and whether it has increased or decreased recently. Similarly, they want to know earnings from in-network billing and what role the private equity firms themselves play in the staffing companies' billing strategy.
They asked the CEOs to specify whether their firms are involved in the staffing companies' negotiations with insurers.
These letters to the private equity firms also follow on the heels of the New York Times' confirmation on Friday that Blackstone's staffing company TeamHealth and KKR's firm Envision Healthcare helped fund the dark money group Doctor Patient Unity.
Doctor Patient Unity has spent about $30 million in attack ads against Pallone and Walden's proposal and parallel legislation by Senate health committee Chair Lamar Alexander (R-Tenn.) and ranking member Patty Murray (D-Wash.).
Additionally, major hospital and other medical groups have spent the summer attacking the "benchmark" proposal with an intensity that has threatened the entire effort, although they're not all on the same page about a solution. Lawmakers from both parties and chambers have peeled off from the committee proposals to support physician-backed measures that are generous to providers.