Congress Investigates Whether PE Firms Are Behind Surprise Medical Bills

House committee asserts unexpected medical bills after emergency care visits could be perpetuated through private equity giants who own the health care facilities.

Members of the US Congress’ Energy and Commerce Committee this week launched a bipartisan investigation to determine whether private equity firms could be a culprit behind “surprise billing practices,” a phenomena whereby insured individuals receive relatively large medical bills after receiving treatment from an out-of-network emergency physician or ancillary clinician, such as a radiologist, anesthesiologist or pathologist.

The committee’s chairman, New Jersey Democrat Frank Pallone, and ranking member Greg Walden, an Oregon Republican, are leading the investigation. “In recent years, the Committee has heard countless heart-wrenching stories from insured individuals who have received thousands of dollars in medical bills after inadvertently receiving care from out-of-network providers,” the pair said in a statement.

The produced letters to leading private equity firms such as Blackstone, KKR, and Welsh, Carson, Anderson, & Stowe, soliciting their ownership of health care-related services, policies, and practices related to third-party medical providers.

The committee cited a recent study conducted by Yale University called “Surprise! Out-of-Network Billing for Emergency Care in the United States,” that concluded private equity firms can be a potential culprit of such price gouging activity.

“Because patients do not choose their emergency physician, emergency physicians can remain out-of-network and charge high prices without losing patient volume,” the study said. “Given that nearly half of individuals in the US do not have the liquid to pay an unexpected $400 expense without taking on debt, these out-of-network bills can be financially devastating to a large share of the population and should be a major policy concern.”

“Surprise bills occur primarily in two scenarios,” the committee wrote in a letter to Blackstone. “When an individual receives emergency services and therefore has no ability to ensure they are treated by in-network providers, or when an individual goes to an in-network hospital, but certain providers at that same hospital, that the patient may not have been aware would be involved in their care, are out-of-network.”

A number of private equity firms have found recent opportunities to invest and profit in the health care industry. KKR’s $10 billion acquisition of Envision Healthcare private is one such example of a large-scale shoulder-in of a private equity behemoth into the health care market. Other examples include Blackstone’s acquisition of Team Health and KKR’s acquisition of EmCare.

A statement from the committee notes that approximately 20% of emergency department visits result in a surprise medical bill.

Democratic presidential candidate and Massachusetts Sen. Elizabeth Warren is also on private equity firms’ tails and introduced legislation earlier this year that would mandate private equity firms publicize their fees and returns, as well as be held accountable for their portfolio companies’ illegal activities.

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