Private Equity Firms Purchasing Medical Practices Are in Congress’ Crosshairs with Legislation Calling for Transparency
Federal lawmakers are scrutinizing private equity firms they believe are major culprits of surprise medical bills.
In 2019, the House Energy and Commerce Committee launched a bipartisan investigation last year into private equity firms’ role in surprise billing. During this investigation, Committee leaders contacted the leaders of major private equity firms (including Blackstone Group, KKR and Welsh, Carson, Anderson & Stowe) to obtain information and documents surrounding their ownership of physician staffing and emergency transportation companies. Committee leaders said that Blackstone had sought to acquire the emergency department staffing firm EmCare and KKR was seeking to acquire the physician staffing firm TeamHealth. The Committee found 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 and health systems.
This past week, the House Ways and Means Committee announced a legislative initiative to force private equity firms that own and manage physician practices to provide the federal government with information on Medicare payments and real estate investments. The legislation is the latest bid by federal lawmakers to scrutinize such firms that critics have said are a driving force behind surprise medical bills. Among other things, the bill would require private equity owners that have a controlling stake in medical providers to file information with the IRS on Medicare reimbursement and the mortgage and rent payments the firms get from the providers. Supporters of the bill seek this transparency to better understand how this segment of the market affects the U.S. healthcare system.
Democrats are concerned about reports that private equity-owned provider groups have been major culprits of foisting surprise medical bills on patients and driving up costs, accusing certain practice groups acquired by private equity firms of employing strategies that inflate costs for patients. The House is working on a package which will include legislation to limit surprise medical bills, which has major bipartisan support. Major Republican opposition, however, could stymie that plan, as certain Republican leaders have slammed the bill as unfairly targeting one sector of the industry.
George W. Bodenger, Esquire
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