U.S. Capitol rotunda with statueAs surprise medical billing has emerged as a hot-button issue forvoters, doctors, hospitals and insurers have been lobbying toprotect their own money flows. (Photo: Diego M.Radzinschi/ALM)

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When Carol Pak-Teng, an emergency room doctor in New Jersey,hosted a fundraiser in December for Democratic freshman Rep. TomMalinowski, her guests, mostly doctors, were pleased when shesteered the conversation to surprise medical bills.

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This was a chance to send a message to Washington that anysurprise billing legislation should protect doctors' incomes intheir battle over payments with insurers. Lawmakers are grapplingover several approaches to curtail the practice, which can leavepatients on the hook for huge medical bills, even if they haveinsurance.

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Related: Two surprise billing proposals vie forsupport

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As Congress begins its 2020 legislative session, there isevidence the doctors' message has been received: The bills with themost momentum are making more and more concessions tophysicians.

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As surprise medical billing has emerged as a hot-button issuefor voters, doctors, hospitals and insurers have been lobbying toprotect their own money flows. All that lobbying meant nothing gotpassed last year.

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Television and internet ads are the most visible manifestationof the battle. But in taking their cause to politicians, doctorslike Pak-Teng have waged an extraordinary on-the-ground stealthcampaign to win over members of Congress. Their professionalcredentials give them a kind of gravitas compared with otherlobbyists, who are merely hired guns.

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Ending the practice of billing patients for the amount of theirtreatment not covered by insurance — sometimes triggered byunwittingly seeing a doctor out of network — is ultimately a fightbetween doctors and insurers over rate-setting and reimbursement.But as more patients balk at surprise bills — or suffer theenormous financial strain — lawmakers are under pressure to protectpatients. In turn, powerful lobbying forces have activated toprotect doctors and insurers who don't want to pay the price for afix.

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The main message physicians are using to bring lawmakers intotheir corner? "We just want to be paid a fair amount for theservices rendered," Pak-Teng said.

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Her congressman, Malinowski, has not endorsed any surprisebilling legislation. In congressional testimony in July, he citedthe "extra $420 million" in medical debt patients in New Jerseyreckon with each year.

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"There are many things that Republicans and Democrats sincerelydisagree about in this body," he said. "I don't think that this isone of them. I don't see any philosophical difference amongst usabout whether people should be stuck with massive surprise medicalbills."

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Doctors say they are taking the brunt of the criticism.

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But little has been as powerful in shaping surprise billinglegislation as the clout of hospitals and their doctors, many ofwhom are, in fact, employed by private equity-backed companies andarmed with years of experience shaping surprise billing legislationat the state level.

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They are throwing in a lot of money, too, funneling millions tolawmakers ahead of the 2020 elections. Four physician organizationsthat have heavily lobbied on surprise medical bills and haveprivate equity ties — the AmericanCollege of Emergency Physicians, Envision Healthcare, US Acute Care Solutions and U.S. Anesthesia Partners — gave roughly$1.1 million in 2019 to members of Congress, according to a KaiserHealth News analysis of Federal Election Commission records.

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The biggest recipients, from all four PACs combined, were Reps.Donna Shalala and Stephanie Murphy, Florida Democrats who got$26,000 each. Sen. Thom Tillis (R-N.C.) took in $25,500, SenateMajority Leader Mitch McConnell got $25,000, and Rep. Brett Guthrie(R-Ky.) received $22,500.

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That was in tandem with a ground game led by local doctors. ERdoctors, anesthesiologists, radiologists and other specialists whomost often charge out-of-network prices — and also areamong the highest-compensated practitioners — fanned outto shape legislation in a way that maintains their pay, and tovoice their concern to lawmakers that insurance companies wouldhave too much leverage to control their compensation.

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"We by necessity place a tremendous amount of trust in ourphysicians," said Zack Cooper, an assistant professor at YaleUniversity who has extensively researched surprise medical bills."Frankly, they have an easier time lobbying members [of Congress]than the folks who are affected by surprise billing."

Arguing over the fix

Lawmakers in both parties appear unified on the need to resolvethe problem of surprise billing. But as was clear when all the airblew out of legislative proposals on the table at year's end, thatis largely where the agreement ends.

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Fixing the problem comes down to settling on a system fordeciding how much to pay for a disputed bill. One approach is toset up an outside arbitration process, in which doctors andinsurance companies would negotiate payment — this is the modelpreferred by doctors, who contend it puts them on better footingagainst insurance companies. Another option would be to resolvesurprise billing disputes by having insurance companies pay doctorsbased on the median in-network rate for the service, an approachknown as benchmarking. Large employers, labor unions and insurancecompanies prefer this.

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The failure to get legislation through Congress set up apotentially explosive battle in an election year. Republicans andDemocrats who have vowed to do something about health care costsmust reckon with powerful industry groups whose influencetranscends party lines.

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Meanwhile, physicians and hospitals have made their case inWashington and back home through in-person meetings and phone callswith lawmakers and congressional staff. They've hosted dinners andfundraisers and organized fly-ins to swarm Capitol Hill within-person meetings. They've even led tours of their emergencyrooms.

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Pak-Teng is among them, coming to Washington this month withother physicians to petition lawmakers. She is employed byEnvision, a physician staffing company backed by private equityfirm KKR. She's also on theboard of the American Academy of Emergency Medicine, a tradeorganization representing ER doctors.

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"There is a lot of anti-physician rhetoric out there," saidPak-Teng, who is pushing her physician colleagues to be more activein shaping public policy by sharing stories about the reality ofcaring for patients.

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The lobbying by hospitals and physicians trying to protect theirreimbursements has divided key lawmakers, compounding disagreementsamong senior House Democrats over the policy details of a bill andturf wars in Congress. Three House committees have now unveiledlegislation to ban surprise medical bills, each with differentdetails.

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"We are not trying to stop legislation. We are trying to stopbad legislation," said Anthony Cirillo,an emergency medicine physician who describes a "bad" billas one that favors insurance companies over doctors.

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Cirillo is also a lobbyist for US Acute Care Solutions, aphysician staffing company backed by private equity firm Welsh, Carson, Anderson & Stowe.WCAS, which manages $27 billion in assets and is focused on healthcare and technology investments, is based in New York City andco-founded US Acute Care Solutions in 2015.

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In an interview, Cirillo said he met with lawmakers and theiraides about "10 to 12 times" in Washington last year. Financialdisclosures show he spent $340,000 between July and Septemberlobbying on surprise billing on behalf of US Acute Care Solutions.USACS' political committee also contributed $134,500 to lawmakersin 2019, according to FEC records.

Tilt toward doctors

Before the private equity-fueled dark-money group Doctor PatientUnity started running adswarning of the dangers of government price controls as an argumentagainst legislation, surprise billing legislation being drafted inone of Congress' most powerful health care committees was alreadytilting to be more favorable to doctors.

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"People on the Hill are very sympathetic to hospitals andphysicians because they're actually providing the care itself,"said one Democratic aide, speaking on the condition of anonymity tocandidly describe sensitive political dynamics. "Nobody wants todefend the insurers."

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In May, a House Energy and Commerce Committee draft proposalincluded no mention of outside arbitration. The same was true for abill the Senate Health, Education, Labor and Pensions Committeeapproved in June. Instead, under those proposals, surprise billingdisputes would be resolved by insurance companies paying doctorsbased on similar rates in that area.

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By mid-July, though — roughly a week before DoctorPatient Unity registered as a business in Virginia — the Energy andCommerce legislation was amended to allow doctors to appeal to an independentarbiter if their payments exceed $1,250. The revision was pushed bytwo physicians on the committee — Democrat Raul Ruiz of Californiaand Republican Larry Bucshon of Indiana — and was a moment SherifZaafran, a Texas anesthesiologist, describes as a "turning point"in negotiations over the bill.

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"It's all about fairness," said Zaafran, who works for privateequity-backed U.S. Anesthesia Partners. He has been involved for adecade in surprise billing fights in Texas, which enacted a new lawwith an arbitration process last year. U.S. AnesthesiaPartners gave $197,900 in campaign contributions to members ofCongress last year.

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Zaafran chaired another coalition of medical specialists,Physicians for Fair Coverage, in 2019, and pressured Congress topursue a surprise billing approach modeled on a New York law underwhich insurers and providers rely on arbitration. Under thatprocess, if there is a payment dispute between doctors andinsurers, the two sides submit a proposed dollar amount to anindependent mediator, who then selects one.

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In New York, the mediators were told to base their decisions onthe 80th percentile of the prices set by the hospital or physician.Research has suggested that the model is broadly making health caremore expensive for state residents because of higher payments todoctors, according to findings from the USC-Brookings Schaeffer Initiative for HealthPolicy.

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Still, on Capitol Hill, doctors complained that many procedureswould fail to cost enough to qualify for arbitration as proposed inthe Energy and Commerce bill, bolstered by data ER doctorspresented to lawmakers showing that prices mainly fall below$1,250.

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"It's largely out of reach," said Laura Wooster, a lobbyist withthe American College of Emergency Physicians, whose politicalaction committee contributed $708,000 to lawmakers in 2019. "Theproblem with a threshold is, you just have one threshold. It'sgoing to impact different specialties so differently."

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By December, House Energy and Commerce Committee leaders andSen. Lamar Alexander, a Republican who chairs the Senate HELPCommittee, agreed to lower the arbitration threshold to $750 aspart of a bipartisan agreement on a bill. Notably, several hospitallobbying organizations, such as the American Hospital Associationand the Greater New York Hospital Association — the latter a strongfinancial backer of Senate Minority Leader Chuck Schumer — refused to back the deal.

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Pak-Teng and other physicians also say that arbitrationthreshold is still too high. The House Education and LaborCommittee has unveiled surprise billing legislation with a similarframework.

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"I'm open to listening to all sides on this," Rep. Greg Waldenof Oregon, the top Republican on the House Energy and CommerceCommittee, said in an interview. "We want to make sure doctors areadequately compensated."

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Walden had harsh words for private equity firms that haveattacked the Energy and Commerce legislation in a series of TV andinternet ads, saying they were "misleading and scaring people" andjust made lawmakers dig in deeper. The ads prompted abipartisan probe from Walden and committee Chairman Frank Pallone(D-N.J.) into how the companies have influenced surprise billingpractices.

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"I'm not trying to hurtle a rock at them, but they've beenthrowing a few my way," he said.

What's coming

Arvind Venkat, a Pittsburgh emergencyphysician employed by US Acute Care Solutions, traveled toWashington multiple times last year to meet with congressionaloffices representing Pennsylvania. But he also made sure to bringup surprise bills on his home turf, giving his congressman,freshman Democrat Conor Lamb, a tour of the emergency room atAllegheny General Hospital last summer.

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"There are two issues here," said Venkat, who leads thePennsylvania chapter of the American College of EmergencyPhysicians and has practiced at Allegheny General for 12 years."Patients need to be protected, [and] we need to avoid anythingthat disrupts in-network relationships between insurers andclinicians."

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The call seems to have been heard: Legislation is likely tochange further this year as the House Ways and Means Committeepushes an approach that is friendlier to hospitals and doctors. Itbuilds off a one-page document committee leaders issued Dec. 11 that bluntedmomentum for a bipartisan deal that was to be included in aDecember spending bill.

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The latest proposal from the committee includes an arbitrationprocess to resolve payment disputes, with no minimum dollar amountneeded to trigger it, and doesn't ban surprise billing from airambulance companies — a win for yet another special-interestlobbying group. The patient protections would not take effect until2022.

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Richard Neal, a Massachusetts Democrat who chairs the committee,remains an ally of Massachusetts hospitals. He released the briefDecember surprise billing document two days after the MassachusettsMedical Society and Massachusetts Hospital Association wrote a joint op-ed in The Boston Globe arguing thatbenchmarking physician payments — as the Senate HELP and Energy andCommerce deal would do — would wreck the state's healthcare system.

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"The heavy hand of government would create an unfair imbalancein the health care marketplace and insurers would have no incentiveto engage physicians in building robust health care networks. Theconnected system of care we have all been working toward inMassachusetts would immediately become fragmented and disjointed,"the two groups wrote in The Boston Globe.

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"They weren't asking for favorable treatment. They were askingfor fair treatment, and there's a big difference," Neal said in aninterview. "I don't want to rule anything out, but I think that themomentum right now is arbitration."

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"We need to get a little bit more balance," added Shalala, whoendorsed the Ways and Means legislation unveiled earlier thismonth.

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Shalala has at least two hospitals in her Miami-area districtthat rely on private equity-supported physician staffingcompanies.

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"I'm worried about the hospitals," she said. "And the providersobviously include the docs."

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Victoria Knight contributed to this story.

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Kaiser Health News isa nonprofit news service covering health issues. It is aneditorially independent program of the Kaiser Family Foundation,which is not affiliated with Kaiser Permanente.

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