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Marketplace Morning Report

Legislation on surprise medical bills would hit physician staffing industry

Blake Farmer Jul 1, 2019
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Christopher Furlong/Getty Images

Todd Johnson’s teenage son had a nasty mountain biking accident last year. So he brought him to a hospital near their home in Knoxville, Tennessee, that he thought was in his insurance network.

“Here at home, I knew — or thought I knew — which hospitals were covered under my insurance,” he said.

The doctor yanked out a 2-inch hunk of tree from his son’s arm. Johnson, a schoolteacher, paid the copay and didn’t think much else about it.

Then the bills began arriving in the mail. One was from the physician staffing firm — an $1,840.15 out-of-network charge.

What Johnson confronted is the quintessential “surprise medical bill” — a hospital in network, but doctors who aren’t. One national study found this emergency room mismatch happens in as many as one in five ER visits.

Emergency rooms have become prime targets in the bubbling rage against high medical costs. Congress is debating multiple proposals that would protect patients from surprise medical bills. And the physician staffing industry is pushing back.

These days, the doctor is usually employed by a physician services company that basically runs the ER. And there are two massive firms based in Tennessee that have quietly come to dominate this sector nationally. One is Envision Physician Services, which runs the ER that Johnson’s son visited.

The other is TeamHealth, and its chief executive, Leif Murphy, says his firm doesn’t join a network if insurance companies won’t pay enough.

“If we are not in network, we are not in network because we’ve been offered an unreasonably low level of reimbursement,” Murphy said.

But that can be a strategic move by the staffing firms, according to health economist Zack Cooper at Yale University. The firms are betting that insurers will hear enough complaints about surprise bills and agree to pay doctors more.

“When this is really a deliberate strategy pushed by private equity-backed emergency physician staffing companies, I think it’s just sort of unpalatable for almost everybody involved,” Cooper said.

Cooper’s research into TeamHealth and Envision has informed legislation advancing in Congress.

One bipartisan package from Sen. Lamar Alexander of Tennessee last week passed the health committee he chairs; it features provisions that would require doctors and hospitals to join the same networks.

“My hope is that regulation shifts the balance of power and makes the market function a whole lot more effectively for all of us,” Cooper said.

Physician firms don’t like the bill advanced by Alexander, preferring more limited proposals that would primarily solve surprise billing by bringing in a third party to settle disputes.

TeamHealth physicians discuss staffing at Parkwest Medical Center in Knoxville, Tennessee. (Blake Farmer/Marketplace)

While companies like TeamHealth and Envision are worth billions of dollars, the big insurers are many times bigger, said Adam Brown, an ER doctor and senior vice president at Envision.

“As insurance companies have consolidated, grown and in some markets become the primary insurance provider of an entire market — sometimes even an entire state — the fairness of reimbursement has certainly shifted,” he said.

Brown said he’s worried that, eventually, doctors will just have to take whatever insurers offer.

But America’s Health Insurance Plans, a lobbying group for insurers, said it’s just trying to keep monthly premiums low for patients. It argues networks make it easier to bargain for lower rates.

For now, it’s up to patients to do their own bargaining, which is exactly what Todd Johnson in Tennessee did.

It wasn’t long before his son had another, more minor, biking accident that sent him back to the ER. This time, Johnson came prepared.

“I brought in a piece of paper,” he said. “I wanted them to sign that I acknowledge the physicians that will service my child are in network, and they wouldn’t sign that.”

Johnson and his son ended up going home, preferring to do without care rather than risk another surprise bill they couldn’t get out of.

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