The Coalition Against Surprise Medical Billing (CASMB) recently submitted comments to the Department of Justice (DOJ), the Federal Trade Commission (FTC), and the Department of Health and Human Services (HHS) in response to a request for information (RFI) to better understand consolidation in health care markets, including the impact of private equity’s (PE) increasing control over the U.S. health care system.

The letter details how PE has advanced business models that are at odds with the goals of the No Surprises Act and present ongoing challenges to health care affordability, quality, and accessibility in the U.S. Further, early evidence from the implementation of the No Surprises Act has shown that some PE-backed providers who were previously able to balance bill patients may now be overutilizing the Independent Dispute Resolution (IDR) process, leading to unintended cost increases.

CASMB recommends the FTC examine practices that potentially undermine and impede the IDR process, such as an unwarranted volume of cases submitted, and how heavily these behaviors are being driven by PE. As part of this research, we urge the FTC to consider the long-term impacts to the cost of services for consumers if these practices are not addressed.

Highlights from the letter are included below:

  • “In some cases, PE firms have strategically targeted certain highly profitable medical specialties, such as anesthesiology, radiology, pathology, and emergency medicine, with the intention of acquiring and then taking these practices out of network. By moving these practices out of insurance networks, PE-backed providers can circumvent lower, negotiated in-network rates and charge significantly higher prices for their services.”
  • “Experts note in a recent Health Affairs article that “PE investments are associated with increased spending in acquired hospitals and physician practices in a number of ways, including higher prices, greater volume of profitable services without commensurate benefits nor quality, changes in billing to increase frequency of more expensive visits, and network exits that lead to high surprise bills.”
  • “This problem is most acute in certain specialties, and a review of average cost increases following PE acquisition found increases of 3 to 5 percent in dermatology, 13 to 26 percent in anesthesiology, and 11 percent across dermatology, gastroenterology, and ophthalmology.”
  • “According to recent data from the Centers for Medicare & Medicaid Services (CMS) and analyzed by researchers at the Brookings Institution, “investor-backed provider groups have accounted for a large and disproportionate share of IDR cases; practices affiliated with just four such companies… generated 74% of line items.””
  • “Researchers have also found that IDR overwhelmingly favors providers, with out-of-network providers, facilities, and air ambulance providers winning approximately 77 percent of resolved cases. In instances where providers won, they received triple the typical in-network rate.”

Click here to read CASMB’s response to the RFI.

For more information on how PE is manipulating the IDR process under the No Surprises Act, click here.