“A push on Capitol Hill to stop US patients from being caught unaware by medical bills is weighing on the debt of KKR-backed Envision Healthcare, the target of one of the biggest leveraged buyouts last year. The proposed law, seen as having broad bipartisan support in both houses of Congress, would prohibit providers from hitting patients with large, unexpected costs for treatment. Investors are concerned that a new so-called ‘surprise billing’ law could crimp revenues at companies such as Envision, which employs emergency-room doctors and anaesthetists through its subsidiary EmCare.”

“Envision’s $5.4bn loan due in 2025, sold in September when investor demand for leveraged loans was very strong, slid from almost 97 cents on the dollar at the start of May to just 87.8 cents on the dollar on Thursday, as more detail surrounding possible legislation has been released. ‘A lot of sellers nervous about this legislation have emerged,’ said Ron Launsbach, a loan fund manager at Columbia Threadneedle. ‘It has put pressure on Envision’s debt.'”

“Surprise billing is a peculiar feature of the US healthcare system. Patients with private insurance pay less for ‘in-network’ treatment — medical facilities and practitioners that accept a specific insurance provider’s coverage. However, patients may go to an in-network hospital but, unbeknown to them, end up being seen by an out-of-network doctor, such as those employed by Envision or TeamHealth. The doctor then attempts to recoup costs from the patient’s insurer and charges the patient extra.”

“’It is like a ransom negotiation: ‘I’ll hit your enrollees with giant bills unless you pay me enough money not to do that’,’ said Loren Adler, associate director at USC-Brookings Schaeffer Initiative for Health Policy. Other leveraged loans exposed to the bill have also been hit. Blackstone-backed TeamHealth, which also provides emergency-room doctors to hospitals, has seen its $2.7bn loan due in 2024 tumble from a year-to-date high of 94.3 cents on the dollar at the start of May to just over 90 cents on the dollar on Wednesday. Air Methods and Air Medical, both private equity-backed providers of air ambulances, have also seen the price of their loans fall.”

“TeamHealth said: ‘While TeamHealth supports legislation to end surprise medical billing, the proposals currently under consideration would be detrimental to patient care, hospitals, and other providers.’ Proposals to end surprise billing are still being finalised in both the House and Senate, and nothing has yet been put forward for a vote by lawmakers.”

“Lowering healthcare costs is one policy area that has united Republicans and Democrats. But with neither side wanting to give the other a major policy victory ahead of next year’s presidential election, analysts said the chances of any significant legislation passing during this Congressional session are slimmer than they might appear. New York has already adopted legislation that requires a third-party arbitrator to determine the final fee paid by the insurer. The US Senate has drafted legislation that could replace surprise billing, with out-of-network providers simply receiving the median in-network rate from insurance providers.”

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