A last-minute scramble to include surprise hospital billing reform in the new coronavirus relief bill has fallen short, according to multiple sources. Surprise billing is a tactic used by hospitals and other medical providers, many of them owned by private equity giants such as Blackstone, to manipulate bills so that patients and insurance companies wind up paying eye-popping sums for treatment.

Wendell Primus, senior policy adviser to House Speaker Nancy Pelosi and the most powerful staffer on the Hill, had plans to send a proposal on surprise medical billing to Senate Majority Leader Mitch McConnell, according to four sources with knowledge of the negotiations. By Monday night, however, the effort had been rebuffed.

“There’s still work that needs to be done with the committees,” a senior Democratic aide said.

Slowing and weakening surprise billing reform has been a driving motivation of House Ways and Means Chair Richie Neal, D-Mass., during this past congressional term. The issue fell under the jurisdiction of the Energy and Commerce Committee, whose chair, Rep. Frank Pallone of New Jersey, hammered out a tough reform bill on the bipartisan issue with his Republican counterparts. Neal, however, invented jurisdiction for the Ways and Means Committee — the panel has jurisdiction over taxation, and he linked the issue to government revenue in a roundabout way — and put forward his own proposal that was much more favorable to the private equity industry.

McConnell was not interested in including the provision, according to three Senate aides. Neal was also an obstacle to getting reform into the Covid-19 bill, said one member of Congress briefed on the talks. “The one stumbling block has been of course, Richie trying to scuttle it,” the member said.

Neal has drawn criticism for his opposition to ending surprise medical billing and his ties to Blackstone, his top funder this cycle. The progressive group Fighting Corporate Monopolies ran ads attacking Neal, during his primary against Holyoke Mayor Alex Morse, over “protecting Blackstone’s profits” by helping last year to kill a Senate compromise deal that would have ended surprise billing, The Intercept previously reported. Neal pulled in major donations from Blackstone executives at the same time he went to work against surprise billing — an unusually close link between campaign contributions and congressional action. Many private equity executives are known to own vacation homes in the Berkshires, which Neal represents.

Surprise billing happens when a patient is in a hospital or medical facility that is within their insurance network but is treated, perhaps only during a single round, by a doctor who is out of network. Patients, of course, have no way of knowing or checking whether the doctor making rounds is in their network or not, so private equity firms have purchased providers and arranged service to maximize the number of times an out-of-network doctor can treat a patient. Those bills are then exponentially higher, landing at the feet of both patients — in the form of copays and deductibles — and insurance companies, who pay the remainder.

The ongoing coronavirus pandemic has exacerbated the issue, with people who went to the emergency room for Covid-19 symptoms receiving surprise bills even when insurers have promised to cover out-of-network care related to the novel virus.

Neal tried to muscle his own version of the bill through, even though Energy and Commerce Committee had a proposal that would have relied on median-in network insurance rates to institute federal benchmarks for payment disputes. Under the proposal, bills over $750 would go to independent arbitration.

The Neal proposal would allow providers and insurance companies to settle disputes through an open negotiation process. If that fails, they could move to an independent mediation process, with a suggestion to consider the mean network rate — regardless of the size of the bill. That cumbersome process would do little to reform the system, leaving provider profits in place and potentially leading to higher premiums. Neal told reporters he wanted to punt the issue to next year, Politico reported Tuesday.

“Providers really want arbitration, because they want the ability to be able to get more money,” said one congressional aide close to the process. “Especially through private equity, because they know they can win this process. Because it almost always goes toward the provider.” 

A Ways and Means Committee spokesperson defended Neal’s bill in a statement. “The Chairman wants to find a balanced path forward on this issue that prioritizes patients but also treats fairly community doctors and hospitals that have been completely overwhelmed by the COVID crisis. He has repeatedly asked for the other committees to make the updated legislative text of their proposal public, but they have not agreed to that transparency.”