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Mystery Solved: Private-Equity-Backed Firms Are Behind Ad Blitz on ‘Surprise Billing’

Two doctor-staffing companies are pushing back against legislation that could hit their bottom lines.

Early this summer, Congress appeared on its way to eradicating the large medical bills that have shocked many patients after emergency care. The legislation to end out-of-network charges was popular and had support from both sides of the aisle. President Trump promised his support.

Then, in late July, a mysterious group called Doctor Patient Unity showed up. It poured vast sums of money — now more than $28 million — into ads opposing the legislation, without disclosing its staff or its funders.

Trying to guess who was behind the ads became something of a parlor game in some Beltway circles.

Now, the mystery is solved. The two largest financial backers of Doctor Patient Unity are TeamHealth and Envision Healthcare, private-equity-backed companies that own physician practices and staff emergency rooms around the country, according to Greg Blair, a spokesman for the group.

“Doctor Patient Unity represents tens of thousands of doctors across the country who understand the importance of preserving access to lifesaving medical care and support a solution to surprise medical billing that protects patients,” said Mr. Blair, who issued the statement weeks after the group was first contacted about the campaign. “We oppose insurance-industry-backed proposals for government rate setting that will lead to doctor shortages, hospital closures and loss of access to medical care, particularly in rural and underserved communities.”

TeamHealth was acquired in 2016 by the private-equity firm Blackstone Group in a deal valued at $6.1 billion. And last fall, in one of the largest takeovers of the year, the private-equity giant KKR spent $9.9 billion to acquire Envision Healthcare.

The ads generally omit references to surprise bills. Instead, they warn of “government rate setting” that could harm patient care. In one ad, an ambulance crew arrives with a patient, only to find the hospital dark and empty.

The proposed legislation, which may advance to floor votes this year, is potentially bad for business for TeamHealth and Envision. The two groups have waged many battles against insurers over what they see as low physician payments for emergency room visits. When there is no agreement with an insurer, the physicians work “out of network,” and bill patients for the amount that insurance does not pay.

A recent academic analysis of filings from a large commercial insurance company found that the firms, though Envision more than TeamHealth, have routinely operated outside the insurance networks of hospitals where their doctors practice. This often leads to surprise bills for patients.

Like all so-called dark money political action groups, Doctor Patient Unity is not legally required to reveal the names of its supporters and, in fact, appears to have worked hard to obscure its identity.

The bread crumbs were scant. Filings by the group to the Federal Communications Commission for purposes of advertising listed the name of a treasurer who works for a firm that often fills such roles for Republican political groups. The group’s corporate filing in Virginia lists an agent who is common to more than 150 other political action groups. Neither the treasurer, the named partners in her firm, the advertising firm or the lawyer associated with the corporate entity responded to calls or emails. An email to the address on the group’s bare-bones website went unanswered for weeks until the group’s statement on Friday.

Representatives of both companies confirmed Friday that they had funded the group, offering written statements similar to the one from Mr. Blair. Neither company’s comments explained why they pursued a dark-money advocacy strategy.

Several Washington news outlets had looked into the origin of the ads, as had some local reporters in several states where the ads have run, including ColoradoTexasAlabama and Minnesota

The $28 million that Doctor Patient Unity has spent on television and radio advertising outstrips the amount spent on advertising around Justice Brett Kavanaugh’s Supreme Court confirmation vote, according to an analysis of filings with the F.C.C. by Advertising Analytics.

Doctor Patient Unity has also spent hundreds of thousands of dollars on Facebook and Google advertising, and has been sending direct mail to voters in dozens of congressional districts. In some cases, the group describes the legislation as the “first step toward socialists’ Medicare-for-all dream.”

The group has focused its broadcast ads in areas where senators, mostly Republican, are running for re-election next year. In North Carolina, Doctor Patient Unity has spent more than $4 million on ads to influence Senator Thom Tillis’s vote on the bill. Another target of the ads is Mitch McConnell, the Senate majority leader, who has expressed support for legislation ending surprise billing.

One ad, in heavy rotation in early August, featured a woman standing in front of a blank background urging voters to call their senators to stop a practice she calls “government rate setting.” She warned the policy could affect patients’ access to doctors in an emergency.

Senator Tina Smith, a Democrat from Minnesota, said she found the ads confusing and frustrating. She is a co-sponsor of a bill that would resolve surprise bills using arbitration, the stated preference of the group. But she was still the target of more than $2 million in ads. She said she had heard from constituents at the Minnesota State Fair during the August recess, many asking what the ads were about.

“If they were genuinely interested in engaging in the political process, they at least would have called me,” she said. “I think the ads are designed to intimidate us into backing down about doing something about surprise medical bills, and I refuse to be intimidated.”

The advertisements are not all negative: The group ran one thanking Senator David Perdue, a Republican from Georgia, and Maggie Hassan, a Democrat from New Hampshire. Ms. Hassan, who is the co-sponsor (with Ms. Smith) of a more doctor-friendly surprise billing approach, was not pleased by the endorsement. Aaron Jacobs, her communications director, described the ads as “deeply harmful to our efforts to pass bipartisan legislation to end the outrageous practice of surprise medical billing,” and said the group was acting in “bad faith.”

Legislation that has passed out of the Senate Committee on Health, Education, Labor and Pensions and a similar bill that has passed in the House Energy and Commerce Committee would ban the practice of sending bills to patients when they visit a hospital covered by their insurance. In situations where the doctors fail to negotiate a price with the patient’s insurer, the bills before Congress would mean that the doctors would be paid the median price that other such doctors in the area get.

Most doctor and hospital groups would rather have both sides present their preferred price to an independent arbitrator. Experts say the current legislation would probably lower the pay for doctors in the relevant medical specialties, even those who do not engage in surprise billing.

In the House, the bipartisan leaders of the Energy and Commerce Committee are starting an investigation into the role of private equity firms in surprise billing, according to a committee aide. The committee’s surprise billing legislation passed through the committee with unanimous support. Greg Walden of Oregon, a Republican and the committee’s ranking member, pushed for the bill at the House Republicans’ retreat this week.

“I’m focused on protecting patients from surprise billing, period,” Mr. Walden said in a statement. “If hospitals, doctors and insurers mean what they say — that patients should be held harmless and should not face unexpected, exorbitant medical bills — then we need to act with legislation.”

Together, Envision and TeamHealth employ tens of thousands of physicians, most in the kinds of hospital-based specialties — like emergency medicine, radiology and anesthesiology — that can generate large surprise bills.

After researchers in 2017 pointed to its high share of out-of-network doctors, Envision, then a public company, vowed it would have more of its doctors accept insurance. A spokeswoman said 90 percent of its care is now in-network. Dan Collard, an executive vice president at TeamHealth, said around 85 percent of its care is delivered in-network.

This summer, Fitch Ratings put the debt of both companies at the top of its list of “loans of concern,” noting that the companies have been “pressured by uncertainty over the outcome of political efforts to cut medical bills.”

“Private equity companies have the most to lose from prohibiting surprise billing, so it’s no surprise that they’d be fighting the hardest to blow up the process,” Loren Adler, an associate director of the U.S.C.-Brookings Schaeffer Initiative for Health Policy, said in an email. Mr. Adler, who has studied the issue, endorses the approach Congress is considering.

Doctor Patient Unity is not the only physician group trying to influence the surprise billing legislation in Congress. Physicians for Fair Coverage has also begun a digital ad campaign and has spent an estimated $240,000 on conventional lobbying this year, according to the Center for Responsive Politics. That physicians group lists its members on its website, and its staff speaks with journalists about the group’s perspective. (Some of its members also have private equity ties.)

The American College of Emergency Physicians and the American Society of Anesthesiologists have also sought changes to the surprise billing legislation, but their message is milder than the TV ads, and they say they want the problem resolved.

Leaders in each of those groups denied knowing who funded Doctor Patient Unity or communicating with the group directly.

“I have no idea who they are — I actually tried Google, and when you look at their website, there’s nothing,” said Michele Kimball, the president of Physicians for Fair Coverage.

Laura Wooster, a spokeswoman for the American College of Emergency Physicians, said she found the group’s first ad confusing. After learning about the group’s funders, Ms. Wooster distinguished the dark money group’s strategy from that of the college.

“ACEP does not want our proactive efforts over the past two years to help protect patients from surprise bills to be conflated with more negative messages that are perceived as obstructionist,” she said. The organization’s current president works for TeamHealth; its president elect works for Envision.

Insurance companies, which strongly favor the prevailing legislative approach, are also heavily invested in efforts to influence the surprise billing legislation, although they have been more transparent about their involvement. An industry group, the Coalition Against Surprise Medical Billing, has run digital and television ads worth several million dollars. Its latest, which ran in Washington during the Democratic presidential debate on Thursday, shows men and one woman negotiating in a dark room as a voice-over describes surprise billing as a “private equity business model.”

“Can we get a little privacy in here?” one person asks the camera.

The Doctor Patient Unity campaign is similar to other dark-money efforts in which groups try to influence public policy without disclosing donors. Anna Massoglia, a researcher at the Center for Responsive Politics, which tracks such campaigns, said many of the tactics used by Doctor Patient Unity were familiar. “You do see the same groups and the same operatives popping up time and time again as these new issues emerge,” she said.

Several lawmakers said the mysterious nature of the ad campaign had left them more committed to the issue than they were before.

“This is an example of what happens when voters can’t tell who’s paying for ads because they’re funded by dark money; it causes a lot of confusion,” Senator Jeanne Shaheen, a Democrat from New Hampshire, said in a statement. “But I don’t care how many ads they run, how many mailers they send or how much dark money they spend. I’m not intimidated and am adamant that tackling surprise billing must remain top of Congress’s to-do list.”