As John Maynard Keynes said, “When the facts change, I change my mind - what do you do, sir?” It is no surprise that two months after the NSA’s passage, Welsh, Carson, Anderson & Stowe sold its stake in US Acute Care Solutions to USACS’ physicians in February 2021. The transaction left USACS with at least $725 million in debt.
Hey Leon- riddle me this? If USACS and extension WCAS not engaging in out of network billing practices ( which they most definitely were) then why did Welsh, Carson, Anderson & Stowe decide to dump their stake in the business as soon as they heard NSA was gonna pass?
The reality is PE highjacked the Out of Network lever physicians traditionally used to negotiate better rates. They used and abused it to enrich themselves. Physicians may have seen some benefit but they saw more.
Writing this while a microscopic violin plays in the background for the demise of PE in healthcare.
Great point. The Welsh Carson playbook is to use going out of network as a negotiating tactic with the goal of being in-network at high rates. The FTC suit goes into this in impressive detail:
As a Welsh Carson analyst explained to a potential lender, “if a payor refuses to give us the pricing that we’re looking for, then the threat of us going out-of-network would be more painful on the payor than it would be on us. . . . [W]hen we cover every major hospital in the market, it doesn’t really have much of an impact on us. All the while, the payor would be responsible for reimbursing at out-of-network rates which are substantially higher than what we see on an in-network basis . . . .” In addition, taking USAP out of network entails administrative costs for payors. There is also the possibility of backlash from members and actual or potential clients.
...
Regan, Bratberg, and the other Welsh Carson and USAP executives agreed that a key part of USAP’s expansion plans—in Houston and beyond—would be spreading Greater Houston Anesthesiology’s high reimbursement rates to other practices through tuck-in acquisitions. After acquiring each firm, Welsh Carson and USAP planned to ratchet up the newly-acquired providers’ rates to those used by Greater Houston Anesthesiology—which had some of the highest rates in Texas when USAP acquired it. USAP thus planned to supply hospitals with generally the same providers as before, but now at significantly higher reimbursement rates. USAP and Welsh Carson referred to these increases as “synergies,” even though they were simply excess profits generated from consolidating the market.
...
USAP immediately began attempting to apply its existing (higher) reimbursement
rates from Houston to Pinnacle providers. Insurers balked at the idea of Houston rates for Dallas anesthesia providers, leading to protracted negotiations. One insurer, , even opted to treat the former Pinnacle (now USAP) anesthesia providers as out of network and arbitrate the amount it was required to reimburse for their services. That arbitration, however, ultimately settled in early 2016, with USAP securing for its Dallas providers a roughly % retroactive price increase on claims filed during the dispute and a % price increase going forward. USAP likewise obtained significant price increases from the other insurers for the same anesthesia providers— % to %, depending on the insurer.
...
When United attempted to lower USAP’s rates, resulting in USAP going out-of-network, United’s clients, including ASO clients operating in multiple parts of the state, pushed for United to bring USAP back in-network to avoid disruption to their members. To return USAP to the network, however, United was forced to accept above-market reimbursement rates.
Well somebody invited Lina Khan to ACEP scientific assembly !!?? ACEP leaders and members can help her take down the CMG's - but be careful what you wish for. . . . a bunch of "baby Bell" regional groups may not be too bad, but forcing out the EM groups could just lead to employment by the mega-health care systems, Optum, etc...
IMO - it would be much more advantageous for ACEP leaders and members to share with Lina Khan the stories of how consolidation of Hospitals, Insurers, Pharma has harmed patient care and assist the FTC in breaking up those monopolies.
Also, Leon you really have a great way of presenting the facts and numbers involved. Although the way in which Envision and others made it a stated business strategy to bill out of network was terrible and short sighted the fact is that the dollar amounts for EM professional fees that became patients responsibility is bubkas compared to anesthesia fees, or EM facility fees for that matter. EM physicians should not be made to be the "bad guys" in this conversation.
As John Maynard Keynes said, “When the facts change, I change my mind - what do you do, sir?” It is no surprise that two months after the NSA’s passage, Welsh, Carson, Anderson & Stowe sold its stake in US Acute Care Solutions to USACS’ physicians in February 2021. The transaction left USACS with at least $725 million in debt.
Hey Leon- riddle me this? If USACS and extension WCAS not engaging in out of network billing practices ( which they most definitely were) then why did Welsh, Carson, Anderson & Stowe decide to dump their stake in the business as soon as they heard NSA was gonna pass?
The reality is PE highjacked the Out of Network lever physicians traditionally used to negotiate better rates. They used and abused it to enrich themselves. Physicians may have seen some benefit but they saw more.
Writing this while a microscopic violin plays in the background for the demise of PE in healthcare.
Hi Saba,
Great point. The Welsh Carson playbook is to use going out of network as a negotiating tactic with the goal of being in-network at high rates. The FTC suit goes into this in impressive detail:
As a Welsh Carson analyst explained to a potential lender, “if a payor refuses to give us the pricing that we’re looking for, then the threat of us going out-of-network would be more painful on the payor than it would be on us. . . . [W]hen we cover every major hospital in the market, it doesn’t really have much of an impact on us. All the while, the payor would be responsible for reimbursing at out-of-network rates which are substantially higher than what we see on an in-network basis . . . .” In addition, taking USAP out of network entails administrative costs for payors. There is also the possibility of backlash from members and actual or potential clients.
...
Regan, Bratberg, and the other Welsh Carson and USAP executives agreed that a key part of USAP’s expansion plans—in Houston and beyond—would be spreading Greater Houston Anesthesiology’s high reimbursement rates to other practices through tuck-in acquisitions. After acquiring each firm, Welsh Carson and USAP planned to ratchet up the newly-acquired providers’ rates to those used by Greater Houston Anesthesiology—which had some of the highest rates in Texas when USAP acquired it. USAP thus planned to supply hospitals with generally the same providers as before, but now at significantly higher reimbursement rates. USAP and Welsh Carson referred to these increases as “synergies,” even though they were simply excess profits generated from consolidating the market.
...
USAP immediately began attempting to apply its existing (higher) reimbursement
rates from Houston to Pinnacle providers. Insurers balked at the idea of Houston rates for Dallas anesthesia providers, leading to protracted negotiations. One insurer, , even opted to treat the former Pinnacle (now USAP) anesthesia providers as out of network and arbitrate the amount it was required to reimburse for their services. That arbitration, however, ultimately settled in early 2016, with USAP securing for its Dallas providers a roughly % retroactive price increase on claims filed during the dispute and a % price increase going forward. USAP likewise obtained significant price increases from the other insurers for the same anesthesia providers— % to %, depending on the insurer.
...
When United attempted to lower USAP’s rates, resulting in USAP going out-of-network, United’s clients, including ASO clients operating in multiple parts of the state, pushed for United to bring USAP back in-network to avoid disruption to their members. To return USAP to the network, however, United was forced to accept above-market reimbursement rates.
Well somebody invited Lina Khan to ACEP scientific assembly !!?? ACEP leaders and members can help her take down the CMG's - but be careful what you wish for. . . . a bunch of "baby Bell" regional groups may not be too bad, but forcing out the EM groups could just lead to employment by the mega-health care systems, Optum, etc...
IMO - it would be much more advantageous for ACEP leaders and members to share with Lina Khan the stories of how consolidation of Hospitals, Insurers, Pharma has harmed patient care and assist the FTC in breaking up those monopolies.
Also, Leon you really have a great way of presenting the facts and numbers involved. Although the way in which Envision and others made it a stated business strategy to bill out of network was terrible and short sighted the fact is that the dollar amounts for EM professional fees that became patients responsibility is bubkas compared to anesthesia fees, or EM facility fees for that matter. EM physicians should not be made to be the "bad guys" in this conversation.