No Surprises Act Bans Surprise Medical Billing After Years of Private Equity Industry Obstruction

On December 27, 2020, Congress passed the No Surprises Act as part of the Consolidated Appropriations Act of 2021, banning most surprise medical billing beginning January 1, 2022. The legislation addressed a predatory billing practice that generated billions in profits for private equity-backed physician staffing companies—particularly TeamHealth (Blackstone) and Envision Healthcare (KKR)—which had used surprise billing as a core business strategy for over a decade. The Act passed only after years of fierce industry lobbying and opposition, demonstrating how private equity firms monetize regulatory gaps while fighting reforms that protect patients.

Surprise Billing: The Private Equity Profit Model

Surprise medical billing occurred when patients received care at in-network hospitals but were treated by out-of-network physicians, generating bills for thousands or tens of thousands of dollars that insurance wouldn’t cover:

The Mechanism:

1. Private equity firms acquire physician staffing companies
2. Staffing companies contract to provide doctors for hospital emergency departments
3. Companies take physician groups out of all insurance networks
4. Patients seeking emergency care at in-network hospitals treated by out-of-network doctors
5. Patients receive massive “surprise” bills for the difference between billed charges and insurance payments
6. PE firms profit from both inflated out-of-network billing rates and leverage against insurers

Scale of the Problem (Pre-2022):

• 1 in 5 emergency department visits resulted in surprise bills
• 1 in 6 inpatient admissions included surprise bills
• Average surprise bill: $628 for emergency physician services, up to $50,000+ for complex care
• Annual surprise bills: Millions of Americans affected, billions in unexpected charges

Inability to Avoid: Patients couldn’t avoid surprise billing because:

• Emergency situations require treatment at nearest hospital
• Patients unconscious or unable to verify network status during emergencies
• Hospital network status didn’t guarantee all treating physicians were in-network
• No transparency about which doctors were out-of-network until after treatment

TeamHealth and Envision: Private Equity Pioneers

Two private equity-backed companies dominated emergency department staffing and pioneered surprise billing strategies:

TeamHealth (Blackstone Group)

Ownership and Scale:

• Acquired by Blackstone Group for $6.1 billion in 2016
• 20,000 employees staffing emergency departments nationwide
• Controlled approximately 1/6 of U.S. emergency departments

Surprise Billing Strategy:

• Systematically went out-of-network to maximize billing rates
• Used threat of surprise bills to patients as leverage against insurers
• Went out-of-network for periods, then negotiated in-network at rates 68% higher than previous contracts
• Employed strategy called “leveraged negotiations”—threatening massive patient bills to force insurers to accept inflated rates

Financial Engineering:

• Blackstone loaded TeamHealth with debt to fund acquisition
• Extracted hundreds of millions in management fees and dividends
• Left company facing bankruptcy by 2020 while Blackstone profited
• Surprise billing revenue essential to servicing debt and generating PE returns

Envision Healthcare (KKR)

Ownership and Scale:

• Acquired by KKR for $9.9 billion in 2018
• 69,300 employees, largest physician staffing company
• EmCare subsidiary staffed emergency departments nationwide
• Controlled approximately 1/6 of U.S. emergency departments

Aggressive Surprise Billing: Yale health economists found:

• When EmCare took over emergency departments, out-of-network rates increased by 81 percentage points
• Charges nearly doubled compared to previous physician groups
• Systematic strategy of going out-of-network to maximize billing
• Emergency physicians didn’t belong to any insurance networks, ensuring surprise bills for nearly all patients

Financial Impact:

• Out-of-network billing generated substantially higher revenues than in-network
• Inflated revenues supported $7+ billion in debt from KKR acquisition
• Company filed bankruptcy in 2023 after PE extraction left it insolvent
• Surprise billing model collapsed when No Surprises Act took effect

Combined Market Power: 1/3 of U.S. Emergency Departments

Together, TeamHealth and Envision controlled:

• Approximately one-third of hospital emergency departments nationwide
• Concentrated market power in essential, non-discretionary medical services
• Ability to implement coordinated pricing strategies
• Political influence to resist regulation through scale and resources

This concentration meant surprise billing wasn’t an isolated problem of a few bad actors—it was an industry-wide business model affecting millions of Americans annually.

The Legislative Battle: Years of Private Equity Obstruction

Efforts to ban surprise billing faced intense private equity industry opposition:

Industry Lobbying Campaign (2017-2020)

Expenditures:

• TeamHealth, Envision, and industry allies spent tens of millions lobbying against surprise billing bans
• Funded front groups and “grassroots” campaigns portraying bans as harmful to patients
• Hired dozens of lobbying firms to target key Congressional committees
• Coordinated lobbying with hospital associations and physician groups

Arguments Against Reform: Industry claimed bans would:

• Reduce physician autonomy and compensation
• Force physicians into unfavorable insurance contracts
• Reduce access to emergency care if physicians refused low-paid in-network contracts
• Harm patients by limiting physician availability

Actual Motivation: These arguments obscured the real concern: surprise billing bans would eliminate the leverage private equity firms used to extract inflated payments from insurers and patients, threatening billions in annual revenues supporting PE debt loads and returns.

Front Groups and Astroturf Organizations

Private equity firms funded groups presenting as patient or physician advocates:

Doctor Patient Unity:

• Spent over $50 million on advertising opposing surprise billing legislation
• Presented itself as physician advocacy organization
• Actually funded by TeamHealth, Envision, and private equity interests
• Ran ads claiming surprise billing bans would “close emergency rooms”

Campaign Tactics:

• Television and radio ads in key Congressional districts
• Direct mail campaigns targeting swing voters
• “Grassroots” phone calls and emails to Congressional offices
• Opposition research and attacks on reform advocates

Deceptive Messaging: Campaigns portrayed private equity firms extracting billions through surprise billing as defenders of physician independence and patient access—inverting reality to serve industry interests.

The No Surprises Act: Final Provisions

After years of lobbying battles, the No Surprises Act finally passed with the following key provisions:

Surprise Billing Protections (Effective January 1, 2022)

Emergency Services:

• Bans surprise bills for emergency services, even if provided out-of-network
• Patients pay only in-network cost-sharing amounts
• Applies to all emergency departments, including freestanding facilities
• Covers air ambulance services

Non-Emergency Services at In-Network Facilities:

• Bans surprise bills from out-of-network providers at in-network facilities
• Applies to ancillary services (anesthesiology, radiology, pathology, etc.)
• Requires providers to give advance notice and obtain consent for out-of-network care

Patient Protections:

• Patients removed from payment disputes between providers and insurers
• Cost-sharing based on in-network rates
• Patients cannot be balance-billed for covered services

Independent Dispute Resolution (IDR)

Payment Determination:

• When providers and insurers cannot agree on payment, either party can initiate IDR
• Independent arbitrator reviews both parties’ offers and supporting information
• Arbitrator selects one party’s offer (baseball-style arbitration)
• Decision is binding

Qualifying Payment Amount (QPA):

• Median in-network rate for the service in the geographic area
• Serves as benchmark for arbitration decisions
• Intended to anchor payments to reasonable market rates

Private Equity Exploits IDR Process

Despite losing the surprise billing battle, private equity firms found new profit opportunities in the dispute resolution process:

Arbitration Dominance: Just four private equity-backed provider groups—TeamHealth, SCP Health, Envision, and Radiology Partners—accounted for:

• 74% of IDR cases in the dispute resolution process
• 43% of resolved line-item claims (TeamHealth and Radiology Partners alone) in 2023-2024
• Thousands of disputes flooding the system

New Revenue Strategy:

• File arbitration for every disputed claim
• Demand inflated payments through IDR process
• Treat arbitration as new business model replacing surprise billing
• Volume of claims overwhelms system, creating delays and leverage

Insurer Non-Payment: By 2024, reports showed:

• More than one-fifth of insurers failed to pay No Surprises awards
• PE-backed providers increasingly pursuing collections
• New conflict as insurers resist arbitration awards
• System dysfunction benefits well-resourced corporate players over individual providers

Ongoing Surprise Bills: Loopholes and Evasion

Despite the ban, surprise billing continues in certain circumstances:

Ground Ambulances Excluded:

• No Surprises Act didn’t cover ground ambulance services
• Private equity increasingly acquiring ambulance companies
• Surprise ambulance bills continue affecting patients
• Gap in legislation creates new profit opportunity for PE firms

Consent Loopholes:

• Providers can still bill out-of-network if patients sign consent forms
• Some providers use aggressive consent practices
• Patients facing emergencies or in vulnerable positions pressured to consent
• Informed consent difficult when patients lack alternatives or information

Implementation Challenges:

• CMS regulations defining “qualifying payment amount” contested
• Industry litigation challenging implementation rules
• Enforcement gaps allowing continued violations
• Some providers ignore law, betting patients won’t pursue complaints

The Cost of Delay: Billions Extracted While Reform Stalled

Private equity opposition delayed surprise billing bans for years, during which:

Patient Harm:

• Millions of Americans received surprise bills totaling billions of dollars
• Families declared bankruptcy from medical debt
• Patients avoided emergency care fearing surprise bills
• Medical debt destroyed credit scores and life opportunities

PE Profits:

• TeamHealth, Envision, and competitors extracted billions through surprise billing
• Inflated revenues supported unsustainable debt loads from PE acquisitions
• PE firms collected hundreds of millions in fees and dividends
• Returns to investors built on exploiting vulnerable patients

Delayed Reform: Every year surprise billing ban was delayed represented:

• Additional billions extracted from patients and insurers
• Continued human toll of bankruptcies and avoided care
• Proof that PE political power could obstruct obvious policy solutions
• Demonstration that patient welfare secondary to industry profits

Regulatory Capture and Political Influence

The years-long delay in banning surprise billing demonstrated private equity’s political power:

Campaign Contributions:

• TeamHealth, Envision, and industry PACs contributed millions to Congressional campaigns
• Targeted members of health committees with jurisdiction over legislation
• Bipartisan contributions ensured influence regardless of party control
• Created conflicts of interest preventing reform

Revolving Door:

• Industry hired former Congressional staff and administration officials
• Provided employment prospects for current officials after leaving government
• Created alignment between legislators’ career interests and industry positions
• Ensured sympathetic hearing for industry arguments

Lobbying Access:

• Industry met regularly with key legislators and staff
• Shaped legislative language and amendments
• Delayed votes and prevented bills from advancing
• Used procedural tactics to obstruct reform

Media Campaigns:

• Doctor Patient Unity ads shaped public perception
• Created false impression of grassroots physician opposition
• Drowned out patient advocacy voices
• Manufactured “controversy” where broad consensus existed for reform

Limited Victory: Patients Protected, PE Adapts

The No Surprises Act represents a partial victory against private equity healthcare practices:

Successes:

• Surprise billing largely eliminated for covered services
• Millions of patients protected from unexpected bills
• Removed patients from payment disputes
• Established baseline patient protections

Limitations:

• Ground ambulances excluded
• Consent loopholes allow continued out-of-network billing
• IDR process creates new profit opportunities for PE firms
• No broader reforms to PE healthcare ownership

PE Adaptation:

• Firms shifted from surprise billing to IDR arbitration strategies
• Acquired ground ambulance companies exempt from ban
• Developed new revenue models exploiting regulatory gaps
• No structural reforms limit PE healthcare investment

Systemic Implications: One Reform, Ongoing Capture

The No Surprises Act demonstrated both the possibility and limits of healthcare reform:

Reform Possibility:

• Sufficient political pressure can overcome industry opposition
• Patient advocacy and media attention can force legislative action
• Egregious practices can eventually be addressed through regulation

Reform Limits:

• Industry delays reforms for years, extracting billions during delay
• Final legislation includes compromises weakening protections
• Industry finds new ways to exploit system after reform
• No structural changes address root causes of exploitation

Ongoing Capture:

• Private equity continues acquiring healthcare providers
• New profit strategies replace banned practices
• Industry lobbying prevents comprehensive reform
• Regulatory agencies lack resources and authority for effective enforcement

The Precedent: Private Equity Will Exploit Regulatory Gaps

The surprise billing saga established clear patterns:

PE Healthcare Strategy:

1. Identify regulatory gap or unregulated practice
2. Exploit gap for maximum profit extraction
3. Use political influence to resist reform
4. Delay regulation as long as possible while extracting profits
5. When reform finally passes, find new gaps to exploit

Next Targets: Following No Surprises Act, private equity shifted focus to:

• Ground ambulance services
• Behavioral health and addiction treatment
• Autism therapy services
• Specialty physician practices
• Medical billing and revenue cycle management

Each represents potential for similar exploitation cycles until regulated.

Conclusion: Reform Possible But Insufficient

The No Surprises Act proved that even private equity’s political power can be overcome when practices become sufficiently egregious and public pressure sufficiently intense. But the years-long delay before reform, and the industry’s successful adaptation after reform, demonstrated the limits of piecemeal regulation.

Surprise billing was banned only after:

• Over a decade of patient exploitation
• Billions extracted through predatory practices
• Countless bankruptcies and financial devastations
• Intense media coverage and political pressure
• Overwhelming public consensus for reform

Even then, industry lobbying delayed action for years, and final legislation included compromises and gaps private equity immediately began exploiting.

The lesson: private equity will identify and exploit every regulatory gap in healthcare until comprehensive structural reforms address PE ownership of essential medical services. Banning specific practices one-by-one allows years of exploitation before each reform, generating billions for PE investors while patients suffer the consequences.

Without broader reforms limiting private equity’s role in healthcare, the surprise billing saga will repeat with new practices in new medical sectors—each requiring its own years-long reform battle while private equity extracts maximum profits from regulatory gaps and patient vulnerability.