Out-of-network air ambulance bills are a pernicious and financially devastating type of surprise medical bill. Courts have broadly interpreted the Airline Deregulation Act to preempt most state attempts to regulate air ambulance billing abuses, so a federal solution is ultimately needed. However, in the absence of a federal fix, states have experimented with a variety of approaches that may survive preemption and provide some protections for their citizens
E. FuseBrown, E.Trish, B.Ly, M.Hall, and L.Adler, “Outof-Network Air Ambulance Bills: Prevalence, Magnitude, and Policy Solutions,” forthcoming Milbank Quarterly (2020), available at <https://doi.org/10.1111/1468-0009.12464> (last visited August 25, 2020), ePub ahead of print (finding that among a nationally representative data set from the Health Care Cost Institute (HCCI) of commercial claims from 2014 to 2017, only 23% of air ambulance transports were in-network. The authors counted transports with a “missing network” status as out-of-network.).
4.
Id. (The number of patients “at risk” of receiving a balance bill was estimated based on the proportion of out-of-network transports where the insurance plan did not pay the amount in full, leaving a potential balance bill for patients. These are estimates of “potential” balance bills because the data did not include information about the amounts actually billed to patients by out-of-network providers.)
5.
K.Chhabra, K.McGuire, K.H.Sheetz, J.W.Scott, U.Nuliyalu, and A.M.Ryan, “Most Patients Undergoing Ground And Air Ambulance Transportation Receive Sizable Out-Of-Network Bills,”Health Affairs39, no. 5 (2020) (epub ahead of print).
6.
Z.Cooper, H.Nguyen, N.Shekita, F. ScottMorton, “Out-of-Network Billing and Negotiated Payments for Hospital-Based Physicians,”Health Affairs39, no. 1 (2020): 24-32 (describing the inflationary effect of out-of-network balance billing on private insurance rates in the context of hospital-based physicians).
7.
Fuse Brown et al., supra note 3.
8.
United States Government Accountability Office (GAO), Air Ambulance: Available Data Show Privately-Insured Patients Are at Financial Risk, GAO-19-292 (March2019), available at <https://www.gao.gov/assets/700/697684.pdf> (last visited January 24, 2020).
9.
United States Government Accountability Office (GAO), Air Ambulance: Data Collection and Transparency Needed to Enhance DOT Oversight, GAO-17-637 (July2017), available at <https://www.gao.gov/assets/690/686167.pdf> (last visited January 24, 2020).
10.
Fuse Brown et al., supra note 3.
11.
G.Bai, A.Chanmugam, V.Y.Suslow, and G.F.Anderson, “Air Ambulances with Sky-High Charges,”Health Affairs38, no. 7 (2019): 1195–1200, at 1195.
12.
Id.
13.
Airline Deregulation Act of 1978, Pub. L. No. 95-504 § 4(a), 92 Stat. 1707 (codified at 49 U.S.C. § 41713(b)(1)).
14.
“Except as provided in this subsection, a State, political subdivision of a State, or political authority of at least 2 States may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier that may provide air transportation under this subpart.” 49 U.S.C. § 41713(b)(1).
15.
Id.; Air Evac EMS, Inc. v. Cheatham, 910 F.3d 751, 763 (4th Cir. 2018) (noting “many courts have considered this question and uniformly held that the ADA preemption clause applies to the air ambulance market”).
16.
K.Chhabra, K.A.Schulman, and B.D.Richman, “Are Air Ambulances Truly Flying Out Of Reach? Surprise-Billing Policy And The Airline Deregulation Act,”Health Affairs Blog, October17, 2019, available at <https://www.healthaffairs.org/do/10.1377/hblog20191016.235396/full/> (last visited April 29, 2020).
17.
A.J.Upton, “Air Ambulance Reform - Why Congress Should Exempt Air Ambulances From ‘Carrier’ Classification and Preemption Under the Airline Deregulation Act,”Journal of Air Law and Commerce82, no. 2 (2017): 431-62.
18.
Morales v. Trans World Airlines, Inc., 504 U.S. 374, 375, 383–87 (1992).
19.
Id. at 387.
20.
Valley Med Flight v. Dwelle, 171 F. Supp. 3d 930, 943 (D.N.D. 2016).
21.
“Business of insurance” regulation under the McCarran-Ferguson means laws focusing on the relationship between the insurer and the policyholder. Id.
22.
15 U.S.C. § 1012(b) (1947) (“No Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance, or which imposes a fee or tax upon such business, unless such Act specifically relates to the business of insurance.”).
23.
See e.g., Dwelle, 171 F. Supp. 3d at 944–47 (finding North Dakota’s laws governing preferred call lists and workers compensation benefits not qualified to receive McCarran-Ferguson reverse preemption since neither law regulated insurance contracts or the relationship between an insurer and the insured but only aimed at imposing restrictions on the air ambulance provider); EagleMed LLC v. Cox, 868 F.3d 893, 905 (10th Cir. 2017) (same for Wyoming worker compensation statute); Air Evac EMS, Inc. v. Sullivan, 331 F. Supp. 3d 650, 667 (W.D. Tex. 2018) (same for Texas worker compensation statute); PHI Air Med., LLC v. Texas Mut. Ins. Co., 549 S.W.3d 804, 812–16 (Tex. App. 2018) (reversed the district court’s finding that the McCarran-Ferguson applied to the Texas worker compensation statute).
See e.g., N.C. Gen. Stat. Ann. §§ 131E-178(a), 131E-176(16)(f1) (1), 131E-176(16)(s), 10A N.C. Admin. Code 14C.33013305 (repealed 2013) (CON required among other licenses and permits); Minn. Stat. § 144.802 (repealed 1997) (license approval prior to entry into market).
27.
Licensing rules governing medically related matters, like quality of medical services and equipment, are not preempted by the ADA. Med-Trans Corp. v. Benton, 581 F. Supp. 2d 721, 740 (E.D.N.C. 2008) (invalidating only the CON requirements needed for air ambulance to enter the North Carolina market). See also Hiawatha Aviation of Rochester, Inc. v. Minn. Dep’t of Health, 389 N.W.2d 507, 509 (Minn. 1986) (invalidating Minn. Stat. § 144.802 (1982)).
28.
Benton, 581 F. Supp. 2d at 736; Hiawatha, 389 N.W.2d at 509.
Workers compensation plans, required of businesses by state law, typically do not negotiate rates with health care providers. So to avoid being charged the undiscounted chargemaster rates, states have passed laws setting reimbursement fee schedules for workers compensation plans. E. FuseBrown, “Irrational Hospital Pricing,”Houston Journal of Health Law & Policy14, no. 1 (2014): 11-58, at 51.
The court found that PHI would not likely recover less under the fair and reasonable reimbursement standard because even the trial court’s determination that the fair and reasonable reimbursement rate was 125% of Medicare rates was based on the price that PHI agreed to charge the one customer with which it had a contract. Texas Mutual Ins. Co., 2020 WL 347700263, at *8, 12.
37.
Sullivan, 331 F. Supp. 3d at 659, 662–63.
38.
Id. at 666. Appeal in the Sullivan case has been filed in the 5th Circuit (Sept. 5, 2019).
39.
Enriquez v. Couto Dairy, Case No. ADJ6833713, 2013 WL 1276510, at *2-5 (Cal. W.C.A.B. March 28, 2013) (finding Cal. Code Regs. tit. 8, § 9789.70 a “regulation” within the Workers’ Compensation Appeals Board’s state constitutional power to declare preempted by the ADA, particularly since the workers’ compensation reimbursement rates for air ambulances capped at 120 percent of the Medicare rate “related to” the regulation of an air carrier’s rates). Although section 9789.70 was amended in 2015, the air ambulance fee schedule has since become obsolete. See State of California Department of Industrial Relations Division of Workers’ Compensation, Order of the Administrative Director of the Division of Workers’ Compensation Official Medical Fee Schedule – Ambulance Fee Schedule Effective for Services Rendered on or after January 1, 2020 (December 24, 2019), available at <https://www.dir.ca.gov/dwc/FeeSchedules/AMBULANCE_FeeSchedule/Ambulance-January-2020/Order.docx> (last visited January 25, 2020) (“The CMS description of the Data Elements of the AFS Data file is attached to this Order, excluding references to air ambulance pursuant [Cal. Code Regs. tit. 8, §] 9789.70(b).”).
40.
EagleMed, LLC v. Travelers Ins., 424 P.3d 532, 536–40 (Kan. Ct. App. 2018) (finding the fee schedule requirement for reimbursement of workers’ compensation services authorized by Kan. Stat. Ann. § 44-510j preempted). Review of this case has been granted on December 19, 2018.
41.
Dwelle, 171 F. Supp. 3d at 942–43, 947 (finding N.D. Cent. Code Ann. § 65-02-08, which allowed the Workforce Safety and Insurance to set fees for treatment provided in compensable work injury claims and prohibited against patient balance billing, preempted by the ADA and McCarran-Ferguson reverse preemption did not apply).
42.
Air Evac EMS, Inc. v. Cheatham, 910 F.3d 751, 766–70 (4th Cir. 2018) (finding W. Va. Code R. § 5-16-8a, which capped reimbursement for air ambulance services at 135 percent of Medicare rates or $100 for state employees with subscription agreements, preempted by the ADA).
43.
Cox, 868 F.3d at 904–05 (finding Wyo. Stat. Ann. § 27-14-401 preempted, including its balancing billing prohibition provision, and McCarran-Ferguson reverse preemption not apply). The statute provision is being revised to remove air ambulance rate schedules, effective April 1, 2020. See HB0194, 65th Leg., 2019 Reg. Sess. (Wyo. 2019) (enacted), available at <https://www.wyoleg.gov/Legislation/2019/HB0194> (last visited Jan. 31, 2020).
44.
See Ala. Admin. Code r. 480-5-5-.34. The Alabama Workers’ Compensation Medical Services Board sets the Maximum Fee Schedule for medical services, including ambulance services, provided to injured workers. Ala. Code § 25-5-313. The Maximum Fee Schedule can be revised on an annual basis or for changes in medical technology or practice subject to the Governor’s approval. Id.; see alsoAlabama Department of Labor, “Workers’ Compensation Fee Schedules,”available at <https://labor.alabama.gov/wc/FeeSchedules.aspx> (last visited January 25, 2020).
45.
See Alaska Admin. Code tit. 8, § 45.083(i) (setting maximum fee schedule for air ambulance transports by licensed air ambulance carriers).
46.
See Ga. Code Ann. §§ 34-9-203, 34-9-205 (these code sections expressly state providers cannot balance bill the injured employee, “charges for…services under this chapter shall be subject to the approval of the State Board of Workers’ Compensation,” and the fee schedules published by the Board are “presumed reasonable” charges). See rates for ambulance and air services rates at “April 1, 2019 Medical Fee Schedule Updates,”State Board of Workers’ Compensation, available at <https://sbwc.georgia.gov/document/document/ambulance-and-air-services/download> (last visited Jan. 31, 2020).
47.
See Haw. Code R. § 12-15-20 (“Charges for medical services shall not exceed one hundred ten percent of participating fees prescribed in the Medicare Resource Based Relative Value Scale System fee schedule (Medicare Fee Schedule) applicable to Hawaii or listed in exhibit A, located at the end of this chapter and made a part of this chapter, entitled “Workers’ Compensation Supplemental Medical Fee Schedule,” dated January 1, 2018.”); Workers’ Compensation Supplemental Medical Fee Schedule, available at <https://labor.hawaii.gov/dcd/files/2012/11/2014-Exhibit-A.pdf> (last visited Jan. 31, 2020).
48.
See Ill. Admin. Code tit. 50, § 9110.90 (“after September 1, 2011, whenever the fee schedule does not set a specific fee for a procedure, treatment or service in the schedule, the amount of reimbursement shall be at 53.2% of actual charge”).
49.
See Tenn. Comp. R. & Regs. 0800-02-18-.02 (maximum amount of reimbursement is set by the fee schedule or at 100 percent of Medicare rate); Tennessee’s Workers’ Compensation Medical Fee Schedule, available at <https://www.tn.gov/content/dam/tn/workforce/documents/injuries/NewTNMFSHandbook2018.pdf> (last visited Jan. 31, 2020) (“Reimbursement for these services is capped at the lesser of the submitted charges, or 150% of the current Medicare rate).
50.
See D.C. Code Ann. § 32-1507(a-1)(5) (medical services shall be billed at the rate established in the medical fee schedule adopted by the Mayor based on 113% of Medicare’s reimbursement amounts).
51.
N.D. Cent. Code Ann. § 23-27-04.10(1).
52.
N.D. Cent. Code Ann. § 23-27-04.10(2).
53.
N.D. Cent. Code Ann. §§ 23-27-04.10(3), (4)(b)(1)-(4)(b)(2).
54.
N.D. Cent. Code Ann. § 23-27-04.10(5).
55.
Id.
56.
Dwelle, 171 F. Supp. 3d at 941–42.
57.
Id. at 942.
58.
Id.
59.
Id.
60.
Texas’s law applied the balance billing prohibition only to workers’ compensation claims. Tex. Lab. Code Ann. § 413.042. The Sullivan court did not address the balance billing prohibition specifically because it had found the air ambulance provider’s first argument, that the worker compensation law was a form of rate restriction was preempted by ADA, persuasive. Sullivan, 331 F. Supp. 3d at 656, FN 4. Therefore, the alternative argument regarding preemption of the balance billing section was not examined. Id.
61.
N.D. Cent. Code Ann. § 26.1-47-09.
62.
N.D. Cent. Code Ann. § 26.1-47-09(1).
63.
N.D. Cent. Code Ann. § 26.1-47-09(3).
64.
Guardian Flight, LLC v. Godfread, 359 F. Supp. 3d 744, 755 (D.N.D. 2019). The court reasoned that N.D. Cent. Code § 26.1-47-09 is not a business of insurance regulation and is not saved by McCarran-Ferguson reverse preemption since the section does not alter the relationship of the insured and insurer, but the insurer and the provider. Id. at 759.
65.
N.M. Stat. Ann. § 59A-57-4(B)(3)(d) (1978) (requiring managed healthcare plans to make emergency care services available to covered individuals without requiring prior authorization and ensure that appropriate out-of-network services were provided without additional cost); N.M. Stat. Ann. § 59A-22A-5(A)(1) (applying to preferred provider organizations (PPOs)); N.M. Code R. § 13.10.21.8(D)(6) (applying to health maintenance organizations (HMOs)).
66.
PHI Air Med., LLC v. New Mexico Office of Superintendent of Ins., No. 18 CV 382 JAP/SCY, 2018 WL 6478626, at *7 (D.N.M. December 10, 2018).
Wyoming Department of Health, Wyoming Air Ambulance Waiver (October28, 2019), available at <https://airambulancewaiver.wyo.gov> (last visited January 25, 2020).
Mont. Code Ann. §§ 33-2-2302, 33-2-2305 (2017) (hold harmless provisions); Mont. Code. Ann. § 20-25-1316 (2017) (dispute resolution).
90.
Mont. Code Ann. §§ 33-2-2302, 33-2-2305 (2017).
91.
Mont. Code. Ann. § 20-25-1316 (2017).
92.
U.S. GAO, supra note 8, at 21 (Montana officials reported that shortly after SB 44’s enactment, a large air ambulance provider entered into a network contract with a large insurer).
The typical surprise medical billing benchmark is median in-network rates, but for air ambulances, that standard is less meaningful because the vast majority of services are out-of-network and pervasive market failures result in highly inflated in-network rates. So a multiple of Medicare rates is a more reliable benchmark for air ambulances. Fuse Brown et al., supra note 3.
North Dakota’s code section 26.1-47-08 provides that “[a]n air ambulance provider, or an agent of an air ambulance provider, may not sell, solicit, or negotiate a subscription agreement or contract relating to services or the billing of services provided by an air ambulance provider.” N.D. Cent. Code Ann. § 26.1-47-08.
103.
House Bill 73, codified at Mont. Code Ann. §§ 33-2-2201 – 2112 (2017) (“A private air ambulance service…shall obtain a certificate of authority from the commissioner prior to selling, soliciting, or negotiating a membership agreement in Montana;” requirements, among others, include stating “membership agreement is an insurance contract” when issued to members); Alaska Stat. §§ 21.61.105, 21.61.106 (2014) (requires air ambulances offering membership programs to register biennially with the Director of Insurance, among other operation requirements, and those providers are considered “insurers,” and those membership agreements, “excepted benefits” insurance policies; “OGC Op. No. 08-07-30,” New York State, available at <https://www.dfs.ny.gov/insurance/ogco2008/rg080730.htm> (last visited January 27, 2020) (membership or subscription plans have been interpreted to fall under New York insurance laws as early as 1986).
104.
United States Department of Transportation, supra note 31.
