Keeping an Eye on Air Ambulance Costs

Posted Date: November 02, 2017
    

Industry InformationInsights

NCCI found that, in aggregate, air ambulance charges increased between 2011 and 2015.

By Laura Kersey
Director—Regulatory & Legislative Analysis, NCCI

The issue of costly air ambulance charges is a hot topic under discussion in several states and Congress.

Some states have fee schedules regulating workers compensation reimbursement rates for air ambulances. However, the federal Airline Deregulation Act of 1978 (ADA) expressly preempts all state laws “related to a price, route, or service of an air carrier.” The question of which law governs air ambulance rates in workers compensation—the state workers compensation law or the federal ADA law—has become a friction point.

Recently, NCCI provided aggregated, countrywide information on air ambulance use and costs to the National Association of Insurance Commissioners (NAIC) Workers’ Compensation (C) Task Force, which was discussed at the April 2017 NAIC meeting. The data on payments, charges, and transactions/units for air ambulance codes showed cost trends between 2011 and 2015.

The infographic below displays the average paid per transaction across five service years based on data from NCCI’s Medical Data Call. The total paid for air ambulance transport (other than waiting time and mileage)—including fixed wing and rotary wing—exceeded $21M in 2015. Payments per transaction for fixed wing and rotary wing transport have grown at an annual rate of 5% between 2011 and 2015.

In addition to providing this national data to the NAIC, NCCI is also responding to requests from individual states for their respective information on this issue.

The workers compensation industry—concerned about the rising access costs of air ambulance services—is watching how various federal and state entities are addressing this issue.

Judicial Activity

The friction point as to which law governs air ambulance rates in workers compensation—the state workers compensation law or the federal ADA—has resulted in several ADA “pre-emption” challenges to state reimbursement rates coming before the courts in various jurisdictions. The US 10th Circuit Court of Appeals and a West Virginia federal court recently found that the ADA preempts state workers compensation laws that regulate and/or set fixed rates for reimbursement of air ambulance carrier claims. Additional cases are pending in Texas state and federal courts.

State Legislative Activity

Some states are attempting to pass legislation that address air ambulance issues including the following:

  • In 2017, Montana passed legislation aiming to regulate air ambulance services without federal preemption (SB 44 and HB 73)
  • New Mexico introduced similar legislation this session (HB 402), but the legislature adjourned without advancing the bill
  • West Virginia introduced SB 276 regarding the collection of air ambulance fees for emergency treatment, but the bill did not pass

Federal Legislative Activity

Sen. Jon Tester (MT) recently introduced S. 471, which is intended to preserve state authority to regulate the network participation, reimbursement, and balance billing of air carriers providing air ambulance services. This legislation is pending further action.

The House of Representatives Transportation and Infrastructure Committee considered legislation reauthorizing the Federal Aviation Administration (FAA). At that time, Rep. Rob Woodall (GA) proposed an amendment to create an advisory committee composed of the US secretary of transportation, representatives of other relevant federal agencies, and a representative of the air ambulance industry. Under the proposed amendment, the advisory committee would:

  • Make recommendations for a rulemaking that requires air ambulance operators to clearly disclose charges for air transportation services separately from charges for non-air transportation medical services provided while onboard an aircraft
  • Provide other consumer protections for customers of air ambulance operators

The committee passed the legislation, but the Woodall amendment was not included in the FAA reauthorization bill Congress passed in late September.

NAIC and NCOIL Activity

NAIC and the National Conference of Insurance Legislators (NCOIL) have voiced support for the above-referenced federal legislation that would allow certain billing- or insurance-related practices of air ambulance carriers to be regulated at the state level. NCOIL created a task force to dive deeper into the issue. It has adopted a resolution and plans to draft a model law.

Conclusion

The legislative debates thus far have primarily focused on what may be considered unreasonably high and unregulated rates for emergency services. In particular, the discussion has centered on the potential cost burden to a patient who is transported by air ambulance and may be left with large bills for the remainder of the cost of the service after the health insurer pays its share.

In the workers compensation context, injured workers are typically not balance billed by the air ambulance provider. However, the cost associated with air ambulance services is still under discussion by workers compensation stakeholders. Currently, if a state does not have a fee schedule, the burden to pay the high air ambulance charge rests on workers compensation insurance carriers, unless they can negotiate a lower price.

This article is provided solely as a reference tool to be used for informational purposes only. The information in this article shall not be construed or interpreted as providing legal or any other advice. Use of this article for any purpose other than as set forth herein is strictly prohibited.