Air ambulance trade association sues feds over surprise billing law

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The Association of Air Medical Services sued the federal government to block regulations shaping a new law that wouldn’t make patients pay for unexpected out-of-network charges associated with emergency care.

The air ambulance trade association alleged that the “overreaching” interim final rules unilaterally adopted by HHS, the U.S. Labor Department and other federal agencies would give insurers too much power in the arbitration process, force the air ambulance providers to accept “deflated” rates and limit access to emergency care, according to a complaint filed Tuesday in a Washington D.C. federal court. The No Surprises Act, which levels cost-sharing across in-network and out-of-network claims, holds patients harmless from balance bills and provides an independent resolution process, will go into effect Jan. 1.

The association claimed the rules “dictated the outcome” of the independent dispute resolution.

“In so doing, the departments have gutted the IDR process that Congress created and jeopardized the ongoing viability of air ambulance providers,” the complaint said.

The argument mirrors many hospital association’s claims that the administrative process in resolving out-of-network services unfairly favors insurers. Health insurers would set the qualifying payment amount, which providers could contest if they have data that clearly demonstrates that it is “materially different from the appropriate out-of-network rate.” Health plans set the qualifying payment amount by calculating the median contract rate of all their negotiated rates for similar services in a certain market, factoring in inflation and multiplying that sum by the miles traveled.

Regulators encouraged providers to make offers that are close to the qualifying payment amount to avoid the arbitration process. But an independent resolution process “rigged to simply reaffirm the qualifying payment amount is neither an independent process nor faithful to Congress’ directive to consider multiple enumerating factors,” the Association of Air Medical Services argued in the complaint.

HHS and the Labor Department did not respond to requests for comment. The U.S. Office of Personnel Management, Employee Benefits Security Administration, Treasury Department and Internal Revenue Service were also listed as defendants.

The No Surprises Act is expected to curb air ambulance providers’ negotiating clout, analysts said. It will especially impact private equity-owned helicopter ambulance carriers that charge nearly twice as much as those that are not part of a private equity-owned or publicly traded company, research from the USC-Brookings Schaeffer Initiative for Health Policy revealed.

Still, air ambulance companies will likely offset out-of-network revenue losses by charging more for in-network claims, industry observers said.

Most air ambulance carriers don’t fit in-network models, the Association of Air Medical Services claimed. Air ambulances’ high fixed costs and unpredictable schedules complicate network contracts because insurers can’t steer increased patient volumes in return for discounts, according to the complaint. Air ambulance carriers and providers negotiate rates on a case-by-case basis, which often leaves the patient with an unexpected balance bill.

The average charge associated with airplane ambulances rose 27.6%, from $19,210 in 2017 to $24,507 in 2020, according to a FAIR Health analysis of around 35 billion healthcare claims. Meanwhile, the average in-network negotiated rate for airplane ambulance jumped rose 76.4% over that span from $8,855 to $15,624.