Department of Transportation Hosts the Inaugural Meeting of Committee to Advise on Air Ambulance Billing Issues

On January 15th and 16th, 2020, the U.S. Department of Transportation (DOT) held the inaugural Air Ambulance and Patient Billing Advisory Committee (Committee) meeting (see video recording here and presentation materials here). Established by the FAA Reauthorization Act of 2018, the Committee is tasked with reviewing “options to improve the disclosure of charges and fees for air medical services, better inform consumers of insurance options for such services, and protect consumers from balance billing.” The recommendations of this committee could shape future DOT regulations or inform federal legislative action to limit practices that have exposed consumers to thousands – sometimes tens of thousands – of dollars in surprise bills.

The first day of the 2-day meeting focused on an overview of the air ambulance industry, costs, prices, and how payers reimburse for air ambulance services. The second day of the meeting focused on more technical issues that the Committee will have to consider, such as the difficulty of splitting air transportation and medical charges, how medical necessity determinations drive the use of air ambulance services, and the scope of DOT’s jurisdiction and whether states have any ability to regulate air ambulance bills.

During the meeting a couple of key issues emerged. First, there’s the question of why air ambulance prices have increased so steeply in the last decade when utilization has remained fairly constant. The Health Care Cost institute presented findings from a study analyzing air ambulance claims as reported by 4 large commercial payers. Both air ambulance charges (the amount a provider sends a bill to the insurer for) and prices (how much the insurer and enrollee pay for the service together) have increased significantly in the last decade. Although the use of air ambulances has remained steady or declined between 2008 and 2017, the average price has increased by 144% for helicopters and 166% for planes.

Industry representatives at the Committee meeting primarily attributed the increase in the prices to Medicare and Medicaid underpayments. However, a recent GAO study pointed to several other factors that might be playing a role in driving up prices, such as the oversaturation of the market, lack of price competition given that this is not a “shoppable” service, consolidation of the industry under its three largest providers, and increasing ownership by private equity firms that prioritize maximizing revenue. While there was some brief discussion of these other factors, the Committee did not have a chance to spend a lot of time on them.

Second, air ambulance industry representatives, when talking about their billing practices, openly admitted that the two reasons they balance bill patients are (1) to track down a payer of record and (2), in instances where the insurance company has reimbursed the patient directly, to obtain that payment from the patient. Industry representatives further stated that sometimes sending a bill to collections is the only way they can get a patient to respond to their phone call. A couple of committee members raised an objection to this practice and called for removing the patient from the middle of provider-payer payment disputes.

Third, there was a lot of emphasis during the meeting on operational questions, such as who initiates the request for an air ambulance, what criteria they are using when they request the service, and how treating clinicians’ decisions tie into insurers’ medical necessity determinations. The most significant detail that emerged from this discussion is that the patient generally has no say in when an air ambulance is called and which air ambulance service provider responds to that call. The committee went on to discuss the role of disclosures and notices to inform the patient about his/her choices. However, as one presenter pointed out, air ambulance services are more often than not needed in emergency situations, meaning that notices and disclosures are of limited utility if the goal is to protect the patients from balance bills.

Fourth, the Committee considered the role of federal vs. state regulators in protecting consumers. DOT has the legal authority to investigate issues related to air ambulance billing practices and they have a complaint portal available for patients. Though DOT received only 24 complaints related to air ambulance billing in 2018 and 34 in 2019, committee members generally agreed that this is most likely because patients are not aware of the complaint portal.

At the same time, as we have previously noted in this space, state regulators are generally preempted under the Airline Deregulation Act of from regulating issues related to billing and pricing of air ambulance services. However, states are still allowed to regulate the medical aspects of air ambulances and federal statutes do not preempt state regulation of the “business of insurance.” Attorneys for DOT pointed out that the courts have not fully settled the question of the scope of state authority, suggesting that one outcome of pending litigation could be to solidify states’ authority to limit air ambulance bills.

The Committee’s first meeting covered a wide range of issues and was largely designed to educate committee members about key aspects of the industry, its billing practices, and the federal-state regulatory framework under which they operate. Future meetings will identify policy options to better inform and protect consumers from air ambulance surprise billing, and CHIR experts will continue to keep a close eye on their deliberations.

You can find out the latest on air ambulances and balance billing by visiting our resource center here.

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