The FAA Reauthorization Bill – An Unexpected Vehicle for Relief from Surprise Medical Bills?

Back in 2015, we wrote about how out-of-network air ambulance bills were emerging as an increasing concern for consumers and state regulators. Since then the issue has picked up more steam with a number of press outlets across the country publishing reports about these bills, which easily run into the five figures, pushing some patients into insurmountable debt. More often than not, air ambulance services are called in to serve people in severe physical distress who do not have the capacity at the time to provide consent. Yet many are later hit with surprise out-of-network charges for the flight. State departments of insurance and state legislators across the nation have taken notice of this issue and sought to protect consumers, but a federal law that has nothing to do with health care prevents them from regulating air ambulance providers.

The Airline Deregulation Act, which was enacted in 1978, expressly prevents any state from enacting a law or a regulation related to the “price, route or service” of an air carrier. Courts have repeatedly established the broad scope of this preemption. North Dakota tried to regulate air ambulance providers’ billing practices but it currently faces litigation on the basis of this preemption language. Last year, Montana also enacted a bill to hold patients harmless for balance billing of air ambulance services but in light of the broad scope of the federal preemption, this bill also is vulnerable to legal challenges.

In the face of states’ inability to act and federal inaction, Sen. John Tester (D-MT) introduced S. 471 earlier this year. The bill amends the Airline Deregulation Act to give the states authority to regulate “network participation, reimbursement and balance billing” with respect to air ambulance providers. The National Association of Insurance Commissioners and the Pennsylvania state insurance commissioner have expressed their strong support for this bill, but the future of this bill remains uncertain at this time.

A separate bill in Congress seeks to tackle the issue of air ambulance billing, but instead of allowing states to regulate air ambulances, it authorizes the Department of Transportation (DOT) to federally regulate air ambulance providers’ billing practices. H.R. 4, the Federal Aviation Administration (FAA) Reauthorization Act, requires DOT to issue a regulation (1) requiring air ambulance providers to clearly disclose charges for transportation services separately from non-transportations services in an invoice, and (2) providing other consumer protections for customers of air ambulance providers. This bill passed the House almost unanimously. Recently, Sen. Clair McCaskill (D-MO) launched an inquiry into air ambulance providers’ billing practices and introduced S. 2812, the Senate companion to the air ambulance-related provision in the House-passed FAA Reauthorization Bill.

On the one hand, if states were directly given the authority to regulate air ambulance providers like Sen. Tester’s bill proposes, there is some concern that states might end up being too slow to act. States have long had the authority to regulate balance billing with respect to other medical service providers, but very few do so. In many cases, efforts to prevent balance billing at the state level have run into a wall of opposition from the medical profession. It is not clear that the political dynamic with respect to air ambulance providers will be any different.

On the other hand, a federal fix, as proposed by the FAA Reauthorization Bill and Sen. McCaskill’s bill, would leave matters of insurance practices in the hands of the U.S. Department of Transportation, which might not have the sort of in-house expertise and on-the-ground enforcement capabilities that state departments of insurance do. However, given the pressing nature of the issue, either fix would be a welcome and much needed step forward for consumers.

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