Federal Committee Recommends Airline Deregulation Act Changes to Avoid Conflicts with No Surprises Act

By Madeline O’Brien and Jack Hoadley

When the No Surprises Act (NSA) was adopted in December 2020, the legislation banned balance billing for patients who receive emergency services from air ambulances. The NSA leaves enforcement of provisions as they relate to fully insured health insurance products and air ambulance providers to the states. The Biden administration released a proposed rule to clarify NSA enforcement procedures on September 10, 2021.

The proposed rule would establish states as the primary enforcer of NSA provisions, with the Department of Health and Human Services (HHS) serving as a back-up if a state fails to substantially enforce the law. However, in addition to the NSA, air ambulances are regulated under the federal Airline Deregulation Act. Passed in 1978, the ADA is primarily known as the legislation that removed federal regulations on airline pricing and routes. As a federal law, the ADA also preempted state regulation of aircraft prices, routes, and services. Despite the clear delegation of NSA enforcement authority to the states, regulators and some stakeholders have expressed concern that air ambulance providers will argue that any state-level efforts to require their compliance with the NSA are preempted.

We’ve previously written about the work of the Air Ambulance and Patient Billing Advisory Committee (committee), created as part of the Federal Aviation Administration (FAA) Reauthorization Act in 2018. It is charged 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.” On August 11, 2021, the committee met again to consider whether to recommend that Congress or regulatory agencies take action to exempt air ambulance from provisions of the ADA, and discussed the open question of whether and how ADA preemption might affect states’ enforcement of the NSA.

The ADA preempts state balance billing protections, leading to concern about preemption of state NSA enforcement efforts

Courts have previously held that the ADA preempts state laws banning balance billing for air ambulances. However, the NSA incorporates an enforcement framework that relies on states to be the primary entity to enforce the legislation, including the law’s payment rules and IDR processes that apply to air ambulances. This creates a question of whether state enforcement could be preempted by the ADA’s authority over air ambulance rates.

Congress leans on state enforcement of the NSA air ambulance provisions with the knowledge of the ADA provisions, so congressional intent seems clear. Further, the NSA is a more recent federal statute than the ADA and it focuses on a specific subset of aircraft. This should make it more difficult for air ambulance providers to challenge state-level enforcement in court, and the federal courts generally prefer to avoid action that would implicitly repeal a law passed by Congress. But, since the NSA marks the first time that states have had any jurisdiction over air ambulances, and air ambulance providers have a history of pursuing litigation against states, any uncertainty surrounding enforcement may result in states’ not exercising their full authority in order to avoid a challenge.

Stakeholders largely support changes to ADA to allow state enforcement of air ambulance laws, though providers express concerns

A spokesperson for the National Association of Insurance Commissioners (NAIC) told the committee that there have been increases in air ambulance prices and complaints from consumers, but courts have struck down state laws that aim to address high prices due to ADA preemption. The NAIC spokesperson suggested that any perceived conflict between the ADA and NSA could be definitively clarified by amending the ADA to say that states can regulate network participation and billing practices. Similarly, representatives from the National Association of State EMS Officials noted that ADA preemption, particularly of laws governing accreditation and certificates of need, have negatively affected the ability of state EMS officials to protect consumers. While they suggested that the FAA and DOT should continue to regulate the safety of ambulance aircraft, state and local governments can most effectively oversee billing.

Air ambulance providers were the sole stakeholder to oppose any change to the current air ambulance preemption, with a representative arguing that changes to the ADA would result in a patchwork of service regulation across state lines that would complicate interstate transports.

Committee recommendations could resolve conflict between ADA preemption and NSA enforcement

The committee sided with stakeholders calling for ADA reforms and approved a slate of recommendations for Congress and the DOT to consider. Committee members were asked to vote independently on each recommendation, all of which will be included in a final report for federal decisionmakers to consider:

  • A complete carve out for air ambulances from ADA preemption, with the exception of safety regulation
  • A more moderate carve out for air ambulances from ADA preemption to allow states to regulate the licensing of medical services on aircraft, even if related to price, route, and services
  • A narrow carve-out for air ambulances from ADA preemption on issues related to reimbursement and balance billing, thus aligning the ADA with the NSA
  • A carve out for air ambulances from ADA preemption on issues related to worker’s compensation
  • A carve out for air ambulances from ADA preemption, only in cases where previous committee recommendations cannot be implemented as a result of the ADA. This recommendation will be reported as “no consensus,” as committee members had a tie vote.

These recommendations, to varying degrees, are designed to ensure that states can directly enforce air ambulance balance billing and consumers are able to gain the protections promised under the NSA, though it will ultimately be up to Congress to make any changes to the statute. While regulators can and should assert that the NSA’s explicit delegation of enforcement authority is clear enough to head off any preemption issues, Congressional adoption of one or more of the recommendations, or federal guidance acknowledging the statutory conflict and reiterating state enforcement power, could empower states to take on their enforcement role while heading off potential litigation from providers. HHS did not discuss ADA preemption in the recent proposed rule, but states could ask the agency to try to resolve the potential conflict in its final rule, through a public comment period expires* on October 18, 2021. HHS could also reinforce state authority over air ambulance billing in a letter of guidance to states.

*Authors’ note: This blog was updated on September 29, 2021 to change the date that comments are due from October 16, 2021 to October 18, 2021, reflecting an announcement of the comment deadline.

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The opinions expressed here are solely those of the individual blog post authors and do not represent the views of Georgetown University, the Center on Health Insurance Reforms, any organization that the author is affiliated with, or the opinions of any other author who publishes on this blog.