Federal Court Again Rules for Air Ambulance Firms, but Insurers Hope Help is on the Way

William Rabb

Austin, TX (WorkersCompensation.com) — Just days after a federal court found that air ambulance companies’ sky-high prices cannot be limited by workers’ compensation fee schedules, a statutorily established advisory committee has urged Congress to rewrite the law that the air companies have relied upon for years.

“That would solve everything,” said Mary Nichols, vice president and general counsel for Texas Mutual Insurance, the dominant comp insurer in Texas.

Texas Mutual was on the losing side of the 5th U.S. Circuit Court of Appeals’ Aug. 4 decision in Air Evac EMS vs. the Texas Division of Workers’ Compensation and eight insurance carriers. The court panel to a large degree contradicted the Texas Supreme Court’s 2020 opinion in a similar case, Texas Mutual Insurance vs. PHI Air Medical, which held that states can, in fact, regulate insurance matters.

The conflicting rulings have left the insurers and the Division of Workers’ Compensation in limbo, with no clear path forward on how to limit air ambulance fees, which can amount to more than $50,000 per trip. When insurers won’t pay the full amount, air companies have been known to bill injured workers for the balance, outraging many.

“DWC is aware of the decision by the 5th Circuit Court of Appeals and we are currently evaluating next steps,” said a statement from Kate Sidora, public information officer for the Texas comp agency.

Air ambulance reimbursement dispute resolutions at the division are still on hold, as they have been for the past three years, Sidora said. A federal judge, who ruled in favor of Air Evac in 2018 at the district level, barred the Texas workers’ compensation commissioner from enforcing the state regulations that created the fee schedules.

Those fee schedules effectively set air transport fees at about 150% of what Medicare allows. That’s far too little to cover costs, the air medical firms have said.

The state DWC and insurers must now decide whether to appeal the 5th Circuit’s decision to the U.S. Supreme Court. Nichols noted that Texas Mutual has not decided on its next step.

“It’s too early to know,” Nichols said Wednesday. “This is a very complicated issue, and everyone needs time to think it through.”

But the U.S. Department of Transportation’s advisory committee’s strong recommendation this week has given insurers hope that help could be on the way.

The Air Ambulance and Patient Billing Advisory Committee was established by the FAA Reathorization Act of 2018. Members were appointed by the U.S. secretary of transportation and include insurance regulators, physicians, insurance executives, consumer advocates and air ambulance company leaders.

The committee met virtually for the third time on Wednesday, Aug. 11. After taking testimony from stakeholders the group voted 8-2 to endorse four recommendations that Congress remove air ambulance carriers from the aegis of the Airline Deregulation Act of 1978. The official documents have not been posted, but those at the proceedings said the move, if signed into law, would vanquish the shield that air transporters have used to bill comp insurers tens of thousands of dollars for helicopter trips.

The ADA statute has been a thorn in the side of insurers and patients for years, as courts have repeatedly ruled that air ambulances that fly across state lines are governed by the law and that it preempts state regulations.

Attorneys for Texas Mutual and other insurers have argued that, surely, members of Congress in 1978 did not intend for the ADA to apply to emergency medical transportation. Unlike the airline industry, the air ambulance field is not a competitive market. Patients in much of the country – and injured workers in the throes of a medical crisis – have little choice in who their transporter should be, insurers have said.

In the 2020 PHI Air Medical case, Texas Mutual also argued that comp fees and regulations are governed by the federal McCarran-Ferguson Act of 1945, which leaves it to the states to regulate the “business of insurance.” The Texas Supreme Court agreedThe U.S. Supreme Court in April of this year declined to review an appeal by PHI Air Medical.

Three federal appeals courts have now disagreed with the Texas court’s line of reasoning, consistently finding that the “ordinary meaning” of the wording of the Airline Deregulation Act is clear and overrides state insurance regulations, as 5th Circuit Judge James Ho explained in his recent opinion.

States “may not enact or enforce a law, regulation, or other provision … related to a price, route, or service of an air carrier that may provide air transportation under this subpart,” the statute reads.

Accordingly, Ho wrote, “we agree with our sister courts of appeals, which have unanimously held that the ADA preempts state price caps on air ambulance reimbursements, and that those state price caps are not saved by the McCarran–Ferguson Act.”

McCarran-Ferguson concerns state regulations governing the relationship between insurers and insureds – not between insurers and providers, the 5th Circuit noted.

“We hold that the ADA expressly preempts TWCA (the Texas Workers’ Compensation Act) reimbursement regulations as applied to air ambulance services,” the court added.

Air ambulance companies have argued that their fees must cover expensive helicopter maintenance, a crew of pilots that must be on call at all times, and highly trained medical staff. Without adequate reimbursement, some parts of the country would be left without air transport in emergencies, the firms have warned.

But insurers and some patient advocacy groups have said that the air fees are inflated, are not “fair and reasonable,” and that air medical carriers are hiding behind the misapplied language of the Airline Deregulation Act. A 2019 bill in Congress known as the Lower Health Care Costs Act of 2019, would have required that insurers would be required to pay no more than the “median in-network” price. The bill also would have prohibited balance billing by medical providers.

That measure died in the Senate in 2019. Last year, Congress passed another bill, the No Surprises Act, which bans surprise or balance billing to patients. But that law applies mostly to health insurance and out-of-network care, and may have little effect on reimbursement paid by workers’ compensation carriers.

Insurers hope this week’s advisory committee recommendation will give new momentum to efforts to address the root of the issue and revamp the ADA. Some consumer advocates agree.

Removing air ambulances from the ADA “would certainly provide more flexibility for states to set up better oversight,” said Patricia Kelmar, health care campaigns director with the U.S. Public Interest Research Group. Until last year, Kelmar served on the DOT air ambulance advisory committee.

Insurers echoed her feelings. In written comments filed with the committee before its vote, America’s Health Insurance Plans said it “strongly recommends that the Advisory Committee vote to recommend to Congress that it amend the ADA to allow states to regulate air ambulance providers. The Advisory Committee’s recommendation to Congress should, at a minimum, provide that air ambulance providers, regardless of whether they are providing inter- or intra-state transports, be expressly excluded from the ADA’s preemption provision – or alternatively – that the statute be amended to expressly provide that air ambulance providers are not ‘air carriers’ under the ADA.”

Meanwhile, Texas Mutual isn’t throwing in the towel, and will continue to balk at what some have called stratospheric air ambulance fees.

“They are a long way from ordering us to pay their billed charges,” TMI’s Nichols said.“We will continue to pay what we believe are fair and reasonable prices. It’s fair and reasonable or it’s zero.”

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