March 4, 2018

Air Ambulances: State v Federal Cost Control

The Third District Texas Court of Appeals recently ruled that the Airline Deregulation Act of 1978, which covers matters related to a price, route, or service of an air carrier, takes precedence over the state's attempt to implement and enforce fee schedules for air ambulance services.

Air ambulance services are generally reimbursable in Medicare and group health programs under narrow sets of circumstances. For instance, if an injured worker has sustained life threatening injuries and the nearest qualified facility is inaccessible by land due to heavy traffic, great distances, rural locations, or inaccessible areas such as flood zones, mountainous areas, etc., air ambulance services are reimbursable.

Workers' compensation has seen an increase in the utilization and cost of air ambulances over the last several years, leaving payers concerned that some instances of air ambulance use may be unnecessary, especially given the amount of domestic land development within the last ten years, which has given ground ambulances better access to patients.

According to the Government Accountability Office, the number of patients transported by helicopter air ambulances from 1998-2008 increased 35% from 200,000 patients to 270,000, and the Office also found that from 2010-2014, the median charge for helicopter air ambulances doubled from $15,000 to over $30,000.

Furthermore, the National Council on Compensation Insurance (NCCI) found that the total paid for air ambulance services, including fixed wing and rotary wing, exceeded $21 million in 2015, with payments having grown 5% between 2011 and 2015.

Many have pointed to the rising need to connect aging populations and individuals in rural areas with care that may not be immediately or locally available, yet others have argued that a rise in the number of air ambulance providers has led to medically unnecessary flights, especially as the frequency of workplace injuries has declined over time.

Of note, the National Association of Insurance Commissioners reported that in 2002, there were an estimated 400 dedicated air ambulances in service, but that number doubled to over 800 by 2008, and has risen steadily since.

Across the nation, states such as West Virginia and Wyoming have attempted to reduce air ambulance rates with fee schedules, only to be stricken down in appeals courts as recently seen in Texas. Other state legislatures have faced varying degrees of success in passing legislation that would address air ambulance rates and regulations.

In 2017, Montana passed House Bill 73 and Senate Bill 44, while New Mexico House Bill 402 failed to pass. Meanwhile, South Carolina introduced a draft proposal for regulation changes that would regulate air ambulance charges, as did Michigan.

However, these pieces of legislation could all be appealed by parties that believe the Airline Deregulation Act takes precedence, allowing the debate of high costs and utilization to continue to grow in the future.

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