Helicopter Air Ambulance (HAA) Fees Present Policy Challenges
When making the decision to transport a critically ill patient by helicopter air ambulance (HAA), the emergency medicine physician must now face the perverse prospect of saving the patient’s life only to devastate that patient’s financial well-being.
Helicopter air ambulance services have proliferated over the past decade, and with them reports of patients and families ruined by exorbitant HAA bills not covered by insurance.[1,2] With federal law currently preventing state- and local-level action against these predatory HAA billing practices, EM physicians must engage in policy reform and other efforts to protect our patients within the helicopter aeromedical transport system.
HAA LANDSCAPE AND COSTS
The sky is abuzz with helicopters. More than 1,000 HAA aircraft currently operate across the US.[1,2] Historically, non-profit outfits run by governmental agencies such as state police or by hospitals themselves accounted for most HAA services.
Now, just three corporate for-profit groups — Air Methods, Air Medical Group Holdings and PHI — account for nearly 50% of the HAA market by revenue and by number of operating aircraft.[1-3] This growing privatization of HAA operations is not necessarily a negative development, were it not for the significant financial implications for patients.
As the number of HAA aircraft has increased, so too have HAA fees. Kathryn Green’s story in the September 2017 edition of Consumer Reports is illustrative. Green’s husband was flown by HAA after a head injury at their home in Mississippi. He died in hospital, but the HAA company charged Green $58,142 for the flight. Only $7,192 was covered by her insurance. The HAA company’s subsequent collection efforts destroyed Green’s finances even as she mourned her husband’s death. Green’s story is not unique. The average HAA bill across all companies is roughly $30,000 per flight, but this pricing differs dramatically for non-profit vs. for-profit carriers.
The average bill of the country’s largest for-profit company, Air Methods, exceeds $50,000 per flight.[2,4] In contrast, some hospital-affiliated non-profit operators charge as little as $15,000 to $20,000, often less than half or even a third of the price of for-profit carriers for the same flight.
These enormous charges to patients exist despite independent research showing that actual operating costs for HAA transport average around $10,000 per flight,[2,4] with Medicare reimbursing approximately $6,000 per flight.[1,2] Thus, HAA companies, especially the for-profits, charge far in excess of their actual operating costs and standard Medicare reimbursement. Unfortunately, commercial healthcare insurance turns out to provide little safeguard against these charges.
The ability of HAA groups to balance bill accounts for the prohibitive sums patients often face for HAA transport. Many for-profit HAA agencies refuse to contract with commercial insurers in their flight areas, thereby remaining “out of network.” As a result, when these HAA companies bill a patient whom they’ve carried, the patient’s insurance will only pay a small “allowable” out-of-network rate, and the HAA company can then directly charge the patient for the remainder.
Federal law shields Medicare and Medicaid patients from excessive balance billing, but commercially insured patients enjoy no protections. The problem of balance billing in other areas of medicine (e.g., out-of-network anesthesiologists providing care during a surgery performed by an in-network surgeon) is being addressed through a combination of state- and federal-level efforts. No such remedies exist for HAA billing, owing to a piece of federal legislation from the 1970s.
AIRLINE DEREGULATION ACT
HAA companies enjoy vast immunity from efforts to restrict balance billing or any other aspects of their operations. This protection stems from a seemingly unrelated federal law. The 1978 Airline Deregulation Act (hereafter, the Deregulation Act) was originally passed with the intent of deregulating the US commercial airline industry and reads in part as follows:
Except as provided in this subsection, a State, political subdivision of a State, or political authority of at least 2 States may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier that may provide air transportation under this subpart.
The Deregulation Act preempts any state or local level action against the “price, route or service” of commercial air carriers. The word ‘preemption’ carries specific legal implications. As a result of the Supremacy Clause of the U.S. Constitution, federal law preempts conflicting state or local laws. Preemption can be expressed (as in the Deregulation Act), implied or achieved by default if federal law occupies the entire field of authority over a policy area.
Preemption, unless ruled by the courts as unconstitutional or as otherwise not applicable to the related state policies, can only be overcome by passage of new or amended federal laws. Three cases have outlined just how broadly the Deregulation Act’s expressed preemption reaches. In Morales v. Trans World Airlines, 504 U.S. 374 (1992), state laws against misleading advertisements by airlines were ruled as preempted by the Deregulation Act.
In American Airlines, Inc. v. Wolens, 513 U.S. 219 (1995), state consumer protection laws were ruled as preempted when applied to airline frequent flier programs.6 Similarly, in Northwest, Inc. v. Ginsberg, 572 U.S. __ (2014), state common law on good faith and fair dealing was preempted when applied to an airline loyalty program.
In a case on preemption of state trucking laws, the US Supreme Court quotes Morales in explaining that a state statute will be federally preempted when it “produces the very effect that the federal law sought to avoid, namely, a state’s direct substitution of its own governmental commands for ‘competitive market forces’ in determining…the services that…carriers will provide.” Federal regulations classify HAA companies as commercial air carriers [9,10] and as such, they fall under the protections of the 1978 Airline Deregulation Act. Thus, the Deregulation Act offers sweeping protection to HAA companies.
Several states have felt the sting of the Deregulation Act’s preemption clause in their attempts to rein in the HAA industry. The following are state legislative and regulatory strategies that have failed due to preemption by the Deregulation Act.
Multiple courts have determined that states cannot require HAA companies to obtain certificates of need or other proof of public necessity before operating within a market.[3,12-14] In 2015, a Florida man sought relief against HAA bills through the state’s Personal Injury Protection Statute, Deceptive and Unfair Trade Practices Act, and Consumer Collection and Practices Act. The court ruled that all of these laws were preempted by the Deregulation Act.
In 2016, a North Dakota law that required HAA operators to form in-network contracts with the state’s commercial insurers before being listed on primary call lists and that required publication of HAA transport fees was struck down on the basis of preemption. In that same case, a separate law that required HAA operators to accept state worker’s compensation fees and precluded balance billing to injured workers was struck down, again on the basis of federal preemption.
Against this long track record of failures, what policy options do exist to combat excessive HAA bills?
Rising HAA costs to patients and increased recognition of the Deregulation Act’s preemptive power have fueled recent efforts to address HAA issues. On a federal level, three separate bills in the current Congress focus on the HAA industry.
S.B. 471, the Isla Rose Life Flight Act, has been proposed by Senator Tester (MT) to amend the language of the 1978 Deregulation Act to explicitly exclude HAA operations from federal preemption protections.
In a move supported by non-profit HAA carriers, Rep. Richard Hudson (NC) has proposed H.R. 3780, the Air Ambulance Quality and Accountability Act, which would establish minimum standards for HAA operators; would require HAA quality and price reporting; and would mandate the Medicare Payment Advisory Commission to use those quality and price data to inform adjustments in Medicare reimbursements for HAA transport.
H.R. 3378, the Ensuring Access to Air Ambulance Services Act of 2017, proposed by Rep. Jackie Walorski (IN) and endorsed by for-profit HAA companies, would immediately increase Medicare reimbursement rates for HAA transport while mandating that companies report cost and limited quality metrics to create performance scores that would affect their reimbursement rates. EM physicians should familiarize themselves with these policy efforts and should contact their congressional officials to express their stances on the measures.
The fight against predatory HAA billing need not take place solely in the halls of Congress, however. EM physicians can take an active role on their next shift. They can call their local HAA companies to ask for pricing information; the HAA company should be willing to disclose an approximate range of fees.
They can scrupulously consider whether a patient truly warrants helicopter transport or could safely travel by ground. Whenever the need does arise to transport a patient by HAA, the physician can choose to preferentially call non-profit HAA groups over for-profit carriers, thereby potentially saving the patient tens of thousands of dollars. This choice may not always be an option if, for example, the local non-profit is already out on a call or is not flying due to weather. However, thousands of EM physicians across the country consistently calling non-profit companies will certainly capture the attention and perhaps influence the pricing models and corporate behavior of for-profit groups.
As emergency medicine physicians, we frequently must decide whether to fly patients: a multiply injured trauma victim, an unstable septic patient or a newborn requiring specialized care. In these moments of life-or-death decisions, we now must also consider whether by calling a helicopter air ambulance we will financially ruin our patients and their families. As a crucial link in the helicopter aeromedical transport system, our specialty has a duty to engage in policy discussions and efforts to ensure equitable and affordable air transport for medicine’s most critical patients.
- Perry AE. Up in the air: inadequate regulation for emergency air ambulance transportation. Consumers Union, Health Policy Report, March 2017. PDF available at <<consumersunion.org>>.
- Government Accountability Office. Air Ambulance: data collection and transparency needed to enhance DOT oversight. GAO-17-637. July 2017.
- Government Accountability Office. Air Ambulance: effects of industry changes on services are unclear. GAO-10-907, September 2010.
- Rosato D. Air ambulances: taking patients for a ride. Consumer Reports, 06 April 2017. Accessed 22 Jun 2018 at <<consumerreports.org>>.
- Pollitz K. Surprise medical bills. Kaiser Family Foundation, 17 Mar 2016. Accessed 22 Jun 2018 at <<kff.org>>.
- Dempsey P. Federal preemption of state regulation of airline pricing, routes, and services: The Airline Deregulation Act. 10 FIU L. Rev., 435 (2015).
- USC Title 49, Subtitle VII, Part A, Subpart ii, Chapter 417, Subchapter I, Section 41713(b)(1). Accessed 22 Jun 2018 from <<uscode.house.gov>>.
- Rowe v. New Hampshire Motor Transp. Assn., 552 US 364 (2008).
- 14 CFR 119 Subpart B. Accessed 22 Jun 2018 from <<gpo.gov>>.
- 14 CFR 135 Subpart L. Accessed 22 Jun 2018 from <<gpo.gov>>.
- Med-Trans Corp. v. Benton, 581 F. Supp. 2d 721 (2008).
- Baptist Hosp., Inc. v. CJ Critical Care Transp. Sys. Of Fla., Inc., CV-07-900193 (Cir.Ct. Montgomery Cty., Ala., July 31, 2007).
- Rocky Mountain Holdings, LLC, v. Cates, 97-4165-CV-C-9 (W.D.Mo. Sept. 3, 1997).
- Valley Med Flight, Inc., v. Dwelle and Klipfel, US District Court ND, No. 1:15-CV-070, 2016.
- Bailey v. Rocky Mountain Holdings, LLC, 136 F.Supp.3d 1376 (2015).
- Tester J. S. 471: Isla Rose Life Flight Act. Available at <<congress.gov>>.
- Hudson R. H.R. 3780: Air Ambulance Quality and Accountability Act. Available at <<congress.gov>>.
- Walorski J. H.R. 3378: Ensuring Access to Air Ambulance Services Act of 2017. Available at <<congress.gov>>.