WC Cost Control

Air Ambulance Rate Debate Unlikely to Fly Away

Where air ambulances are concerned, health care regulation is at odds with aviation regulation, creating a dispute over rates.
By: | March 9, 2018 • 4 min read

Disputes over air ambulance transport bills continue to rage on, and a recent ruling in Texas overturning a decision in favor of insurers isn’t likely to ground the debate.

More than a half a million individuals are transported via air ambulance services each year, according to the Association of Air Medical Services. The majority of these transports are via helicopter in emergency situations; the remainder are fixed-wing transports for longer distances.

Linda Colsen, vice president and national product leader, One Call Care Management

While fees charged by traditional medical transport services are regulated under the Affordable Care Act, air ambulance providers argue that they fall under the jurisdiction of the Airline Deregulation Act (ADA) of 1978, which prevents states from enacting or enforcing laws or regulations related to the price, route or service of an air transportation carrier.

This, unfortunately, has led to runaway transport fees and no way for insurers to mitigate them.

Linda Colsen, vice president and national product leader at Jacksonville, Fla.-based One Call Care Management, said emergent care situations where an individual needs to be transported via helicopter to a trauma center is the biggest contributor to these runaway rates.

“The call is being made on the ground in an emergency situation by the local EMS provider, and from a payer perspective, there’s no oversight, no ability to negotiate savings, and they’re stuck with the invoice that can be tens, even hundreds of thousands of dollars,” she said.

Advertisement




Colsen said one of her clients was billed more than $300,000 for a single helicopter emergency transport, but that One Call was able to negotiate savings of $173,000 for the insurer during a retrospective review.

Excessive helicopter transport bills were the crux of the lawsuit in PHI Air Medical, LLC v. Texas Mutual Insurance Company, et al. A trial court rendered judgment in favor of eight plaintiff insurers, which included Texas Mutual Insurance Company and Hartford Underwriters Insurance Company, who disagreed with PHI’s per-trip charge for medically transporting injured workers.

On Jan. 31, 2018, however, the Texas Court of Appeals remanded the case, holding that any rate provisions for air ambulance transports are preempted by the ADA.

Under the Texas Workers’ Compensation Act, the state’s Commissioner of Workers’ Compensation has the right to adopt policies and guidelines that reflect standardized reimbursement structures by using Medicare and Medicaid reimbursement methodologies and policies, and to ensure that these guidelines are fair and reasonable “to ensure the quality of medical care and to achieve effective medical cost control.”

The Act also defines a maximum allowable reimbursement (MAR) for workers’ comp-related medical costs, setting this MAR at 125 percent of the Medicare or state Medicaid fee schedule, or a “fair and reasonable rate” if neither applies.

While the trial court held the insurers could not be asked to pay more than 125 percent of the Medicare amount for air ambulance transport, the appeals court said the ADA’s preemption provision bars a state from enacting a law or rule “related to a price, route or service of an air carrier that may provide air transportation …”

Interestingly, the court did not demand that the insurers pay the air ambulance company.

“From a payer perspective, there’s no oversight, no ability to negotiate savings, and they’re stuck with the invoice that can be tens, even hundreds of thousands of dollars.” — Linda Colsen, vice president and national product leader, One Call Care Management

Mary Nichols, senior vice president and general counsel for Texas Mutual, said these court decisions have left no pathway to payment, and noted that the courts have not identified a single provision in the ADA or other federal statutes that would require state actors to make any payment of air ambulance claims, “much less at the rates they choose to charge.”

Although multiple states have enacted laws to combat unfair air ambulance charges — leading to dozens of lawsuits — they’re ineffectual unless Congress decides to make a change to the ADA.

“They are subject to challenge unless the courts or Congress clarifies the issue,” Nichols said. “Until then, states may lack the authority to order payment of any kind, including billed charges.”

Sen. Jon Tester, D-Montana, introduced S.B. 471 in February 2017, which would create an exemption in the ADA to allow states to regulate air ambulances. Although the bill has the support of the National Association of Insurance Commissioners, it hasn’t left committee.

Advertisement




The courts could eventually clarify the issue too. Nichols said Texas Mutual will be filling a petition for review with the Texas Supreme Court, and noted that a similar case in West Virginia is on appeal to the 4th Circuit Court of Appeals.

The top executive of one southeastern air transport company said brokers who arrange services — some of whom may inflate the bill by as much as three to four times the actual cost of transport — are also a part of the problem. The executive, who asked not to be identified, said his company coordinates air ambulance services, and about 80 percent of its business involves coordinating services for workers’ comp clients.

He noted that he doesn’t see a reimbursement cap of 125 percent of Medicare as unreasonable. But he believes further attempts to implement legislation in the industry will receive significant push-back from brokers.

“There has to be a reasonableness that is fair to the broker and that is fair for the payer based upon the actual cost of rendering the services,” said the executive. &

Angela Childers is a Chicago-based writer specializing in health care and business management. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

Advertisement




That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

Advertisement




Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]