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March 14, 2022

Source: Vertical Magazine

A lawsuit brought by the Association of Air Medical Services (AAMS) over the implementation of the No Surprises Act has deeply divided the U.S. air medical industry, with some hospital-based providers claiming that AAMS has jeopardized their programs by prioritizing the interests of independent providers.

Metro Aviation — which operates 155 aircraft for 39 traditional air medical customers — withdrew from AAMS last month, telling the trade association that its “continued actions will very likely do great harm to the very hospital-based air medical providers that form a large part of your membership and that you purport to represent.”

“It was a very, very hard decision for Metro to make. We’ve supported AAMS for almost 35 years,” Metro co-owner and director of business integration Todd Stanberry told Vertical. Stanberry resigned from the AAMS board on the same day his company severed ties with the association, Feb. 11.

“At the end of the day . . . this wasn’t about Metro, this wasn’t even about just Metro’s customers, it was about what’s right for the industry,” he said. “And we saw just a philosophical, ethical problem with an industry trade organization that purports to represent the majority of that industry . . . basically siding with one segment of the industry.”

AAMS disputes this characterization, contending that the arguments in its lawsuit, “if successful, will benefit every member and the medical transport industry.”

“While it is unfortunate that some within the industry continue to misinterpret this position, AAMS is confident that our lawsuit and our broader public policy platform serve to enhance the viability, quality, and safety of every medical transport service,” the association said in an emailed statement.

Dissimilar business models

At issue is AAMS’s position that hospital-based and independent air ambulance services should be considered separately for purposes of calculating the qualifying payment amount (QPA), defined in the No Surprises Act as the median of the contracted rates that a health insurance plan or issuer pays for a service.

Congress passed the No Surprises Act in late 2020 to prohibit most healthcare providers — including air ambulance providers — from billing patients for services not fully covered by their insurers because the providers were out of network. The air ambulance industry had become notorious for such surprise “balance bills,” with the highest charges associated with independent providers such as Air Methods and Global Medical Response, which are owned by private equity firms.

white paper published last year by Brookings estimated that private equity and publicly traded air ambulance carriers had a standardized average charge of $48,155 across 2016 and 2017, around 75 percent higher than other providers’ standardized average charges of $27,366. Because private-equity carriers were also more likely to be out-of-network, 55 percent of their helicopter transports in 2017 had the potential to result in a balance bill, compared with 29 percent of transports from hospital-based, nonprofit, and independently owned providers.

Some independent providers have used balance billing as a tool for extracting higher payments from insurers, as a patient who receives a surprise bill for tens of thousands of dollars is likely to pressure their health plan to cover more of it. Although various states have attempted to rein in air ambulance providers’ charges, courts have consistently ruled that they are preempted from doing so by the 1978 Airline Deregulation Act.

 

For Metro customer Tampa General Hospital (TGH) Aeromed, around two-thirds of its patient transports do not have TGH medical facilities as their destination, and therefore TGH doesn’t realize any additional hospital-based revenue from them. “This is an important fact, and why the business model of the air medical provider should not be included in the determination of the [QPA],” declared program director John Visokay.

The No Surprises Act removes patients from the middle of payment disputes, giving insurers and providers 30 days to negotiate a settlement between themselves. If they are unsuccessful, then the claim will go before an independent dispute resolution (IDR) entity, which will award either the provider’s or the insurer’s proposed payment amount in a so-called “baseball-style” arbitration.

According to the No Surprises Act, the IDR entity must consider the QPA for air ambulance services in the same geographic area, as well as factors including patient acuity, the provider’s quality and outcomes measures, the training and experience of its medical personnel, and the type of vehicle used. They may not consider the provider’s billed charges, which can greatly exceed the QPA, or the “non-negotiated rates” of government payers such as Medicare, which can be well below the cost of providing the service.

With an effective date of Jan. 1, 2022, the No Surprises Act gave government agencies barely a year to write the rules necessary for its execution. In July and September last year, the U.S. Departments of Health and Human Services, Labor and the Treasury, along with other agencies issued two interim final rules, Part I and Part II, spelling out how they planned to implement the legislation.

Among other things, Part I stipulates that all providers of air ambulance services are considered to be a single provider specialty for purposes of calculating the QPA. Part II dictates that the IDR entity must select the offer closest to the QPA unless other information clearly demonstrates that the QPA is not appropriate.

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