The 2021 No Surprises Act provisions to protect the public from the most painful of surprise bills, air ambulance transport, will take effect January 1, 2022. Yet, the controversy over establishing a process to identify a “fair” payment rate remains under dispute. 

Congress directed federal agencies, including the U.S. Department of Health and Human Services (HHS), to establish a federal Independent Dispute Resolution (IDR) system to be available for use after thirty days of unsuccessful negotiations between a payer and air ambulance provider. Under the proposed IDR system, an approved arbitrator entity would receive information about each party’s claim, additional requested information, and the “qualified payment amount” (QPA) or the plan’s median in-network payment. Modeled after the “baseball-style” arbitration, the IDR entity selects one offer, which becomes binding on both parties. The losing party must pay the fees associated with the IDR process.

Recognizing that billed charges can be inflationary and that public program rates are significantly lower than commercial payments, Congress barred the IDR arbitrators from considering: (1) a provider or facility’s usual and customary charge or the billed charge; or (2) reimbursement rates paid by public payers. The law lists the QPA as a must-be considered factor and gives the IDR the authority to determine how other factors influence their determination. These other “additional factors” likely include geography, market share, service expertise or level, etc. The IDR entity is also required to explain their decisions when selecting an offer that is higher than the QPA.

Both the Association of Air Medical Services (AAMS) and the Texas Hospital Association have filed suits in federal court challenging the proposed rules. According to a December 6th Health Affairs blog post, both suits claim that the agencies have given priority to the QPA, and as such, the new federal IDR process favors insurers. The lawsuits claim that the rules are not consistent with what Congress intended because of the heavy weight placed on the qualifying payment amount in the arbitration process.

Administration officials, purchasers, plans, and patients believe that the agencies did what Congress instructed. Their goal was for the IDR process to help to lower health care spending, and they find that many of the provisions are necessary to encourage the parties to work together in earnest to resolve their dispute, rather than relying the arbitration process. If QPA is not considered, they fear that patients, employers, and public insurance programs could face higher premiums. 

Hotly debated and lobbied political issues are a strong indication of the amount of money on the table. Operating as an “out-of-network” provider has brought price-setting power to air ambulance companies and hefty profits. Research from the USC-Brookings Schaeffer Initiative for Health Policy revealed that by 2017, two private equity firms controlled nearly two-thirds of the national Medicare market for both fixed-wing and helicopter air ambulance transports and that transports delivered by private equity and publicly-traded firms were the most expensive, often reimbursed at 50 percent more.  

According to Heathcare Dive, Congress is also weighing in on the rules, with 152 lawmakers signing a letter on November 5 stating the latest rules "do not reflect the way the law was written, do not reflect a policy that could have passed Congress…” Besides stating the obvious, since these issues were debated for months in Congress, before the details were assigned to the federal agencies to determine, their letter seems to value the financial interest of the private equity firms above that of the American public. The Healthcare Dive article links you to the letter and 152 Congressional signors. Take a look and see what you think.  

Stay tuned. Resolution of these pending lawsuits is expected in early 2022. 

Warm regards,

Louise Y. Probst

BHC Executive Director