Department of Transportation to Establish Committee to Study Air Ambulance Billing Practices

Concern about out-of-pocket costs associated with air ambulance transport has been growing for some time. Groups such as the National Association of Insurance Commissioners (NAIC) have advocated for state flexibility to regulate the billing practices of the industry. A small but meaningful step forward came last fall with the passage of a legislative requirement that the Federal Department of Transportation create an advisory committee to explore air ambulance patient billing. With the committee’s formation currently underway, we have compiled an overview of issues related to air ambulance billing and the latest developments.


Air ambulances typically provide emergency transportation to emergency rooms or trauma centers, or between hospitals. While some air ambulances are affiliated with hospitals or otherwise contract with insurance providers, many are not. As a result, even if the patient is covered by commercial insurance or a public program such as Medicare or Medicaid, the patient can be balance billed by an out-of-network air ambulance provider to cover the difference between the insurer’s payment and the full cost billed. That amount typically reaches into the tens of thousands of dollars. Air ambulance providers that contract with insurers do not balance bill; unfortunately, many patients do not have the choice of an in-network provider—and those who do often cannot make that choice when necessary, since air ambulance services are typically provided in emergent and time-critical situations.

This is, surprisingly, not a limited issue. According to the Association of Air Medical Services, over 550,000 patients in the United States use air ambulances every year. Concerns are compounded by the fact that prices for air ambulance transport are growing. According to the Government Accounting Office, the median prices for air ambulance services rose from $15,000 to $30,000 per transport between 2010 and 2014.

Air ambulance providers and insurers point to each other as the source of the issue. Providers argue that their charges derive from their significant professional staffing needs, their overhead costs, and their need to be available 24/7. They claim that the real source of the issue is the fact that insurers are often unwilling to contract with them and refuse to pay adequate reimbursement. Insurers, on the other hand, claim that it is the providers who are unwilling to contract and that their charges are unreasonable. What no one disputes is the impact on patients who are balance billed.

Efforts have been underway to regulate the balance billing facing patients who received air ambulance transport. While states can pass laws prohibiting or limiting ground ambulance providers from balance billing insured patients, similar efforts related to air ambulances are preempted by the Airline Deregulation Act of 1978 (the “Act”). Passed to ensure the continued competitiveness of commercial airline carriers, the Act’s prohibition of states from regulating the rates, route or services of any air carrier applies to air ambulance services. As a result, for example, a law passed in North Dakota in 2017, intended, in part, to protect insured individuals from being balance billed by air ambulance providers, was recently deemed invalid by a U.S. District Court judge.[1]

Because of this, State regulators have advocated for an exemption from the Act that would allow them to regulate air ambulances for the limited purpose of protecting consumers from excessive out-of-pocket costs.

Current Status

While attempts to amend the Act have so far been unsuccessful, those in favor of regulating air ambulance charges won a small victory last fall. The Federal Aviation Administration (FAA) Reauthorization Act of 2018 requires the Department of Transportation (DOT) to establish an advisory committee on air ambulance and patient billing in consultation with the Department of Health and Human Services (HHS).[2] The charge of the committee is to review “options to improve the disclosure of charges and fees for air medical services, better inform consumers of insurance options for such services, and protect consumers from balance billing.” The committee will be composed of representatives from the DOT, HHS and any other relevant Federal agency (as determined by the DOT), as well as representatives of State insurance regulators, representatives of the air ambulance and insurance industries, patients, physicians, and others deemed necessary (all to be appointed by the DOT).

The committee will make recommendations in a report to be completed within six months of its first meeting. These recommendations must address transparency regarding charges, fees and insurance coverage, consumer protection and enforcement authorities, and the prevention of balance billing, as specifically enumerated in Section 418 of the Act. In regard to preventing balance billing, the committee will consider “options, best practices, and identified standards,” including those related to improving network and contract negotiations, dispute resolution between carriers and providers, and explanations of insurance coverage and subscription programs to consumers. The committee must also consider what steps states can take to ensure consumer protection and what additional data the DOT needs to strengthen its oversight. The report will be submitted to the DOT, HHS, and Congressional committees of jurisdiction. The DOT is directed to consider issuing regulations or guidance as necessary based on the findings of the report.

[1] The ruling is being appealed.

[2] The Act also addresses the review of air ambulance consumer complaints by the DOT and requires the DOT to submit a report to Congress within six months outlining how it will conduct oversight of air ambulance providers going forward and its timeline for issuing guidance relative to unfair and deceptive business practices within the industry.

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