Health Reform WK-EDGE Insurer’s limited reimbursements to air ambulance provider protected by safe harbor
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Friday, June 8, 2018

Insurer’s limited reimbursements to air ambulance provider protected by safe harbor

By Patricia K. Ruiz, J.D.

The Eastern District of Arkansas dismissed claims against Usable Mutual Insurance Co. (Blue Cross) alleging that the insurer’s practice of limiting reimbursement to an emergency air ambulance service provider constituted violations of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) and state law and regulations. The court found that the provisions cited by the provider did not create a private cause of action and that the insurer’s reimbursement practices, as highly regulated conduct, fell within a state safe harbor provision (Air Evac EMS Inc. v. Usable Mutual Insurance Co., May 29, 2018, Miller, B.).

Reimbursement for emergency air ambulance services. Air Evac EMS Inc. (Air Evac) provides emergency air ambulance services in Arkansas. The services are very expensive because of the costs incurred by Air Evac in providing them, including purchasing the aircraft, maintenance, fuel employees regulatory compliance, and medical supplies. In 2014, it charged $19,250 for a single transport. In compliance with federal law, Air Evac provides services without regard to the patient’s ability to pay and without consideration of the patient’s insurance provider, and it incurs debt when providing services to uninsured patients and beneficiaries of Medicare and Medicaid, as the programs do not reimburse the full cost of the service. Air Evac also incurs debt when private insurance providers reimburse only a fraction of the cost of the service.

Claims against Blue Cross. Air Evac alleged that Blue Cross violated state and federal law by limiting the reimbursements it pays to Air Evac, as an out-of-network provider, for services it provides to patients insured by Blue Cross. Specifically, it challenged Blue Cross’s reimbursement practices for services provided after 2010, following the enactment of the ACA, alleging that Blue Cross violated requirements to prohibit annual limits on essential health benefits (ACA §2711), provide minimum payments for certain emergency services, and provide adequate participating provider networks for plans offered through the state and federal exchanges. Air Evac also alleged that Blue Cross’s conduct violates the Employee Income Retirement Security Act (ERISA), multiple federal and state insurance regulations, the Arkansas Deceptive Trade Practices Act (ADTPA), and Arkansas common law.

Motion to dismiss. Blue Cross moved to dismiss. It alleged Air Evac failed to state a claim upon which relief could be granted and that Air Evac lacked standing to bring suit. It also alleged that the "Filed rate doctrine" requires dismissal of the claims brought under ADTPA.

The court granted Blue Cross’s motion to dismiss in its entirety. In reference to the ACA claims, the court granted the motion to dismiss, as the applicable ACA provisions do not create an explicit private cause of action. Furthermore, the court dismissed Air Evac’s ERISA claims, reasoning that Air Evac lacks standing to sue under ERISA for equitable relief. Finally, the court dismissed Air Evac’s claims that Blue Cross violated ACA regulations and Arkansas regulations ensuring network adequacy and limiting patient responsibility for services from out-of-network providers, as well as Air Evac’s claims alleging violations of ADTPA, as Blue Cross’s conduct falls within a safe harbor provision under ADTPA, and the statutory provisions and regulations cited do not create a private cause of action.

The case is No. 4:16-CV-00266 BSM.

Attorneys: Alex T. Gray (Steel, Wright, Gray & Hutchinson, PLLC) and Henry C. Quillen (Whatley Kallas, LLP) for Air Evac EMS Inc. Anthony F. Shelley (Miller & Chevalier Chartered) and Gordon S. Rather, Jr. (Wright, Lindsey & Jennings) for USAble Mutual Insurance Co. d/b/a Arkansas Blue Cross and Blue Shield.

Companies: Air Evac EMS Inc.; USAble Mutual Insurance Co. d/b/a Arkansas Blue Cross and Blue Shield

Cases: CaseDecisions NewsFeed AccessNews EssentialBenefitNews InsurerNews ArkansasNews

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