FARGO — North Dakota patients who receive air ambulance services outside their health insurance networks will remain liable for bills that can exceed $60,000 because a federal judge has struck down consumer protection provisions under a state law.
The decision, by U.S. District Judge Daniel Hovland in Bismarck, marks the second time a law passed by the North Dakota Legislature to protect consumers from what officials have called “price gouging” has failed to survive a court challenge.
Jon Godfread, North Dakota’s insurance commissioner and a proponent of the law, said Tuesday, Jan. 29, that he's “extremely disappointed” in the judge’s decision and said the state is weighing a possible appeal.
In both cases, the laws were struck down, in whole or in part, because courts consistently have ruled that air ambulance services are regulated under the Airline Deregulation Act — and therefore are subject to federal, not state, regulation.
The law just struck down, which passed in 2017, considers a payment by an insurer to an air ambulance service as “full and final payment,” with no option for the provider to seek the balance of the bill from the patient, a practice called “balance billing.”
Guardian Flight, which owns Valley Med Flight, based in Grand Forks, filed a lawsuit challenging the law’s legality, arguing that it sought to pre-empt federal law.
Although the law’s focus was on insurance, which falls under state jurisdiction, Judge Hovland ruled that the billing restrictions amounted to regulation of air ambulance providers, exempted from state regulation.
“Good intentions do not save state legislation intended to protect patients from exorbitant air ambulance bills from ADA preemption,” Hovland wrote in his decision.
“In effect, Guardian Flight must accept the state-mandated rate and no balanced billing is permitted,” Hovland wrote, explaining why he was striking down the provision. “Obviously then, the law relates to air ambulance rates. There can be no question that such interference with air ambulance rates and prices is precisely the type of state regulation Congress sought to prevent when it included an express preemption clause in the ADA.”
If the state of North Dakota wants to protect patients who need air ambulance services, Hovland suggested, “it would do well to mandate insurance providers pay a larger percentage of the charges rather than trying to regulate how much the air ambulance bills for its services.”
Requiring health insurers to pay more of the bill would not be good public policy, Godfread said.
“It would be a blank check for air ambulance providers,” Godfread said, and would be “wholly unfair” to insurers, who would have to pass the costs along to premium payers. “We think those charges would be even more excessive.”
Requiring air ambulance services to accept insurance payments as “full and final payment” was working, Godfread said. Consumer complaints about exorbitant air ambulance bills stopped coming to his office when the 2017 law took effect, he said.
“This law did what it was intended to do,” Godfread said. A tally of consumer complaints kept by his office through April 2018 of almost 50 cases totaled $1.8 million, with an average bill remaining for the patient of more than $63,000. Bills ranged from $27,000 for a flight from Dickinson to Bismarck to $533,850 for a charter flight from Florida to Fargo.
“It’s a life-changing sum,” Godfread said. “It can be devastating for consumers. These companies are very aggressive with their collections.”
Eight air ambulance services operate in North Dakota, according to the state’s air ambulance participation guide for consumers. All but three services participate in the coverage networks of the state’s two largest health insurers, Blue Cross Blue Shield of North Dakota and Sanford Health Plan, while most accept certain health plans.
“There certainly are good actors in this state,” Godfread said. By state law, once summoned by an emergency responder, attending physician or hospital emergency room, air ambulances must provide service, unless the case fails to qualify as an emergency.
Hovland’s decision upheld a provision of the law, however, requiring hospitals to inform patients in non-emergency situations about which air ambulances have contractual agreements with the patient’s health insurance company.
The decision also upheld a state law prohibiting the sale of air ambulance service subscriptions.
A 2015 North Dakota law, the state’s first attempt at restraining air ambulance bills for out-of-network flights, created air ambulance call lists and required air ambulance services to provide fee schedules upon request. That law also was struck down.
“I think Congress will need to act,” Godfread said. Godfread has been nominated to represent the National Association of Insurance Commissioners on a congressional advisory committee that recently was formed to examine the issue.