Kansas Supreme Court mulling whether the state can police medical bills from ‘air pirates’

photo by: Richard Gwin/Journal-World File Photo

An air ambulance takes an injured man to a Kansas City-area hospital after a rollover accident on the South Lawrence Trafficway in this file photo from June 2009.

TOPEKA — Fed-up with sticker shock from air ambulance bills, one insurer has pressed its case all the way to the Kansas Supreme Court.

A justice on the state’s high court seemed sympathetic, even as he questioned whether state courts hold the power to tackle practices that critics see as predatory.

“We understand that you’re trying to fight federally sanctioned air pirates,” Justice Dan Biles told an attorney for the insurance company during oral arguments in Topeka in January. “But … it seems like your fight is with Congress.”

The Kansas Supreme Court has yet to rule in the case. It involves EagleMed, a company that billed Travelers Insurance tens of thousands of dollars in 2013 for each of four people flown from rural areas to hospitals in Wichita and Garden City.

The insurer balked at the bills and offered far lower payouts based on Medicare rates.

Massive bills for air ambulance rides are common. The Kansas News Service wrote last week about Alvin Letner, a retired school teacher facing a nearly $50,000 bill for a 30-mile transport following a traffic accident.

Such bills are notoriously tricky for states to rein in, because federal law shields air ambulance companies from many of their attempts at regulation. Because the EagleMed case involved injured workers, however, the insurer hoped that would give Kansas authority to review EagleMed’s charges.

The Kansas Division of Workers’ Compensation sets pay rates for other medical services stemming from workplace injuries.

In a similar case from Wyoming, the U.S. 10th Circuit Court of Appeals ruled in 2017 that states couldn’t set rates.

Wyoming had limited its workers’ compensation fund to paying out $3,900 for transporting an injured worker by helicopter (plus a modest mileage fee).

Air ambulance operators sued, and federal judges agreed that Wyoming couldn’t set that price. Why? Because medical helicopters and planes fall under the same 1978 federal aviation law that regulates airlines and prevents states from setting airline prices.

Kansas is one of at least two states where supreme courts are considering similar cases. In the Kansas case, Travelers Insurance argues the state can review air ambulance charges without actually setting their rates the way Wyoming had done.

The other pending case is in Texas.

In 2015, an administrative judge there concluded he could weigh in on prices. He pegged the fair payout for air ambulances in workers’ compensation cases at about 1.5 times Medicare rates. That, he said, ensured the helicopter company “a reasonable profit.”

Outrage at air ambulance prices is fueled in part by dramatic increases. Federal investigators compared 2010 and 2014 prices and found they had doubled.

Those investigators also found that air ambulances aren’t subject to the same type of price competition as airlines.

A person unconscious after a traffic accident can’t call around for price quotes or ask emergency responders to find an air ambulance within their insurance network.

Air ambulance companies, meanwhile, argue that higher prices for some privately insured customers help balance out lower payments for serving people on Medicare, Medicaid or without insurance.

Some companies also argue that a sharp increase in air ambulances vying for patients has cut into each chopper’s workload, making it harder to maintain profit margins.

Still, the growing chorus of complaints over hefty bills has prompted Congress to create a special committee that’s looking into the problem. That body met for the first time in January.

The Kansas News Service, ksnewsservice.org, is a collaboration of KCUR, Kansas Public Radio, KMUW and High Plains Public Radio focused on health, the social determinants of health and their connection to public policy.


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