Ass’n of Air Med. Servs. v. HHS, 2023 WL 5094881 (D.D.C. 2023)
An association of air ambulance providers sued HHS, challenging the agency’s No Surprises Act (NSA) regulations under the federal Administrative Procedure Act (APA). The NSA was enacted as part of the Consolidated Appropriations Act, 2021, to shield individuals from surprise bills for certain out-of-network emergency and non-emergency services, including certain air ambulance services. The association challenged the method of calculating the “qualifying payment amount” (QPA)—which is generally based on the median contracted rate that a plan or insurer would have paid for emergency care if the care had been provided by an in-network provider—in Part I of the interim final surprise billing regulations. The association claimed that this method intentionally and unlawfully lowers the QPA for air ambulance services by (1) excluding most types of contracted rates between air ambulance providers and plans or insurers; (2) treating hospitals and independent air ambulance services as providers in the same or similar specialty; and (3) using overbroad geographic regions, resulting in QPAs “wholly divorced from real-world pricing in reasonable geographic markets.” Separately, the association objected to basing patient cost-sharing obligations for air ambulance services on the QPA rather than on an amount determined through open negotiation or through the independent dispute resolution (IDR) process. HHS responded that its rules complied with the APA and were a reasonable exercise of its statutory authority.
Agreeing with HHS, the court examined the regulations’ exclusion of some types of contractual arrangements (most notably “single case” agreements) in the QPA calculation. While the association argued that all amounts charged under any type of contract should be included when determining the median rate, the court explained that the NSA directs HHS to include only the payment rates that are contracted for under the generally applicable terms of a plan or policy. Thus, excluding single case agreements from QPA calculations was reasonable. The court also found that HHS provided a well-reasoned justification for treating air ambulance providers and hospitals providing air ambulance service as the same “single provider specialty.” While the association argued that hospitals often accept below market rates for air ambulance transports as part of a larger contract for other services, the court accepted HHS’s explanation that patients should not have to pay higher cost-sharing amounts for non-hospital-based air ambulance providers simply because the provider assigned to them has negotiated higher contracted rates to cover its higher costs. Noting that the NSA specifies that the QPA is to be based on the median contracted rate for services provided in the applicable geographic region and directs HHS to define those geographic regions, the court further concluded that HHS’s use of broad “census divisions” was reasonable in that a narrower approach would be more likely to produce insufficient information to calculate the QPA. Finally, the court accepted HHS’s explanation that tying patient cost-sharing to the QPA is consistent with the NSA’s intent to protect against excessive bills and to remove patients as much as possible from disputes between plans and insurers and air ambulance providers.
EBIA Comment: Multiple lawsuits involving HHS’s surprise billing rules have been filed, with some courts upholding the rules and others siding with providers. As a result of litigation, portions of Part II of the regulations were vacated—including certain provisions that prioritized the QPA over other factors in determining the payment amount for out-of-network air ambulance services. For more information, see EBIA’s Health Care Reform manual at Section XII.B.4 (“Surprise Air Ambulance Billing”) and EBIA’s Group Health Plan Mandates manual at Section XIII.B (“Patient Protections”). See also EBIA’s Self-Insured Health Plans manual at Section XIII.C (“Federally Mandated Benefits”).
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