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Battle Over Air Ambulance Pay Lands in Arkansas

3 min read

An air ambulance operator says it is owed $10 million or more by Arkansas Blue Cross & Blue Shield, which hasn’t properly paid for medical flights provided to policyholders.

Air Evac EMS Inc. of O’Fallon, Missouri, filed a lawsuit in U.S. District Court in Little Rock last month to collect the money. Air Evac also wants a judge to rule that the cap ABCBS places on reimbursements to Air Evac is a violation of the essential health benefits in the Affordable Care Act. (ABCBS is the second-largest private company in Arkansas as ranked by 2015 revenue. See the complete list of the 75 Largest Private Companies in Arkansas.)

An ABCBS spokeswoman said last week that she can’t comment on the specific claims in the lawsuit. “We do believe the complaint is incorrect in its assertion regarding annual limits on air ambulance services since individual policies purchased prior to the implementation of the Affordable Care Act may indeed have such annual limits,” ABCBS said. ACA “also does not require any minimum payment requirements, nor does it contain any network adequacy requirements with regard to air ambulance services. Thus, we believe those assertions are incorrect as well.”

Seth Myers, president of Air Evac, told Arkansas Business that each transport it makes in Arkansas costs about $30,000. But when it submits the bill to ABCBS, the health insurer will only pay a maximum of $5,000, he said.

Air Evac then turns to the patient to collect the balance, which many can’t pay, he said.

Myers said he has tried to get into the ABCBS network to provide the service to its members for an agreed-upon fee, but the insurer has refused to offer contracts to providers of air ambulance services.

It’s common for health insurance companies not to allow air ambulance companies into their network because of the disparity between what an air ambulance charges and what a health insurer is willing to pay, said Patrick Souter, an attorney who practices health care law in Dallas. Souter is also a professor of health care studies at the Baylor University School of Law.

He said if an air ambulance provider is out of network, it will charge an insurance company what’s known as a “usual and customary rate.” Had the air ambulance been in-network, the rate would have been lower.

“So I think that’s where you see a lot of pushback from the insurance companies,” Souter said. “On this they still don’t want to pay what their share is from the usual and customary rate.”

Myers said Air Evac has had to sue other insurance companies over the issue.

“This is a very small number of insurance providers who are reducing their rates and leaving the patient with a balanced bill,” he said.

Myers said the bill is high is because of the cost to operate the air ambulance.

The aircraft alone costs about $3 million, and the modifications add about $500,000 to the purchase price. Maintenance costs can be more than $200,000 annually. In addition, Air Evac has at least four pilots and medical personnel on standby at all times.

He said that even Medicare pays more than ABCBS.

Medicare will pay a flat rate of $4,877 for emergency air transportation from a rural area in Arkansas. But Medicare will then pay $34 a mile, which means any trip further than 3 miles is reimbursed at a higher rate than ABCBS will pay.

Myers said that he needs the payment from ABCBS because he can’t afford to give away care.

“I have to make ends meet,” he said.

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