Due to the increased litigation of air ambulance claims, employers may want to review their plan language to see whether their group health plan covers air ambulance services, and if so, to better understand the terms of the coverage.
Below are three issues employers may want to consider:
- Expensive and Often Out-of-Network. Air ambulance claims can be very expensive. While a 2014 report from the National Association of Insurance Commissioners (“NAIC”) indicates that the average air ambulance trip is 52 miles and costs between $12,000 to $25,000 per flight, recent litigation shows that these claims can go into the hundreds of thousands of dollars. Furthermore, because many air ambulance carriers are out-of-network, if the group health plan does not cover, or only partially covers, the air ambulance services, the air ambulance company may balance bill the participant.
- Conflict of Interest. Some group health plans state that they will cover air ambulance services to the nearest facility if medically necessary. If the plan document gives the plan administrator (or claims administrator) discretionary authority to make medical necessity decisions, it may offer the plan some protection. However, like any other large claim, a court may factor the plan administrator’s conflict of interest (i.e., the plan administrator both decides claims and pays claims) into the standard of review.
- Broad or Ambiguous Plan Language Could be Contested. Some plans include broad or ambiguous language related to their air ambulance benefits. For example, a plan may state that it will cover air ambulance transportation to the “nearest qualified facility” or the “nearest appropriate facility” instead of the “nearest facility.” Although an employer may want to reserve some flexibility in its plan document, it may also be worthwhile for it to consider how adverse parties could use such terms against plan.
This is a developing area of the law with no clear-cut answers. As a result, employers may want to develop a multi-dimensional strategy to protect the employer, plan, and plan participants from potential out-of-network air ambulance bills. This may include, for example, clarifying that the plan administrator shall have sole discretionary authority to decide air ambulance claims (including what is medically necessary); revising broad or ambiguous plan language; communicating with the plan’s third party administrator to determine what amount, if any, the plan will pay for air ambulance services and possibly using an easily determinable amount such as an allowable amount based on Medicare; and taking steps to protect participants from balance billing (e.g., conditioning payments to the air ambulance company on them not balance billing participants).