This month, the 8th Circuit Court of Appeals struck down a 2017 North Dakota law that had banned “air ambulance memberships,” bringing an end to a years-long fight between air ambulance companies and the state. But what are air ambulance memberships and why did North Dakota try to ban them? And what should consumers do now?
Emergency medical air transport can be extremely expensive, with the average bill running from $12,000 to $25,000. Not all insurance plans offer air ambulance coverage, and for those that do, the consumer still must pay co-pays or co-insurance. Even if a health insurance plan provides coverage for medical air transports, many ambulance companies do not participate in insurance networks. These out-of-network air ambulances can charge extravagant rates and sometimes insurers refuse to pay the whole bill, leaving patients to cover the rest. This is known as balance billing and for expensive services like air ambulances, insured consumers can be forced to pay bills in the tens of thousands of dollars.
These horror stories help the air ambulance companies sell air ambulance memberships to supplement health insurance plans. When a consumer buys a membership, the air ambulance company promises not to send a balance bill and agrees to accept whatever payment the member’s insurer makes. For as little as $85 a year or a discounted senior rate of $65, the companies claim their memberships offer peace of mind and financial security.
That’s where the North Dakota Insurance Commissioner Jon Godfread disagreed. A fierce critic of these membership plans, he called them “another loophole” used to “essentially exploit our consumers.”
Godfread argued that membership plans create a false sense of security. The reality is that when someone needs an air ambulance, they have no means of choosing which company will be called to provide the transport. Having a membership with one air ambulance company does nothing to protect you from balance billing from another. As Commissioner Godfread pointed out, there are nine different air ambulance operators in North Dakota, which means even those consumers with a membership could still end up with a costly air ambulance bill. To get complete protection, patients would need memberships from all nine companies.
The North Dakota legislature passed a law in 2017 that prohibited companies from selling memberships, but it was quickly challenged in court. In 2020, Commissioner Godfread had to issue a “cease and desist” order against one company that continued to flout the law. But on March 17, 2021, the 8th Circuit Court of Appeals brought an end to the fighting by striking down the ban on memberships.
With the consumer protection law gone, consumers in North Dakota and elsewhere need to make up their own minds about whether air ambulance memberships make sense. Consumers must first look beyond these plans’ marketing material and instead look at any existing health insurance coverage that they already hold. Many health insurance plans offer some level of coverage for emergency air ambulances, and that coverage would extend to bills from any air ambulance company in their insurance network.
In an example of misleading marketing, some air ambulance companies offer senior discounts suggesting memberships are particularly important for seniors. But this is not necessarily the case. Medicare and Medicare Advantage plans cover limited emergency air ambulance rides and protect patients from balance bills when it is clear that a ground ambulance is not an option. Medicare Advantage also has an out-of-pocket payment cap. All consumers should make sure that they find out what protections they already have before buying protections they might not need.
The second question for consumers to ask is: How effective will a membership be? A membership only applies to medical transportation provided by the particular company that sold the membership. If there are multiple air ambulance companies in your area, you would need a membership from each company to be sure you were fully covered. This might make sense for some, but it is also important to understand the limits of any membership. Are there exclusions which deny payment for transportation in certain situations? Does the membership cover costs for all services and care, or just for some? A close read-through of each company’s contract is highly recommended.
Despite the recent court decision, consumers can be assured of stronger consumer protections beginning in 2022. Congress has passed the No Surprises Act which, among other provisions, explicitly bans out-of-network air ambulances from billing patients for more than their in-network cost-sharing amount. This means that patients with insurance which covers air ambulance transportation will be protected from balance bills.
But for now, consumers interested in these air ambulance memberships should think critically about what a membership would do for them. If your health plan doesn’t offer you coverage, a membership could be right for you. However, it’s important to consider how effective a membership would be. How many air ambulances are in your area and how likely is it that the ambulance you use will be covered by your membership? No one wants to find themselves financially vulnerable to large medical expenses, but it’s important to know that you are buying real protections and not just paying for a false sense of security.
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