Why Ambulances Are Exempt From the Surprise-Billing Ban

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When Congress passed a law banning surprise medical bills on Monday, it made a notable exception: ambulances.

Ambulances have the highest out-of-network billing rate of any medical specialty, meaning most rides can result in a surprise bill. The new federal law will protect patients from the bills of out-of-network doctors unexpectedly involved in their care at a hospital. Those protections will not extend to the ambulance trip needed to get there.

Amid a surprise billing debate that involved industry opposition and jurisdictional fights, many lawmakers saw adding ambulances as too hard. They had little data on the actual costs of ambulance trips, and worried about tussling with the local governments that often oversee these services — especially those whose budgets have been battered by the economic downturn.

“From a policy standpoint, the omission of ground ambulances is huge,” said Karan Chhabra, a surgical resident at Brigham and Women’s Hospital who has studied the issue. “It affects a really large number of people, even if the size of the bills isn’t eye-popping.”

Dr. Chhabra’s work finds that 71 percent of ambulance rides have the potential to generate a surprise bill, with an average cost to the patient of $450. (Whether an ambulance company chooses to pursue this bill is something his research cannot determine, which is why it is merely potential.) Both private and public ambulance departments send surprise bills, which leaves patients with $129 million in potential surprise ambulance bills each year.

An earlier study, published in Health Affairs, also found that a majority of ambulance rides resulted in an out-of-network bill, a substantially higher rate than the medical specialties that the new legislation covers.

Legislators and staffers who have worked on surprise billing say the omission doesn’t reflect the influence of a big ambulance lobby. Local governments provide a majority of emergency ambulance rides, via fire departments or stand-alone rescue squads. Though private corporations provide a growing share of ambulance rides, those entities haven’t been buying television ads or flooding congressional offices with calls, as doctor and hospital groups did on other kinds of surprise medical bills.

But lawmakers have been reluctant to regulate surprise billing among ambulances, citing the diversity of providers, complex layers of state and local regulation, and a dearth of information about precisely what it costs to keep an ambulance stocked and running. Amid the bruising surprise-billing debate, many lawmakers saw it as one tricky issue too many.

Two new developments may change that hesitancy in the coming years. Medicare, which pays ambulances set rates and bans surprise billing for the patients it covers, is reviewing its payment rates. As part of that process, the government is collecting detailed data from ambulance companies about their costs and prices. And the surprise billing legislation passed this week establishes a commission to study the problem of ground ambulance bills, another way for lawmakers to learn more about how things are currently working.

This week’s legislation also sets up a new arbitration system for handling payment disputes between insurers and medical providers. Adding ambulances to that system may prove easier than starting from scratch.

“The law really captures every single form of surprise billing that we think of in this context, except ground ambulances,” said Loren Adler, an associate director of the U.S.C.-Brookings Schaeffer Initiative for Health Policy, who recently began a research project on ambulance costs and billing practices. Mr. Adler said he thinks emerging research will bring ambulances into the foreground of the policy debate. “It does seem like the last frontier in the surprise billing world.”

Most states that have passed laws banning surprise billing have also omitted ambulances from the rules so far. That includes Texas, which banned other surprise medical bills in 2019 but allowed ambulances to continue engaging in the practice.

“Now you do hear people complaining about ambulance bills, because they’re the only entities still sending surprise ones,” said Stacey Pogue, a senior health policy analyst at Every Texan, a consumer advocacy group.

This month, the Texas Department of Insurance published new research finding that 85 percent of ambulance rides in the state are out of network. In Houston, the state’s largest city, no city-run ambulance services participate in any private insurance plans, a recent investigation by The Houston Chronicle found.

Along with the new research, the Texas Department of Insurance recommended that the Texas legislature revisit its 2019 law, and begin regulating ambulance billing as well.

“It’s meaningful that the regulator is recommending this to the legislature,” Ms. Pogue said. “I’m hopeful a bill will get filed in the next legislative session.”

Maryland and Colorado are two states that have recently regulated ambulances in their surprise billing legislation. New York and Illinois have had such laws for longer, though they don’t apply to patients with every kind of health insurance. Colorado took a two-pronged approach: It barred private ambulances from sending surprise bills to patients, but allowed public entities to continue to do so after Colorado fire chiefs lobbied to be excluded.

Rather than billing patients directly, insurers in Colorado are now required to pay private ambulances 325 percent of the typical Medicare rate, under new rules that went into effect this spring.

The payment rate is generous enough to have caught the eye of some public ambulance departments, who say they typically get significantly less from private health plans.

“In some respects, I really wish I was getting that as a public entity,” said Tim Dienst, chief executive officer of the Ute Pass Regional Health Service District in Colorado.

Public ambulances are typically funded through a mix of taxpayer support and bills to patients. Many companies warn that without the ability to bill patients directly, they will need more money from local governments.

Mr. Dienst’s ambulance department is currently out of network with all private health plans, and he estimates it sends more than $500,000 in bills to collections each year.

“I’m not proud of my ambulance bills, but I’ll stand behind them because it’s based on cost and the uncollectability,” said Mr. Dienst, who also leads the advocacy committee for the Emergency Medical Services Association of Colorado. “We send bills to collections, but it’s not especially fruitful.”

For his department, he estimates that 325 percent of Medicare would work out to roughly double what private insurers currently pay. It still would be a few hundred dollars lower than the $1,900 Mr. Dienst said each ambulance ride costs on average, but significantly closer.

“If I got the 325 percent, that would go a long way into paying for the unreimbursed costs of ambulance services,” he said.

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