Wyoming’s Next Air Ambulance Gambit Falls Outside of the Confines of Workers’ Compensation

Last legislative session the Wyoming legislature decided to fight the air ambulance dispute out on a broader front. It sensibly abandoned the attempt to limit workers’ compensation reimbursement of air ambulance services and began wrestling with air ambulance expense on a universal, state-wide basis by passing a new law. There are a number of interesting features to the effort.  

First, air ambulance matters are to be administered through the state Department of Health (the Department). The Department is authorized to apply to make coverage of air ambulance transport services through Medicaid available to all Wyoming residents, an interesting form of limited Medicaid expansion (Interestingly Wyoming has rejected ACA Medicaid expansion). I do not know enough about CMS regulations to opine whether such a limited expansion is legally possible, though it strikes me as problematic. If the model were approved by the feds, the Department would create an “air ambulance transport services program.” Under the law,

There is created the air ambulance coverage account. Premium assessments collected by the insurance commissioner and state agency reimbursements paid to the department of health under this section shall be deposited into the account and used by the department to cover air ambulance transport services under this section and to implement this section. Other funds used to provide air ambulance coverage, including federal funds, may be deposited into the account. The account may be divided into subaccounts for purposes of administrative management. Funds in the account and any amounts earned from those funds are continuously appropriated and shall not lapse at the end of any fiscal period. For accounting and investing only, subaccounts shall be treated as separate accounts.

The details are reportedly being hashed out by state officials at the moment, but overall this looks from a distance like a form of state fund that would somehow commingle federal and state monies to provide universal air ambulance coverage for state residents. Air ambulance transport services covered by any program administered by the state (including workers’ compensation) are exclusively covered under the section. Then other agencies (including the Department of Workforce Services that administers workers’ compensation) pay reimbursement to the general air ambulance coverage account. As a component of reimbursement, the Department would require state agencies to pay, on a proportional basis, administrative costs necessary to implement the program.

I think legislators are on the right track here in creating a broader coverage program outside of workers’ compensation, provided it is adequate and comprehensive. But next we run into some familiar trouble. Under the law, residents or air ambulance providers would make claims for payment of air ambulance transport services to the Department. An air ambulance provider shall provide services if the provider otherwise makes air ambulance transport services available to persons in Wyoming who are eligible for Medicaid. Under W.S. 42-4-123(c), an air ambulance provider who provides services shall accept payment under this subsection as full satisfaction of all charges, costs and fees relating to air ambulance transport services, except as provided in 42-4-123(d). That subsection, in turn, states:

An air ambulance provider shall collect a copay or other cost sharing requirement for services covered under this section, as established by the department and consistent with federal requirements, based on the following:

 (i)  For persons who are eligible for Medicaid independent of the coverage provided by this section, any copay or other cost sharing requirement shall be consistent with the copay or cost sharing requirement specified for other services under Medicaid;

 (ii)  For persons who are not eligible for Medicaid independent of the coverage provided by this section, any copay or cost sharing requirement shall be proportionate, based on income and shall not be greater than fifty percent (50%) of the allowable costs for air ambulance transport under this section, as determined by the department. 

On one reading the legislation continues to reference “rates, routes, and services of an air carrier.” Morales v. Trans World Airlines, Inc., 504 U.S. 374, 378 (1992). Indeed, this state law explicitly caps rates to 50% (of whatever—it does not matter to what the cap references). Also, tethering rates to federal reimbursement rates is still accomplished through state legislation, so I really cannot imagine a federal court analyzing preemption issues any differently than they have been doing. Indeed as a Kansas state appellate court stated last summer in EagleMed v. Travelers Ins.,

In the alternative, Travelers contends that the Division of Workers Compensation should apply the Medicare fee schedule for air ambulance providers to EagleMed's bills in order to resolve the fee dispute between the parties. In 1965, Congress enacted the Medicare program as Title XVIII of the Social Security Act to provide health insurance coverage to the elderly. Congress later expanded the Medicare program to provide health insurance coverage to certain disabled persons . . .

Based on our review of the record on appeal, we find nothing to suggest that the four injured workers are eligible for Medicare coverage either because of age or because of disability. We also find that the issue of whether to use the Medicare fee schedule to establish the amount air ambulance services may charge to non-Medicare patients is related to the prices charged by air carriers. Moreover, this appears to be a public policy decision that should not be decided by state agencies or state courts. Thus, we also find this issue to be subject to federal preemption.

Barring Supreme Court re-visitation of ADA preemption, or Congressional modification of the Airline Deregulation Act, I would expect most courts to react in similar fashion to anti-preemption arguments premised on state regulation of rates connected to federal benefit reimbursement rates. My guess is it would not take air ambulance companies’ counsel long to write the brief challenging the Wyoming law if it is implemented and applied to one of their number. It is also possible that the state is merely setting up a kind of sub-monopolistic fund meant merely to partially compensate its residents for the staggering costs of air ambulance transportation. But even if that is so, the balance will have to come from somewhere, and the legislation still references rates. This may be a good lesson to state legislatures on the meaning of reference preemption. See District of Columbia v. Greater Washington Bd. of Trade. Still, I sense progress.

Michael C. Duff