Alaska is taking a step back from regulating the membership plans marketed by air ambulance providers. State regulators say it’ll cut unnecessary red tape. But consumer advocates aren’t thrilled.
Across much of Alaska it’s not uncommon for patients to be medevaced to hospitals in Anchorage or Seattle. The bills for these flights can be staggering.
“I think it’s important for people to understand the cost of being transported,” Shelly Deering, the Juneau-based regional manager for Airlift Northwest, a nonprofit air ambulance service that flies in Southeast Alaska. “And that high cost can be over $100,000, depending where you’re coming from and where you’re going to.”
Health insurance plans often won’t cover the full cost of a flight. So to guard against sticker shock, air ambulance companies offer membership plans.
Households pay a flat fee — between $49 and $125 depending on the carrier — to ensure they don’t end up paying out-of-pocket.
Until this month, the state’s Division of Insurance used its authority under a 2014 law to look over the fine print of those membership plans to make sure they were legal.
But not anymore.
“We are no longer going to review those $49 membership or $100 membership agreements,” Alaska’s Division of Insurance Director Lori Wing-Heier told CoastAlaska.
She signed a recent regulatory order that says the state’s three air ambulance providers no longer need to file their membership plans with the state for pre-approval.
“They’re easily fully understood, they always have been, and we didn’t see the need to further stagnate the process of getting those agreements out to market,” she added.
The order says it “does not limit or in any way prevent the division from enforcing the insurance laws and regulations.”
The change was welcomed by carriers. All three air ambulance providers contacted told CoastAlaska they hadn’t asked for it but are nonetheless pleased.
“This is a great example of the government working with companies to improve the process,” Deering said.
Guardian Flight Alaska Executive Director Jared Sherman says the arrangement makes sense. Under the old rules, any tweaks to membership plans — even minor ones — could take months for approval.
He says now his staff can just pick up the phone to the Division of Insurance.
“We (can) just reach out and ask them,” Sherman said. “Rather than us submitting formal documentation, and going through a formal process for that evaluation.”
And if a complaint or dispute does arise, Wing-Heier says the insurance division can step in at any time.
“We would still have authority to investigate that and seek resolution between the two parties,” Wing-Heier said.
But consumer advocates aren’t enthusiastic about shifting to a complaint-driven process.
“A regulator opting to waive oversight always raises red flags,” Dena Mendelsohn, senior policy counsel for Consumers Union in San Francisco, told CoastAlaska.
The nonprofit advocacy group is urging more – not less — regulation of air ambulance carriers. In the meantime, she says states should be vetting services as closely as they can.
“A consumer has gone through enough trauma to have to be in an air ambulance in the first place,” Mendelsohn said. “And now they’re going to have to follow up and, and reach out to the regulator to get the protections that they should have already had from the beginning? That doesn’t make sense.”
States like Alaska are limited in how they can regulate air ambulances. They can’t set the rates to control costs. That’s because the courts have held that Congress’ deregulation of airlines in the 1970s also extends to air ambulances.
But pending legislation could change that. The No Surprises Act would — among other things — allow states to regulate the cost of medevac flights.
“The fact that consumers are in the position of having to purchase their membership on top of health insurance that they may already own, really underscores the need for federal consumer protection around air ambulance costs in general,” Mendelsohn said.
Wing-Heier says the recent order can always be walked back — if her division sees a reason or need.
“We hold the right to repeal the order at some point,” Wing-Heier said. “If we get additional authority, that would have to come from the federal government back down to the states to regulate the actual cost of transportation.”
It’s unclear how many people could be affected by the recent rule change. Air ambulance providers wouldn’t disclose how many households they’ve enrolled in the membership plans.
But Alaska patients are flown every day. In Juneau, for example, Bartlett Regional Hospital’s records show around 1,000 people were medevaced over the past three years.