Kathleen Hoechlin lost control as she crested a small jump on her final ski run of the day at California's Mammoth Mountain two years ago. She landed hard on her back, crushing one of the vertebra in her lower spine "like a Cheerio," she said.
An air ambulance flew Hoechlin, then 32, to an airport near Loma Linda University Medical Center in Southern California's Inland Empire. There she underwent emergency 12-hour surgery to remove bone fragments and replace the crushed vertebra with a metal cage that was fused to the rest of her spine with rods and screws to provide structure and stability.
Hoechlin was still in intensive care when her husband, Matt, got the bill for the 300-mile air ambulance ride. The total: $97,269. The company wasn't in their health plan's network of providers, and the PPO plan they had through Matt's job agreed to pay just $17,569.
The Hoechlins were on the hook for the $79,700 balance.
"It was just shocking," said Hoechlin, who worked as a business analyst project manager in Highland, California. "I was just focused on, 'Am I going to be able to walk again?' I thought I was going to have a heart attack when he told me."
A California law that took effect Jan. 1 aims to protect consumers from such enormous bills for out-of-network air ambulance services. The measure limits what consumers owe if they're transported by an air ambulance that's not part of their insurance network to the amount that they'd be charged if they used an in-network provider. The health plan and the air ambulance provider must then work out payment between themselves.
But the new law won't protect consumers like Hoechlin, whose health plan isn't regulated by the state. Matt's employer pays its workers' medical claims directly rather than buying state-regulated insurance, a common arrangement called "self-funding." Self-funded plans are regulated by the federal government and generally not subject to state health insurance laws.
In this regard, the new air ambulance law is like laws in California and other states that protect consumers from surprise medical bills: They don't apply to residents in federally regulated health plans. Those plans cover about two-thirds of people who get insurance through their jobs nationwide.
In California, that translates to nearly 6 million people.
Federal legislation is the best solution for those consumers, experts say. One of the leading bills before Congress to address surprise medical bills includes air ambulance charges. But that, and other measures, are up in the air, although members of Congress say they are working to reach an accord this year.
Another legal wrinkle affects even consumers with health plans the state does oversee. Under the federal Airline Deregulation Act of 1978, states aren't permitted to regulate the "rates, routes, or services" of air carriers, including air ambulances. It's unclear whether the California law, which doesn't spell out a payment rate for a health plan, would be preempted by federal law if challenged in court, according to legal experts.
"It's a very big step in balance billing, but it's not a definitive one," said Samuel Chang, a health policy researcher at the Source on Healthcare Price and Competition, a project of the University of California-Hastings.
Although people rarely need to be transported by a helicopter or airplane for medical care, it's often an emergency when they do, and they're unable to shop for an in-network provider, even if their health plan offers one. According to a federal Government Accountability Office analysis of air ambulance private insurance claims, 69% of air ambulance transports were out of network in 2017.
The median price charged in 2017 was $36,400 for a transport by helicopter and $40,600 by plane, according to the report. If an insurer doesn't have a contract with an air ambulance provider, the air ambulance company may bill the consumer for whatever the insurer doesn't pay, a practice known as balance billing.
"The air ambulance issue is such a big deal because it's just such an eye-popping bill," said Yasmin Peled, the policy and legislative advocate at Health Access California, a consumer advocacy group.
Air ambulance providers defend their charges, saying the rates offered by commercial insurance companies barely cover their costs. And public insurance programs often pay even less.
"Seven out of 10 of our transports are Medicare, Medicaid or uninsured," said Doug Flanders, director of communications and government affairs at Air Methods, a large air ambulance company that provides services in 48 states, including California. Medicare pays Air Methods an average of $5,998 per transport, and Medicaid payments are typically half of that, Flanders said via email. That presents a "huge financial challenge," he said.
In recent years, Air Methods has focused on joining the networks of some major insurers, including Blue Shield of California and Anthem Blue Cross of California, Flanders said. In addition to protecting patients, being in network "stabilizes operations and eases the administrative burden of the claims processing procedures created by insurers," he said.
For the past several years, reimbursements by Medi-Cal, the state's Medicaid program, for air ambulance services have been bolstered by funds collected from penalties for traffic violations. But the penalty was slated to sunset in 2020. Under the new California law, the state will extend supplemental funding of Medi-Cal payments for air ambulance services until 2022. Without that agreement, the rates would have reverted to much lower 1993 levels.
With the higher Medi-Cal rates, the industry supported the bill, including the prohibition on balance billing. In fact, the California Association of Air Medical Services sponsored the bill, although it didn't respond to requests for comment.
In contrast, when other states have tried to prohibit air ambulance balance billing, the companies have often successfully challenged those laws on the grounds that the federal Airline Deregulation Act of 1978 prohibits state rate setting, according to Erin Fuse Brown, an associate law professor at Georgia State University who has studied air ambulance billing.
Legal experts say California's approach may thread the needle where other states have failed.
"I do think the state has a pretty tolerable argument here that they are not regulating rates," said Christen Linke Young, a fellow at the USC-Brookings Schaeffer Initiative for Health Policy. "They are telling the air ambulance providers who they can go to to get paid, but they're ultimately not telling the amount that is getting paid."
Kathleen Hoechlin and her husband, who now live in Riverside, California, eventually negotiated the amount they owed down to $20,000, arguing to the air ambulance firm that by tapping their savings and using money from a GoFundMe campaign, that was all they could afford.
She is now able to walk with only a slight limp. But she continues to deal with severe pain due to nerve damage. She recently underwent a fourth surgery to implant a spinal cord stimulator to interrupt the pain signal to her brain.
"When you look at the bigger picture, at the total amount, we're feeling very fortunate," she said.
This KHN story first published on California Healthline, a service of the California Health Care Foundation.
This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.