Air Methods Chapter 11 filing
Thread Starter
Air Methods Chapter 11 filing
Don't have an account, so can't read beyond the headlines. This has been acknowledged and reported for over a year now, but it looks like a Creditor Protection Chapter 11 filing is imminent.
Analysis: https://www.macroaxis.com/invest/rat...-Of-Bankruptcy
https://news.bloomberglaw.com/merger...oad-profit-hit
Reshmi Basu
Bloomberg News
Jill R. Shah
The company plans to file as soon as the end of October, though those plans could change, said the people, who asked not be identified discussing a private matter. Air Methods already has been given extensions to remedy a missed interest payment earlier this month, said one of the people.
The closely held medical transport company’s profits have been slashed by rising costs, higher interest rates and federal ...
Analysis: https://www.macroaxis.com/invest/rat...-Of-Bankruptcy
https://news.bloomberglaw.com/merger...oad-profit-hit
Air Methods Plans Bankruptcy Filing on Debt Load, Profit Hit
Reshmi Basu
Bloomberg News
Jill R. Shah
- First-lien lenders poised to take over air ambulance company
- Air Methods has $1.25 billion floating-rate loan due in April
The company plans to file as soon as the end of October, though those plans could change, said the people, who asked not be identified discussing a private matter. Air Methods already has been given extensions to remedy a missed interest payment earlier this month, said one of the people.
The closely held medical transport company’s profits have been slashed by rising costs, higher interest rates and federal ...
Surprise...surprise...surprise! As Gomer Pyle used to say..
https://www.financierworldwide.com/f...s-in-25bn-deal
Private Equity Funds buying businesses they know nothing about....done on a house of cards.....what possibly could go wrong?
The big shareholders who scored big on the sale are probably laughing into their Latte's this morning.
Aaron Todd's words ring a bit hollow today.
https://www.financierworldwide.com/f...s-in-25bn-deal
Private Equity Funds buying businesses they know nothing about....done on a house of cards.....what possibly could go wrong?
The big shareholders who scored big on the sale are probably laughing into their Latte's this morning.
Aaron Todd's words ring a bit hollow today.
“As a private company, Air Methods will have greater flexibility to execute our strategy and pursue long-term growth,” said Aaron Todd, chief executive of Air Methods. “We look forward to partnering with American Securities to strengthen our market position in air medical transportation and air tourism.”
Last edited by SASless; 20th Oct 2023 at 15:43.
The following users liked this post:
Thread Starter
https://www.ainonline.com/aviation-n...ing-bankruptcy
Report: Air Methods Considering Bankruptcy
Would an Air Methods bankruptcy be a harbinger for medevac industry?
After the passage of the No Surprises Act, Air Methods, which operates more than 400 air ambulances nationwide, began closing bases.
By MARK HUBER • Contributor - Rotorcraft
October 20, 2023Reports have surfaced in the last few days, including from Bloomberg, that air ambulance provider Air Methods is contemplating a structured Chapter 11 bankruptcy filing.
The move would cede control of the company to creditors that are owed $1.25 billion. The loans, with floating interest rates, come due next April. Another $500 million on 8 percent interest bonds is due in 2025. Rating agency Moody’s is grading that debt as Caa3, deep into the highly speculative or “junk” category.
Much of that debt was tied to the $2.5 billion acquisition of Air Methods by private equity firm American Securities in 2017. Investment data company Macroaxis recently gave Air Methods a “100 percent” chance of bankruptcy. AIN’s attempts to solicit comment from Air Methods prior to today’s deadline were not successful.
As early as 2017, financial analysts were warning that the company’s business model was not sustainable as it was becoming dependent on ever-increasing transport price hikes charged to private payers/insurance companies in a saturated market. Those price hikes stemmed from Medicare/Medicaid transport reimbursements for patients covered by those programs that were substantially below costs.
That problem was exacerbated when Congress incorporated the “No Surprises Act” (NSA) into the second Covid relief package (the Consolidated Appropriations Act) in 2021. The act was supposed to insulate patients when it came to payment disputes between healthcare providers and payers, including insurance companies. Critics charged that provisions of the legislation gave insurance companies outsized power in settling billing disputes, providing them wide latitude to delay, discount, and deny claims.
The consequences hit providers with community-based air ambulance programs, such as Air Methods, particularly hard, and the company, which operates more than 400 air ambulances nationwide, most of them helicopters, began closing bases last year. Reports also surfaced that the NSA’s impact trimmed the company’s revenues in recent quarters by more than 50 percent. (Air Methods is privately held and does not disclose financial data.)
While certain implementation rules for the NSA have been successfully challenged in federal court, including last year when air ambulance provider LifeNet brought suit, that is likely a temporary reprieve as the relevant federal agencies, including Health and Human Services and Labor, tweak those rules to pass legal muster.
But any bankruptcy filing by Air Methods could be followed by more from other air ambulance providers. Last year, Christopher Eastlee, Association of Air Medical Services vice president for public affairs, expressed doubt that enough of the NSA could be sufficiently changed and done soon enough to provide needed relief. “Can we wait it out? I don’t know if we can,” he said.
Report: Air Methods Considering Bankruptcy
Would an Air Methods bankruptcy be a harbinger for medevac industry?
After the passage of the No Surprises Act, Air Methods, which operates more than 400 air ambulances nationwide, began closing bases.By MARK HUBER • Contributor - Rotorcraft
October 20, 2023Reports have surfaced in the last few days, including from Bloomberg, that air ambulance provider Air Methods is contemplating a structured Chapter 11 bankruptcy filing.
The move would cede control of the company to creditors that are owed $1.25 billion. The loans, with floating interest rates, come due next April. Another $500 million on 8 percent interest bonds is due in 2025. Rating agency Moody’s is grading that debt as Caa3, deep into the highly speculative or “junk” category.
Much of that debt was tied to the $2.5 billion acquisition of Air Methods by private equity firm American Securities in 2017. Investment data company Macroaxis recently gave Air Methods a “100 percent” chance of bankruptcy. AIN’s attempts to solicit comment from Air Methods prior to today’s deadline were not successful.
As early as 2017, financial analysts were warning that the company’s business model was not sustainable as it was becoming dependent on ever-increasing transport price hikes charged to private payers/insurance companies in a saturated market. Those price hikes stemmed from Medicare/Medicaid transport reimbursements for patients covered by those programs that were substantially below costs.
That problem was exacerbated when Congress incorporated the “No Surprises Act” (NSA) into the second Covid relief package (the Consolidated Appropriations Act) in 2021. The act was supposed to insulate patients when it came to payment disputes between healthcare providers and payers, including insurance companies. Critics charged that provisions of the legislation gave insurance companies outsized power in settling billing disputes, providing them wide latitude to delay, discount, and deny claims.
The consequences hit providers with community-based air ambulance programs, such as Air Methods, particularly hard, and the company, which operates more than 400 air ambulances nationwide, most of them helicopters, began closing bases last year. Reports also surfaced that the NSA’s impact trimmed the company’s revenues in recent quarters by more than 50 percent. (Air Methods is privately held and does not disclose financial data.)
While certain implementation rules for the NSA have been successfully challenged in federal court, including last year when air ambulance provider LifeNet brought suit, that is likely a temporary reprieve as the relevant federal agencies, including Health and Human Services and Labor, tweak those rules to pass legal muster.
But any bankruptcy filing by Air Methods could be followed by more from other air ambulance providers. Last year, Christopher Eastlee, Association of Air Medical Services vice president for public affairs, expressed doubt that enough of the NSA could be sufficiently changed and done soon enough to provide needed relief. “Can we wait it out? I don’t know if we can,” he said.
Would not have thought this was happening, considering the size, and the contracts. So is it a given that the likes of Metro, PHi Air Medical can come into the void and take over some of the contracts??
Every year at Heli Expo for the last near 2 decades I have been attending religiously, always see new EC135, EC145 EMS with their subsidiary hospital / medical centres on display impressive.
Earlier this year in Atlanta, I did not hear any rumbles whatsoever. or sense any unhappiness, negative feelings.
cheers
Every year at Heli Expo for the last near 2 decades I have been attending religiously, always see new EC135, EC145 EMS with their subsidiary hospital / medical centres on display impressive.
Earlier this year in Atlanta, I did not hear any rumbles whatsoever. or sense any unhappiness, negative feelings.
cheers
Surprise...surprise...surprise! As Gomer Pyle used to say..
https://www.financierworldwide.com/f...s-in-25bn-deal
Private Equity Funds buying businesses they know nothing about....done on a house of cards.....what possibly could go wrong?
The big shareholders who scored big on the sale are probably laughing into their Latte's this morning.
Aaron Todd's words ring a bit hollow today.
https://www.financierworldwide.com/f...s-in-25bn-deal
Private Equity Funds buying businesses they know nothing about....done on a house of cards.....what possibly could go wrong?
The big shareholders who scored big on the sale are probably laughing into their Latte's this morning.
Aaron Todd's words ring a bit hollow today.
With the size of the organisation, i guess it be nigh on impossible for the employees , say 100 or so pilots and engineers administrators / flight ops managers to take over themselves...
cheers
Memory serves me that PHI Aero Med (or whatever name PHI used) filed for bankruptcy for its Texas operations not so long ago.
The EMS business has changed business models over time having started out for the main part as Hospital based flight operations which if a stand alone flight operation would not have been profitable but the kinds of very serious cases the helicopter brought to the medical center and the profits from that level of care made up the difference.
Then as the Operators branched out and the model shifted to Community Based Operations that revenue stream that existed under the old hospital based method fell off and thus the flight operations then had to become more self supporting.
Competition in that style of business model became quite vigorous and profit margins shrank.
Add in the other factors mentioned in other posts and you can begin to draw your own conclusions.
Air Methods in kind words was pretty much a victim of its own success.
Some things they did really well but they got into some parts of the EMS business they might have stayed away from and done much better in the end.
I am sure there will be others with a fresher and better knowledge of how this all came about as mine is not very recent or very involved.
One thing for sure is one should not believer one's own propaganda and that goes for commercial ventures as well as military or political organizations.
As to the final outcome....no about there shall be a loss of contracts, jobs, and reduction in the size of the fleet of aircraft and perhaps core units such as manufacturing of interiors.
All of the EMS Operators are confronting many of the same problems re revenue and are subject to the same market forces as is Air Methods.
Exposure to debt obligations might vary and those that are way over extended due to prior expansion and growth that came as a cost of that exposure will not fare well.
There is a market out there...and some one has to fill that need....who it is remains to be seen.
The EMS business has changed business models over time having started out for the main part as Hospital based flight operations which if a stand alone flight operation would not have been profitable but the kinds of very serious cases the helicopter brought to the medical center and the profits from that level of care made up the difference.
Then as the Operators branched out and the model shifted to Community Based Operations that revenue stream that existed under the old hospital based method fell off and thus the flight operations then had to become more self supporting.
Competition in that style of business model became quite vigorous and profit margins shrank.
Add in the other factors mentioned in other posts and you can begin to draw your own conclusions.
Air Methods in kind words was pretty much a victim of its own success.
Some things they did really well but they got into some parts of the EMS business they might have stayed away from and done much better in the end.
I am sure there will be others with a fresher and better knowledge of how this all came about as mine is not very recent or very involved.
One thing for sure is one should not believer one's own propaganda and that goes for commercial ventures as well as military or political organizations.
As to the final outcome....no about there shall be a loss of contracts, jobs, and reduction in the size of the fleet of aircraft and perhaps core units such as manufacturing of interiors.
All of the EMS Operators are confronting many of the same problems re revenue and are subject to the same market forces as is Air Methods.
Exposure to debt obligations might vary and those that are way over extended due to prior expansion and growth that came as a cost of that exposure will not fare well.
There is a market out there...and some one has to fill that need....who it is remains to be seen.
[QUOTE=SASless;11524936]Memory serves me that PHI Aero Med (or whatever name PHI used) filed for bankruptcy for its Texas operations not so long ago.
The EMS business has changed business models over time having started out for the main part as Hospital based flight operations which if a stand alone flight operation would not have been profitable but the kinds of very serious cases the helicopter brought to the medical center and the profits from that level of care made up the difference.
I was a personal member of ASHBEAMS (American Society of Hospital Based Emergency Air Medical Services). Things have certainly changed since then...
The EMS business has changed business models over time having started out for the main part as Hospital based flight operations which if a stand alone flight operation would not have been profitable but the kinds of very serious cases the helicopter brought to the medical center and the profits from that level of care made up the difference.
I was a personal member of ASHBEAMS (American Society of Hospital Based Emergency Air Medical Services). Things have certainly changed since then...
Thread Starter
The perilous financial situation of Air Methods has been recognized for some significant time and was more a matter of timing than likelihood. The Wall Street Journal wrote about it nine months ago (as did others), but it was all still a distant outcome. There are a number of other heavily leveraged companies out there in similar circumstances.
Matt Grossman
An Air Methods medical helicopter. (Air Methods)
A rising share of companies are landing at the lower end of the credit-rating scale, Moody's Investors Service said in a new report.
Of the junk-tier businesses it scans, 14% had credit ratings of no higher than B3 with a negative outlook at the end of last year, Moody's said. That proportion grew by 25% from a quarter earlier. (A B3 from Moody's is six notches below investment grade.)
Downgrades have been accelerating in recent months as a darkening economic outlook dims expectations for corporate earnings at the same time that rising interest rates threaten to make borrowing more expensive.
Healthcare companies in particular are seeing their creditworthiness deteriorate, Moody's said. They have made up the largest share of companies recently downgraded to B3 with a negative outlook or worse.
Late last year, Moody's downgraded Air Methods to Caa3 from B3. It projected the emergency air-medical transport company's debt load will reach nearly 12 times its earnings before interest, taxes, depreciation and amortization over the next 12 to 18 months—up from a recent ratio of 9.2 times.
Air Methods bonds due in 2025 have traded as cheaply as 5 cents on the dollar this year, according to MarketAxess data. The company didn't respond to an inquiry.
Note: Caa3 rating is "Obligations rated Caa are judged to be of poor standing and are subject to very high credit risk". Caa3 is the lowest of this class of rating.
More Companies Slapped With Low Credit Ratings
ByMatt Grossman
An Air Methods medical helicopter. (Air Methods)A rising share of companies are landing at the lower end of the credit-rating scale, Moody's Investors Service said in a new report.
Of the junk-tier businesses it scans, 14% had credit ratings of no higher than B3 with a negative outlook at the end of last year, Moody's said. That proportion grew by 25% from a quarter earlier. (A B3 from Moody's is six notches below investment grade.)
Downgrades have been accelerating in recent months as a darkening economic outlook dims expectations for corporate earnings at the same time that rising interest rates threaten to make borrowing more expensive.
Healthcare companies in particular are seeing their creditworthiness deteriorate, Moody's said. They have made up the largest share of companies recently downgraded to B3 with a negative outlook or worse.
Late last year, Moody's downgraded Air Methods to Caa3 from B3. It projected the emergency air-medical transport company's debt load will reach nearly 12 times its earnings before interest, taxes, depreciation and amortization over the next 12 to 18 months—up from a recent ratio of 9.2 times.
Air Methods bonds due in 2025 have traded as cheaply as 5 cents on the dollar this year, according to MarketAxess data. The company didn't respond to an inquiry.
Note: Caa3 rating is "Obligations rated Caa are judged to be of poor standing and are subject to very high credit risk". Caa3 is the lowest of this class of rating.
Last edited by Cyclic Hotline; 23rd Oct 2023 at 21:06. Reason: formatting
And HAI has just shared that Air Methods CEO JaeLynn Williams has won the Women's Tech Council (WTC) Trail Blazers award. How does that work when your company is looking at Chap.11?? 
Thread Starter
Here it is.
https://www.benzinga.com/pressreleas...g-term-success
byGlobe Newswire
October 24, 2023 3:12 AM | 7 min read
Operating Normally with Record Number of Transports; Continuing to Serve Healthcare Partners, Communities and Patients with Industry-Leading Air Medical Services and Best-in-Class Clinical Care
DENVER, Oct. 24, 2023 (GLOBE NEWSWIRE) -- Air Methods Corporation ("Air Methods" or the "Company"), the leading air medical service provider in the U.S., announced today that it has entered into a Restructuring Support Agreement ("RSA") with (i) majorities of its first lien lenders and bondholders and (ii) its equity sponsor under which such key stakeholders have agreed to support an expedited balance sheet restructuring. Implementing the restructuring contemplated by the RSA will reduce the Company's total debt by approximately $1.7 billion, increase liquidity and position the business for long-term success by allowing it to focus on its growth and development strategies.
"We are pleased to have reached this agreement with our key stakeholders, which will enable Air Methods to continue supporting patients with lifesaving care and serving as an integral link between the nation's top healthcare facilities and people in rural and remote communities," said Chief Executive Officer JaeLynn Williams. "Over the past year, we have made meaningful progress optimizing our field operations, going in-network with leading commercial insurers and improving our cost structure. We've also seen record numbers of transports, and we've opened several new bases across the country this year as there is a great demand for air medical services. By strengthening our balance sheet, we are taking an important step forward in delivering on our transformation plan while answering every call with the highest level of service and patient care."
To implement the restructuring contemplated by the RSA, Air Methods and certain of its affiliates initiated today voluntary prepackaged Chapter 11 cases in the U.S. Bankruptcy Court for the Southern District of Texas. The prepackaged Chapter 11 process provides an orderly forum for Air Methods to implement the balance sheet restructuring efficiently and quickly. Additionally, the restructuring contemplated by the RSA provides for vendors and suppliers to be paid in full, and for teammates to continue receiving their pay and benefits without interruption. Pursuant to the RSA, the Company has already obtained the requisite support from its stakeholders to confirm the plan of reorganization and, due to this broad support, Air Methods expects to complete this process on an expedited basis and emerge from Chapter 11 with an optimal capital structure by year end.
"With increased financial flexibility and access to additional capital, we will be better positioned to continue opening new greenfield bases, accelerate our talent acquisition initiatives, execute on our growth initiatives and equip more emergency personnel with the expertise needed to safely deliver the highest quality air medical care for generations to come," said Williams. "We appreciate the support of our debtholders and equity sponsor in enabling us to achieve this positive outcome. I also thank our team members across the country who put our mission into action every day. Together with our healthcare and community partners, we will continue to close the gap between our patients and the critical care they need."
In connection with the court-supervised process, Air Methods has obtained commitments for $80 million of debtor-in-possession financing from the first lien lenders party to the RSA. Following court approval, this new financing will provide sufficient liquidity to support the Company's financial obligations and day-to-day operations during this process, including the payment of employee wages and benefits, suppliers, partners, and vendors in the ordinary course of business.
Air Methods is operating normally and without service interruptions as it moves through the court-supervised process. This includes continuing to serve partner hospitals, healthcare systems and customers with the Company's fleet of 365 medical helicopters and fixed-wing aircraft from 275 bases serving 47 states.
Additionally, the Company's United Rotorcraft and Blue Hawaiian businesses are operating normally. Blue Hawaiian, the largest provider of helicopter tours and charter flights in Hawaii, is not included in the Company's court-supervised process.
Additional Information
Additional information regarding the Company's court-supervised process is available at www.AirMethodsRestructuring.com. Court filings and other information related to the proceedings are available on a separate website administrated by the Company's claims agent, Epiq, at https://dm.epiq11.com/AirMethods; by calling Epiq representatives at (877) 506-0331 within the U.S. & Canada (or +1 (503) 854-0296 internationally for calls originating outside of the U.S.); or by sending an email to [email protected].
Weil, Gotshal & Manges LLP is serving as legal advisor, Lazard is serving as financial advisor and Alvarez & Marsal is serving as restructuring advisor to Air Methods. Davis Polk & Wardwell LLP is serving as legal advisor and Evercore Group, L.L.C. is serving as financial advisor to the ad hoc group of lenders.
https://www.benzinga.com/pressreleas...g-term-success
Air Methods Takes Strategic Steps to Position Business for Long-Term Success
byGlobe Newswire
October 24, 2023 3:12 AM | 7 min read
Initiates Voluntary Prepackaged Chapter 11 Proceedings to Implement Restructuring Support Agreement with Lenders to Strengthen Balance Sheet and Enhance Liquidity
Receives Commitment for New Financing to Support Ongoing Operations; RSA Provides for Vendors, Suppliers and Teammates to be Paid in FullOperating Normally with Record Number of Transports; Continuing to Serve Healthcare Partners, Communities and Patients with Industry-Leading Air Medical Services and Best-in-Class Clinical Care
DENVER, Oct. 24, 2023 (GLOBE NEWSWIRE) -- Air Methods Corporation ("Air Methods" or the "Company"), the leading air medical service provider in the U.S., announced today that it has entered into a Restructuring Support Agreement ("RSA") with (i) majorities of its first lien lenders and bondholders and (ii) its equity sponsor under which such key stakeholders have agreed to support an expedited balance sheet restructuring. Implementing the restructuring contemplated by the RSA will reduce the Company's total debt by approximately $1.7 billion, increase liquidity and position the business for long-term success by allowing it to focus on its growth and development strategies.
"We are pleased to have reached this agreement with our key stakeholders, which will enable Air Methods to continue supporting patients with lifesaving care and serving as an integral link between the nation's top healthcare facilities and people in rural and remote communities," said Chief Executive Officer JaeLynn Williams. "Over the past year, we have made meaningful progress optimizing our field operations, going in-network with leading commercial insurers and improving our cost structure. We've also seen record numbers of transports, and we've opened several new bases across the country this year as there is a great demand for air medical services. By strengthening our balance sheet, we are taking an important step forward in delivering on our transformation plan while answering every call with the highest level of service and patient care."
To implement the restructuring contemplated by the RSA, Air Methods and certain of its affiliates initiated today voluntary prepackaged Chapter 11 cases in the U.S. Bankruptcy Court for the Southern District of Texas. The prepackaged Chapter 11 process provides an orderly forum for Air Methods to implement the balance sheet restructuring efficiently and quickly. Additionally, the restructuring contemplated by the RSA provides for vendors and suppliers to be paid in full, and for teammates to continue receiving their pay and benefits without interruption. Pursuant to the RSA, the Company has already obtained the requisite support from its stakeholders to confirm the plan of reorganization and, due to this broad support, Air Methods expects to complete this process on an expedited basis and emerge from Chapter 11 with an optimal capital structure by year end.
"With increased financial flexibility and access to additional capital, we will be better positioned to continue opening new greenfield bases, accelerate our talent acquisition initiatives, execute on our growth initiatives and equip more emergency personnel with the expertise needed to safely deliver the highest quality air medical care for generations to come," said Williams. "We appreciate the support of our debtholders and equity sponsor in enabling us to achieve this positive outcome. I also thank our team members across the country who put our mission into action every day. Together with our healthcare and community partners, we will continue to close the gap between our patients and the critical care they need."
In connection with the court-supervised process, Air Methods has obtained commitments for $80 million of debtor-in-possession financing from the first lien lenders party to the RSA. Following court approval, this new financing will provide sufficient liquidity to support the Company's financial obligations and day-to-day operations during this process, including the payment of employee wages and benefits, suppliers, partners, and vendors in the ordinary course of business.
Air Methods is operating normally and without service interruptions as it moves through the court-supervised process. This includes continuing to serve partner hospitals, healthcare systems and customers with the Company's fleet of 365 medical helicopters and fixed-wing aircraft from 275 bases serving 47 states.
Additionally, the Company's United Rotorcraft and Blue Hawaiian businesses are operating normally. Blue Hawaiian, the largest provider of helicopter tours and charter flights in Hawaii, is not included in the Company's court-supervised process.
Additional Information
Additional information regarding the Company's court-supervised process is available at www.AirMethodsRestructuring.com. Court filings and other information related to the proceedings are available on a separate website administrated by the Company's claims agent, Epiq, at https://dm.epiq11.com/AirMethods; by calling Epiq representatives at (877) 506-0331 within the U.S. & Canada (or +1 (503) 854-0296 internationally for calls originating outside of the U.S.); or by sending an email to [email protected].
Weil, Gotshal & Manges LLP is serving as legal advisor, Lazard is serving as financial advisor and Alvarez & Marsal is serving as restructuring advisor to Air Methods. Davis Polk & Wardwell LLP is serving as legal advisor and Evercore Group, L.L.C. is serving as financial advisor to the ad hoc group of lenders.
Thread Starter
Here is a bit of background on this industry for anyone unfamiliar with its workings and the attempts to remedy things in the last couple of years.
https://nymag.com/intelligencer/2022...mbulances.htmlINVESTIGATIONS APR. 20, 2022
Photo-Illustration: Intelligencer; Photos: GettyThis article was featured in One Great Story, New York’s reading recommendation newsletter. Sign up here to get it nightly.
Kathleen Hoechlin was in the intensive-care unit, wondering if she would ever walk again, when she and her husband, Matt, started receiving the phone calls. It was January 2018, and the couple had just gone skiing in Mammoth Lakes, California. On the last run of the day, Kathleen skied over a small jump and landed on her back, shattering the L1 vertebra in her lower spine. With the nearest hospital ill equipped to handle the required surgery, she was loaded onto a small plane and flown 300 miles south over the Sierra Nevada mountain range to Loma Linda, where she underwent 12 hours of surgery to replace the vertebra with a metal implant. The phone call, which the Hoechlins received less than a day after the surgery, was from the air-ambulance provider, Guardian Flight, informing them that the plane ride had cost $97,269.
Kathleen Hoechlin recovering post-surgery at Loma Linda University Medical Center in February 2018. Photo: Courtesy Kathleen HoechlinThe couple tried not to panic, holding out hope that their insurance policy would cover the cost. But when the explanation of benefits finally arrived, it showed that Guardian Flight was out of network and that their policy would cover only $17,569, leaving the Hoechlins responsible for the remaining $79,700. Guardian Flight continued to hound them, with Kathleen not yet out of the full-body brace she was sent home in. “They were calling the week I got home,” she says. “I just told them, ‘How can you sleep at night? I can’t talk to you when you’re asking me for this money while I’m trying to learn to walk again.’”
From then on, Matt dealt with the incessant phone calls himself and managed to negotiate the remaining balance down to $20,000 after telling Guardian Flight that he and Kathleen would have to file for bankruptcy if it were any higher. Between their savings, gifts from family members, and a GoFundMe campaign, the Hoechlins managed to pay off the remainder. “It left me with a lot of trauma and a lot of ‘aha’ moments,” Kathleen says. “Why is this happening, and why should patients have to go through this?”
Prescriptions and equipment required for Kathleen’s recovery at the Hoechlins’ former home in Highland, California, in January 2019. Photo: Courtesy Kathleen HoechlinI first came across Kathleen’s story after being transported by an air ambulance myself last April, albeit under less severe circumstances. I was also on vacation in Mammoth Lakes when I experienced intense chest pain that was later diagnosed as myocarditis. After keeping me for a night at Mammoth Hospital, the staff there ordered that I be transferred via air ambulance to a medical center in Reno, Nevada, where a cardiology team could do the required testing. I pushed back initially, worried about the potential cost of the flight, but the doctors insisted it was necessary. Within a few hours, I was strapped to a gurney with tubes in my nose, flying over Lake Tahoe in a small plane while two paramedics sat nearby, ready to administer nitroglycerin in case my chest pain flared up again. The air-ambulance provider, REACH Air Medical Services, sent me a letter two months later saying the flight had cost me $86,184.
I spent the next eight months fending off letters and phone calls from REACH requesting full payment. Eventually, my employer intervened and got my insurance company, Cigna, to renegotiate with REACH, leaving me responsible for a co-pay of only $132 on the out-of-network claim. Even so, the experience left me with some of the same questions as Kathleen Hoechlin: Why is this happening, and how could something as essential as an air ambulance possibly be so expensive, especially when an estimated 550,000 patients in the U.S. require one each year? That line of questioning led to at least one culprit: private equity.
At the start of the aughts, private-equity firms conducted about $5 billion worth of deals in the U.S. health-care sector each year. By 2019, that figure had jumped to an estimated $120 billion, a result of deep-pocketed firms looking to park their money in a sector perceived as recessionproof (people get sick even when the economy is bad) and ripe for consolidation. When major private-equity firms started buying up air-ambulance companies, it set off a flurry of acquisitions. In 2010, Bain Capital bought Air Medical Group Holdings for $1 billion, only to sell it five years later for double that amount to KKR, which, in turn, merged the company with yet another air-ambulance provider, American Medical Response, under the name Global Medical Response. (Tracking this shell game can be dizzying. In the three years between Hoechlin’s air-ambulance flight and mine, Guardian Flight merged with REACH Air Medical Services; both are owned by Global Medical Response.) In 2017, American Securities drastically accelerated private equity’s takeover of the air-ambulance industry with its $2.5 billion purchase of Air Methods, the largest domestic provider of air ambulances. (In 2016, during its final year as a publicly traded company, Air Methods posted a $97.9 million profit on $1.17 billion in revenue, and the year before had paid its CEO $2.5 million in direct compensation, including stock options.) That purchase established the industry’s current landscape, in which two private-equity firms, American Securities and KKR, control almost two-thirds of the national market for air ambulances, according to Medicare data.
As private equity tightened its stranglehold on the industry, it jacked up the already-high prices. Between 2008 and 2017, the median price charged by providers for helicopter air ambulances nearly tripled, jumping from $12,500 to $35,900 per flight, according to a study by the Health Care Cost Institute. As the Hoechlins and I experienced, air-ambulance providers are often out of network with private insurance companies. That’s not by accident:Private-equity-backed and publicly traded air-ambulance providers in particular tend to remain out of network to charge higher rates than what may be allowed under an in-network contract. Since patients don’t decide when or where they have a medical emergency that requires them to be airlifted to a hospital, they don’t have a choice in which air-ambulance provider they use. As a result, competition in the marketplace does little to keep prices down — the higher providers set the price, the more they may be able to get paid. When insurers deem the cost too high, they pass the enormous remaining balance on to the patient, a practice known as “balance billing.” Among privately insured patients, an estimated two in five air-ambulance flights result in a potential balance bill. About half the time, though, the insurance companies simply pay up, according to Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy. Private equity “saw an opportunity to say, ‘Look, the existing companies aren’t leaning into the surprise-billing threat enough from a moneymaking perspective,’” says Adler, who co-authored a white paper last year about private equity’s impact on the air-ambulance industry. “If you really lean on that a lot, sometimes you can fight with the patient to get paid. But I think a bigger part of the money thing is often you can cajole the employer to pay because they don’t want their employee getting stuck with an $80,000 bill.”
Private-equity firms have applied their balance-billing approach to other corners of the health-care sector they have encroached upon, including emergency-physician staffing, anesthesia, and ground ambulances — all services for which patients don’t typically choose their providers. In 2017, Blackstone Group acquired the physician-staffing company TeamHealth for $6.1 billion, only to be one-upped a year later by KKR’s $9.9 billion purchase of another physician-staffing company, Envision Healthcare. In the time since, both companies have faced scrutiny for their aggressive billing practices, with TeamHealth sending thousands of surprise bills to patients in 2017 and even going so far as to sue low-income patients over unpaid medical debts. (The company now insists it has a “long-standing policy” against balance billing and ceased its practice of suing patients after a ProPublica investigation called attention to it in 2019.)
When asked about their exorbitant fees, representatives for air-ambulance providers tend to emphasize the high operational costs of the business. REACH, for example, says the company keeps its medical crews on standby 24/7. Other providers blame the costs they charge privately insured patients on themuch lower reimbursements they’re forced to accept from people covered by Medicare and Medicaid, which, the providers argue, don’t come close to covering their operational costs. (Medicare often pays providers between $6,000 and $7,000 per fixed-wing air-ambulance flight, and those patients can’t be balance-billed by participating Medicare providers per federal law.) As a result, providers say they have to charge privately insured patients significantly more to compensate for the losses.
As air-ambulance providers continued to drive up their prices over the past decade, lawmakers started hearing from angry patients. Across the country, states attempted to rein in the industry, but air-ambulance providers shot down each attempt in court with an unlikely silver bullet: a 1978 federal law called the Airline Deregulation Act. Ironically, the ADA was designed to drive down the cost of air travel by deregulating the commercial airline industry and allowing it to function as a competitive free market. The nascent air-ambulance industry — which in 1978 consisted of a few dozen helicopters scattered across the country — was lumped in with commercial airlines under the broader category of air carriers, effectively preempting any efforts by states to regulate its prices. Time and again, air-ambulance providers invoked the law in court, successfully arguing that states did not have jurisdiction over the federally regulated industry.
The battle moved to the federal level, where patients finally started to gain traction. In 2017, the U.S. Government Accountability Office published a report on the growing concentration of the market before concluding that private equity’s increasing role in the industry “could further exacerbate these trends while also reducing transparency.” The following year, President Trump authorized the Federal Aviation Administration to create an advisory committee to research balance billing in the industry. The committee, which consisted of state insurance regulators, physicians, insurance executives, air-ambulance executives, and patient advocates, concluded last year that the federal government should consider increasing Medicare’s reimbursement rates to providers but that it should also remove air ambulances from the ADA’s protection.
In the meantime, Congress turned its attention to the broader issue of surprise medical billing, and the idea of banning the practice quickly gained bipartisan support. While air-ambulance bills are a comparatively niche concern, approximately one in five emergency-room visits results in a surprise medical bill of some sort, often stemming from a specific out-of-network service. (For instance, a patient may undergo a surgery covered by their insurance policy but unknowingly receive anesthesia from an out-of-network provider.) Having stumbled upon an issue that resonated with a wide swath of voters, both the House and Senate put forward bipartisan legislation in 2019 aimed at bringing an end to surprise medical bills for emergency care, inching the government closer to protecting patients from the air-ambulance industry’s skyrocketing rates. “I had heard horrific stories from people who, in a lifesaving emergency, had no idea that they were going to get some kind of surprise bill from an air ambulance,” says Senator Patty Murray, a Democrat from Washington who helped lead the Senate’s efforts to end surprise medical billing. “That was really critical for me to keep in the bill.”
Just as these efforts started to pick up momentum, a mysterious political-action group called Doctor Patient Unity dumped $28 million into an ad campaign aimed at derailing the legislation. The ads framed it as a unilateral victory for the insurance lobby, arguing that “government rate setting” would reduce patients’ access to care by leaving providers underfunded. In
, a suited man from “Big Insurance” shows up in a crowded waiting room and tells everyone to go home — he’s shutting down the hospital with a little help from Congress. Doctor Patient Unity operated in the shadows for weeks before a spokesperson put out a statement clarifying that the group was entirely funded by two private-equity-backed providers, TeamHealth and Envision Healthcare. Around the same time, Global Medical Response, the KKR-backed company that owns REACH, launched its own $800,000 ad campaign arguing that the legislation could force the provider to service fewer areas, leaving rural communities without emergency medical transport.
The ads couldn’t halt the legislation, and Congress passed the No Surprises Act in December 2020 as part of the second COVID stimulus package. The law went into effect this year and bans most surprise medical bills — with the notable exception of bills from ground ambulances. It also removes patients from the negotiation process between their insurance company and out-of-network providers, meaning patients shouldn’t receive constant phone calls as the Hoechlins and I did. Instead, patients will have to pay only the in-network rate dictated by their insurance policies, while providers and insurers negotiate the remainder of the cost between themselves. If they can’t agree on an amount, they enter an arbitration process overseen by the federal government, which has to be resolved within 30 days.
It may seem as if the battle to protect patients from shocking bills is over, but air-ambulance companies and other health-care providers aren’t giving up. A number of provider groups have sued the federal government, including the American Hospital Association, the American Medical Association, and the Association of Air Medical Services. While the lawsuits vary slightly, they all take issue with the arbitration process established under the No Surprises Act, arguing that it will result in insufficient payments to providers. (Research by USC’s Adler, by contrast, suggests that the only facilities that will suffer losses under the law “are those who were benefiting financially from surprise billing.”)
In the process of implementing the law, the Biden administration issued a rule instructing arbitrators to prioritize the median in-network rate for a service. In other words, if providers want to charge significantly more than that amount, they have to justify it to the arbitrator. Providers argue that this unfairly favors insurance companies. In an email, a representative from REACH said the company wants arbitrators to be “free to look at all the evidence and determine the appropriate out-of-network rate without influence from special-interest groups like the insurance lobby.”
While surprise medical billing will remain illegal no matter what, if the lawsuits succeed, providers might be able to once again charge insurance companies enormous fees for out-of-network services — a cost that could then be passed on to patients through increased insurance premiums. “This is their last-ditch effort to keep their profit-making billing mechanism in place,” says Patricia Kelmar, health-care campaigns director for the consumer-advocacy group U.S. PIRG. She points out that the No Surprises Act allows the federal government to collect data on the historically opaque air-ambulance industry, which will help regulators tweak the implementation ofthe law down the line. “It’s in no one’s interest to lose an emergency medical service, so there’ll be a lot of attention. And if there’s evidence to support that they can’t function in this market, providers will be the first to say it, as will the patients, and something will be done to change it.” In February, a federal judge in Texas ruled that the Biden administration had “impermissibly” altered the No Surprises Act by instructing arbitrators to prioritize the median in-network rate, and as a result, arbitrations were put on hold before they even began. Five provider lawsuits remain unresolved, but all eyes are now on the Biden administration, which is expected to issue its final guidance on the arbitration process by the end of May.
Despite previous bipartisan support for the No Surprises Act, the arbitration issue has since divided Congress. Last October, the top Democrat and top Republican on the House Ways and Means Committee co-wrote a letter accusing the Biden administration of undermining Congress’s intent by “tipping the scales” of the arbitration process. The Democrat, Representative Richard Neal, told me the administration needs to “implement a fair system of dispute resolution for health-care providers and insurance companies that doesn’t have negative downstream impacts on patients.” Subsequently, 150 representatives in the House — split roughly evenly between Democrats and Republicans — issued a similar letter, as did a separate group of Republican senators. Despite pressure from providers, other lawmakers haven’t bent, including Senator Murray and Representative Frank Pallone, who co-authored the original House legislation and believes the Biden administration’s interpretation of it is consistent with congressional intent. “I’m very concerned that the outcome could lead to hospitals and insurance companies shifting more and more costs onto consumers,” Pallone, a Democrat from New Jersey, said in a statement about the lawsuits. “It’s just another unfortunate example of financial greed, and I’m hopeful that the courts do the right thing and that the administration can ultimately implement a policy that keeps costs down for consumers.”
As providers and insurers continue fighting among themselves over who gets to keep the bigger share of the profits when someone needs emergency care, patients such as Kathleen Hoechlin are being left out of it. “You know, my life was saved by that air ambulance,” said Hoechlin, who has since gotten certified as a patient advocate to help others navigate their insurance battles in her free time. “And I’m so grateful for the crew and everything. They deserve to be paid — but a fair amount.”
https://nymag.com/intelligencer/2022...mbulances.htmlINVESTIGATIONS APR. 20, 2022
The Air-Ambulance Vultures
A search for why my flight cost $86,184 led to a hidden culprit: private equity.
By Chris StantonPhoto-Illustration: Intelligencer; Photos: GettyThis article was featured in One Great Story, New York’s reading recommendation newsletter. Sign up here to get it nightly.
Kathleen Hoechlin was in the intensive-care unit, wondering if she would ever walk again, when she and her husband, Matt, started receiving the phone calls. It was January 2018, and the couple had just gone skiing in Mammoth Lakes, California. On the last run of the day, Kathleen skied over a small jump and landed on her back, shattering the L1 vertebra in her lower spine. With the nearest hospital ill equipped to handle the required surgery, she was loaded onto a small plane and flown 300 miles south over the Sierra Nevada mountain range to Loma Linda, where she underwent 12 hours of surgery to replace the vertebra with a metal implant. The phone call, which the Hoechlins received less than a day after the surgery, was from the air-ambulance provider, Guardian Flight, informing them that the plane ride had cost $97,269.
Kathleen Hoechlin recovering post-surgery at Loma Linda University Medical Center in February 2018. Photo: Courtesy Kathleen HoechlinThe couple tried not to panic, holding out hope that their insurance policy would cover the cost. But when the explanation of benefits finally arrived, it showed that Guardian Flight was out of network and that their policy would cover only $17,569, leaving the Hoechlins responsible for the remaining $79,700. Guardian Flight continued to hound them, with Kathleen not yet out of the full-body brace she was sent home in. “They were calling the week I got home,” she says. “I just told them, ‘How can you sleep at night? I can’t talk to you when you’re asking me for this money while I’m trying to learn to walk again.’”
From then on, Matt dealt with the incessant phone calls himself and managed to negotiate the remaining balance down to $20,000 after telling Guardian Flight that he and Kathleen would have to file for bankruptcy if it were any higher. Between their savings, gifts from family members, and a GoFundMe campaign, the Hoechlins managed to pay off the remainder. “It left me with a lot of trauma and a lot of ‘aha’ moments,” Kathleen says. “Why is this happening, and why should patients have to go through this?”
Prescriptions and equipment required for Kathleen’s recovery at the Hoechlins’ former home in Highland, California, in January 2019. Photo: Courtesy Kathleen HoechlinI first came across Kathleen’s story after being transported by an air ambulance myself last April, albeit under less severe circumstances. I was also on vacation in Mammoth Lakes when I experienced intense chest pain that was later diagnosed as myocarditis. After keeping me for a night at Mammoth Hospital, the staff there ordered that I be transferred via air ambulance to a medical center in Reno, Nevada, where a cardiology team could do the required testing. I pushed back initially, worried about the potential cost of the flight, but the doctors insisted it was necessary. Within a few hours, I was strapped to a gurney with tubes in my nose, flying over Lake Tahoe in a small plane while two paramedics sat nearby, ready to administer nitroglycerin in case my chest pain flared up again. The air-ambulance provider, REACH Air Medical Services, sent me a letter two months later saying the flight had cost me $86,184.
I spent the next eight months fending off letters and phone calls from REACH requesting full payment. Eventually, my employer intervened and got my insurance company, Cigna, to renegotiate with REACH, leaving me responsible for a co-pay of only $132 on the out-of-network claim. Even so, the experience left me with some of the same questions as Kathleen Hoechlin: Why is this happening, and how could something as essential as an air ambulance possibly be so expensive, especially when an estimated 550,000 patients in the U.S. require one each year? That line of questioning led to at least one culprit: private equity.
At the start of the aughts, private-equity firms conducted about $5 billion worth of deals in the U.S. health-care sector each year. By 2019, that figure had jumped to an estimated $120 billion, a result of deep-pocketed firms looking to park their money in a sector perceived as recessionproof (people get sick even when the economy is bad) and ripe for consolidation. When major private-equity firms started buying up air-ambulance companies, it set off a flurry of acquisitions. In 2010, Bain Capital bought Air Medical Group Holdings for $1 billion, only to sell it five years later for double that amount to KKR, which, in turn, merged the company with yet another air-ambulance provider, American Medical Response, under the name Global Medical Response. (Tracking this shell game can be dizzying. In the three years between Hoechlin’s air-ambulance flight and mine, Guardian Flight merged with REACH Air Medical Services; both are owned by Global Medical Response.) In 2017, American Securities drastically accelerated private equity’s takeover of the air-ambulance industry with its $2.5 billion purchase of Air Methods, the largest domestic provider of air ambulances. (In 2016, during its final year as a publicly traded company, Air Methods posted a $97.9 million profit on $1.17 billion in revenue, and the year before had paid its CEO $2.5 million in direct compensation, including stock options.) That purchase established the industry’s current landscape, in which two private-equity firms, American Securities and KKR, control almost two-thirds of the national market for air ambulances, according to Medicare data.
As private equity tightened its stranglehold on the industry, it jacked up the already-high prices. Between 2008 and 2017, the median price charged by providers for helicopter air ambulances nearly tripled, jumping from $12,500 to $35,900 per flight, according to a study by the Health Care Cost Institute. As the Hoechlins and I experienced, air-ambulance providers are often out of network with private insurance companies. That’s not by accident:Private-equity-backed and publicly traded air-ambulance providers in particular tend to remain out of network to charge higher rates than what may be allowed under an in-network contract. Since patients don’t decide when or where they have a medical emergency that requires them to be airlifted to a hospital, they don’t have a choice in which air-ambulance provider they use. As a result, competition in the marketplace does little to keep prices down — the higher providers set the price, the more they may be able to get paid. When insurers deem the cost too high, they pass the enormous remaining balance on to the patient, a practice known as “balance billing.” Among privately insured patients, an estimated two in five air-ambulance flights result in a potential balance bill. About half the time, though, the insurance companies simply pay up, according to Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy. Private equity “saw an opportunity to say, ‘Look, the existing companies aren’t leaning into the surprise-billing threat enough from a moneymaking perspective,’” says Adler, who co-authored a white paper last year about private equity’s impact on the air-ambulance industry. “If you really lean on that a lot, sometimes you can fight with the patient to get paid. But I think a bigger part of the money thing is often you can cajole the employer to pay because they don’t want their employee getting stuck with an $80,000 bill.”
Private-equity firms have applied their balance-billing approach to other corners of the health-care sector they have encroached upon, including emergency-physician staffing, anesthesia, and ground ambulances — all services for which patients don’t typically choose their providers. In 2017, Blackstone Group acquired the physician-staffing company TeamHealth for $6.1 billion, only to be one-upped a year later by KKR’s $9.9 billion purchase of another physician-staffing company, Envision Healthcare. In the time since, both companies have faced scrutiny for their aggressive billing practices, with TeamHealth sending thousands of surprise bills to patients in 2017 and even going so far as to sue low-income patients over unpaid medical debts. (The company now insists it has a “long-standing policy” against balance billing and ceased its practice of suing patients after a ProPublica investigation called attention to it in 2019.)
When asked about their exorbitant fees, representatives for air-ambulance providers tend to emphasize the high operational costs of the business. REACH, for example, says the company keeps its medical crews on standby 24/7. Other providers blame the costs they charge privately insured patients on themuch lower reimbursements they’re forced to accept from people covered by Medicare and Medicaid, which, the providers argue, don’t come close to covering their operational costs. (Medicare often pays providers between $6,000 and $7,000 per fixed-wing air-ambulance flight, and those patients can’t be balance-billed by participating Medicare providers per federal law.) As a result, providers say they have to charge privately insured patients significantly more to compensate for the losses.
As air-ambulance providers continued to drive up their prices over the past decade, lawmakers started hearing from angry patients. Across the country, states attempted to rein in the industry, but air-ambulance providers shot down each attempt in court with an unlikely silver bullet: a 1978 federal law called the Airline Deregulation Act. Ironically, the ADA was designed to drive down the cost of air travel by deregulating the commercial airline industry and allowing it to function as a competitive free market. The nascent air-ambulance industry — which in 1978 consisted of a few dozen helicopters scattered across the country — was lumped in with commercial airlines under the broader category of air carriers, effectively preempting any efforts by states to regulate its prices. Time and again, air-ambulance providers invoked the law in court, successfully arguing that states did not have jurisdiction over the federally regulated industry.
The battle moved to the federal level, where patients finally started to gain traction. In 2017, the U.S. Government Accountability Office published a report on the growing concentration of the market before concluding that private equity’s increasing role in the industry “could further exacerbate these trends while also reducing transparency.” The following year, President Trump authorized the Federal Aviation Administration to create an advisory committee to research balance billing in the industry. The committee, which consisted of state insurance regulators, physicians, insurance executives, air-ambulance executives, and patient advocates, concluded last year that the federal government should consider increasing Medicare’s reimbursement rates to providers but that it should also remove air ambulances from the ADA’s protection.
In the meantime, Congress turned its attention to the broader issue of surprise medical billing, and the idea of banning the practice quickly gained bipartisan support. While air-ambulance bills are a comparatively niche concern, approximately one in five emergency-room visits results in a surprise medical bill of some sort, often stemming from a specific out-of-network service. (For instance, a patient may undergo a surgery covered by their insurance policy but unknowingly receive anesthesia from an out-of-network provider.) Having stumbled upon an issue that resonated with a wide swath of voters, both the House and Senate put forward bipartisan legislation in 2019 aimed at bringing an end to surprise medical bills for emergency care, inching the government closer to protecting patients from the air-ambulance industry’s skyrocketing rates. “I had heard horrific stories from people who, in a lifesaving emergency, had no idea that they were going to get some kind of surprise bill from an air ambulance,” says Senator Patty Murray, a Democrat from Washington who helped lead the Senate’s efforts to end surprise medical billing. “That was really critical for me to keep in the bill.”
Just as these efforts started to pick up momentum, a mysterious political-action group called Doctor Patient Unity dumped $28 million into an ad campaign aimed at derailing the legislation. The ads framed it as a unilateral victory for the insurance lobby, arguing that “government rate setting” would reduce patients’ access to care by leaving providers underfunded. In
The ads couldn’t halt the legislation, and Congress passed the No Surprises Act in December 2020 as part of the second COVID stimulus package. The law went into effect this year and bans most surprise medical bills — with the notable exception of bills from ground ambulances. It also removes patients from the negotiation process between their insurance company and out-of-network providers, meaning patients shouldn’t receive constant phone calls as the Hoechlins and I did. Instead, patients will have to pay only the in-network rate dictated by their insurance policies, while providers and insurers negotiate the remainder of the cost between themselves. If they can’t agree on an amount, they enter an arbitration process overseen by the federal government, which has to be resolved within 30 days.
It may seem as if the battle to protect patients from shocking bills is over, but air-ambulance companies and other health-care providers aren’t giving up. A number of provider groups have sued the federal government, including the American Hospital Association, the American Medical Association, and the Association of Air Medical Services. While the lawsuits vary slightly, they all take issue with the arbitration process established under the No Surprises Act, arguing that it will result in insufficient payments to providers. (Research by USC’s Adler, by contrast, suggests that the only facilities that will suffer losses under the law “are those who were benefiting financially from surprise billing.”)
In the process of implementing the law, the Biden administration issued a rule instructing arbitrators to prioritize the median in-network rate for a service. In other words, if providers want to charge significantly more than that amount, they have to justify it to the arbitrator. Providers argue that this unfairly favors insurance companies. In an email, a representative from REACH said the company wants arbitrators to be “free to look at all the evidence and determine the appropriate out-of-network rate without influence from special-interest groups like the insurance lobby.”
While surprise medical billing will remain illegal no matter what, if the lawsuits succeed, providers might be able to once again charge insurance companies enormous fees for out-of-network services — a cost that could then be passed on to patients through increased insurance premiums. “This is their last-ditch effort to keep their profit-making billing mechanism in place,” says Patricia Kelmar, health-care campaigns director for the consumer-advocacy group U.S. PIRG. She points out that the No Surprises Act allows the federal government to collect data on the historically opaque air-ambulance industry, which will help regulators tweak the implementation ofthe law down the line. “It’s in no one’s interest to lose an emergency medical service, so there’ll be a lot of attention. And if there’s evidence to support that they can’t function in this market, providers will be the first to say it, as will the patients, and something will be done to change it.” In February, a federal judge in Texas ruled that the Biden administration had “impermissibly” altered the No Surprises Act by instructing arbitrators to prioritize the median in-network rate, and as a result, arbitrations were put on hold before they even began. Five provider lawsuits remain unresolved, but all eyes are now on the Biden administration, which is expected to issue its final guidance on the arbitration process by the end of May.
Despite previous bipartisan support for the No Surprises Act, the arbitration issue has since divided Congress. Last October, the top Democrat and top Republican on the House Ways and Means Committee co-wrote a letter accusing the Biden administration of undermining Congress’s intent by “tipping the scales” of the arbitration process. The Democrat, Representative Richard Neal, told me the administration needs to “implement a fair system of dispute resolution for health-care providers and insurance companies that doesn’t have negative downstream impacts on patients.” Subsequently, 150 representatives in the House — split roughly evenly between Democrats and Republicans — issued a similar letter, as did a separate group of Republican senators. Despite pressure from providers, other lawmakers haven’t bent, including Senator Murray and Representative Frank Pallone, who co-authored the original House legislation and believes the Biden administration’s interpretation of it is consistent with congressional intent. “I’m very concerned that the outcome could lead to hospitals and insurance companies shifting more and more costs onto consumers,” Pallone, a Democrat from New Jersey, said in a statement about the lawsuits. “It’s just another unfortunate example of financial greed, and I’m hopeful that the courts do the right thing and that the administration can ultimately implement a policy that keeps costs down for consumers.”
As providers and insurers continue fighting among themselves over who gets to keep the bigger share of the profits when someone needs emergency care, patients such as Kathleen Hoechlin are being left out of it. “You know, my life was saved by that air ambulance,” said Hoechlin, who has since gotten certified as a patient advocate to help others navigate their insurance battles in her free time. “And I’m so grateful for the crew and everything. They deserve to be paid — but a fair amount.”
After working briefly for one of the aforementioned companies, I can say I knew it was coming. I was treated extraordinary well but more like eerily well. Pay, benefits, entitlements just didn't add up for a for-profit company. It was almost like I was being encouraged to hang around so the place could be looted before the wheels came off. I was watching the wastage and uncontrolled spending throughout the business and there's no way any sustained entity would be allowed to function this way. Was I complaining, hell no, but the red flags were raised for sure.
Did we not see some of the same thing in the Oil/Gas industry with Bankruptcies there too.
That seemed to be more along the lines of too many eggs in too few baskets and when the markets turned down it caught folks way over extended.
The one thing about helicopter operators and operations....they have their ups and downs and only the strong and wise survive intact.
One example might be Bristow and what it turned into over the many buy outs yet it still exists although in a much changed way.
Bond, CHC, PHI, ERA, also have interesting histories and then we look at Columbia which seems to be an outlier.
That seemed to be more along the lines of too many eggs in too few baskets and when the markets turned down it caught folks way over extended.
The one thing about helicopter operators and operations....they have their ups and downs and only the strong and wise survive intact.
One example might be Bristow and what it turned into over the many buy outs yet it still exists although in a much changed way.
Bond, CHC, PHI, ERA, also have interesting histories and then we look at Columbia which seems to be an outlier.
