For a more in-depth description about the specifics of the AAMS federal lawsuit challenging the interim final regulations (IFRs) implementing the No Surprises Act, please see below:

IFR Parts I and II violate the Administrative Procedure Act (APA) on numerous grounds. Complaint at ¶¶ 124 – 139 (see full AAMS complaint here). AAMS asserts that IFR Part I is arbitrary and capricious because it establishes a methodology for the qualified payment amount (QPA) that lumps hospitals and independent air ambulance providers together as a single specialty, while treating hospitals and freestanding emergency departments as different specialties. Id. at ¶¶ 12, 15, 114-115. The difference in treatment is arbitrary and capricious because it is unexplained. It also fails to account for the fact that hospitals offer a wide range of services in addition to air ambulance transports and can therefore enter into global agreements for all service lines that may, or may not, contribute to the cost of air ambulance services. Id.

AAMS asserts that IFR Part II is contrary to law and arbitrary and capricious because it gives the QPA nearly conclusive weight in the independent dispute resolution (IDR) process. Id. At ¶ 90. IFR Part II dictates that “[t]he certified IDR entity must select the offer closest to the [QPA]” unless “the certified IDR entity determines that credible information submitted by either party under paragraph (c)(4)(i) clearly demonstrates that the [QPA] is materially different from the appropriate out-of-network rate ….” Id. To rebut the presumption in favor of the QPA, IFR Part II requires the submission of additional information, including information on “the practice specialty.” Id. at ¶ 91.

In contrast, IFR Part II merely permits the submission of information about the “additional circumstances” that the statute requires the IDR entity to consider. Id. at ¶ 92. Those circumstances include “the level of training, experience, and quality … of the provider” as well as any “[a]ny additional information submitted by a party, provided the information is credible and relates to the offer submitted by either party … .” Id.

The No Surprises Act (NSA) does not give the QPA any special weight in the IDR process. Rather, the NSA authorizes the parties to submit any information they wish to the IDR entity, without limitation and without meeting a heightened evidentiary burden. IFR Part II exceeds the authority of the Departments by imposing requirements that go far beyond the text of the statute.

AAMS seeks vacaturs of the offending provisions of IFR Parts I and II to achieve parity with emergency departments in the QPA methodology and ensure that the IDR process is an individualized one that turns on the facts presented by the parties.

There are two important considerations that are often overlooked. First, AAMS’ challenge to IFR Parts I and II rests on what is obvious in the industry: hospitals and independent air ambulance providers are different specialties. It is true that different hospitals may use different aircraft, equipment, and crews, and may negotiate different rates with payers and issuers. But all hospitals still share characteristics that make them distinguishable from independent air ambulance providers. The recognition of those distinctions in the QPA methodology would achieve parity by aligning the treatment of air ambulance providers with the treatment of emergency departments in the QPA methodology. It would not require plans and issuers to pay hospitals less than independent air ambulance providers.

AAMS does allege in its Complaint that IFR Part I will have the effect of deflating the QPA for all air ambulance services. AAMS bases its allegation on reports from AAMS members that “the judgments made for hospital-based air ambulance providers negotiating global agreements for numerous hospital service lines do not reflect the economic considerations that would determine a reasonable rate for an independent air ambulance provider negotiating only for air ambulance services.” See Complaint at ¶ 114. According to our members, the different economic considerations for hospitals sometimes yield hospital rates that are below what independent providers can accept. This includes so-called “ghost rates” that may exist in large hospital contracts where the hospital has never provided—or later ceases to provide—air ambulance services. AAMS members believe that such hospital rates will pull the QPA down below the continuum of rates negotiated with different economic considerations in mind.

Second, AAMS’ challenge to IFR Parts I and II is consolidated. Any assessment of the challenge to IFR Part I should consider the challenge to IFR Part II. It is the consolidated challenge to Parts I and II that promises to give all air ambulance providers an opportunity to obtain fair payment.