By: Jon Jablon, Esq.

A few months ago, Montana passed SB44, which created a new part of the Montana Code Annotated (the MCA). The new provisions have been added because, according to the legislature’s statement of purpose, “in many cases the high charges assessed by out-of-network air ambulance services and limited insurer and health plan reimbursements have resulted in Montanans incurring excessive out-of-pocket expenses….” For once, I don’t disagree with a state law’s purpose. Unlike many other states’ laws, which justify themselves as correcting health plan coverage deficiencies, this law exists because of high provider charges, and the legislature acknowledged that, at least to some extent. The “limited insurer and health plan reimbursements” is a byproduct of high provider charges, rather than a separate problem; it’s a problem created by the medical provider who have gouged payers for decades.

To start, note that it is likely that ERISA will preempt this law as it relates to self-funded health plans governed solely by ERISA, since the primary purpose of this law is to determine reimbursement by a health plan to a medical provider. Courts have consistently interpreted ERISA as preempting state laws purporting to change the allocation of risk between the insurer and the insured, and this apparently does exactly that by dictating what the insurer must pay. Seems like a textbook candidate for preemption.

According to the “Hold Harmless” section of the law (MCA 33-2-2302), a health plan is required to tender payment to an air ambulance provider within 30 days of claim receipt based on either (i) billed charges, (ii) a negotiated rate with the provider, or (iii) the median amount the insurer or health plan would pay to an in-network air ambulance service for the services performed.

The law goes on to provide for dispute resolution, which applies after payment is made, and if a party disputes the other party’s contention of whether any further payment obligation exists. This is potentially troublesome because it does not say that the parties can engage in dispute resolution right off the bat if either party disputes the reimbursement allegedly due; this implies that payment must first be made, and then the parties can engage in dispute resolution. Needless to say, that’s not ideal for a health plan.

The dispute resolution provisions start out on a high note (the procedure outlined in the law “is to be used to determine the fair market price of the services”). Then there’s another very sensible provision (“[p]ayment of the fair market price calculated pursuant to 33-2-2305 constitutes payment in full of the claim”). Those factors include fees usually charged and accepted as payment in full by the provider and other providers, Medicare rates, the context of the flight, and crew qualifications. This is all looking good!

But then it takes a turn.

The very next provision, referring specifically to dispute resolution, says “[a] determination under this section is not binding on the insurer or health plan and the air ambulance service.”

I am dumbfounded. That’s as anticlimactic a statement as any law can contain. The legislature’s inclusion of that last bit undermines the entire provision; once you find out that it’s not binding, you can basically just stop reading and forget what you read. It’s like reading something purporting to be a “true story” and then at the end there’s a disclaimer saying “none of this actually happened.” Not good.

So, then, where do we stand regarding payment amounts due to out-of-network air ambulance providers in Montana based on this law? It’s hard to know. Payment is apparently required to be made within 30 days, and then it can be challenged (with non-binding dispute resolution…?) – but if a health plan is first required to tender payment based on either billed charges, a negotiated rate, or the median network rate accessed by the plan, then it seems that this law is going to do more harm than good.
I wonder if Montana’s penal code is non-binding, too?