National Association of Insurance Commissioners Issues Public Comment on DOT Proposed Rule

WASHINGTON, April 28 -- The National Association of Insurance Commissioners has issued a public comment on the Department of Transportation's proposed rule entitled "Defining Unfair or Deceptive Practices". The comment was written and posted on April 23, 2020:

The comment was co-signed by Raymond G. Farmer, president; David Altmaier, president-elect; Dean L. Cameron, vice president; Chlora Lindley-Myers, secretary-treasurer; and Michael F. Consedine, CEO.

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On behalf of the membership of the National Association of Insurance Commissioners,/1 we offer comments on the Department of Transportation's (DOT's) proposed rule that would define unfair and deceptive practices in air transportation. Like DOT, state insurance regulators have extensive experience in balancing the needs of consumers and other stakeholders in a highly regulated industry. Further, state regulators have a keen interest in air ambulances due to the billing practices of some providers which have led to scores of complaints to NAIC members.

Air ambulance bills almost always stem from situations when consumers cannot reasonably choose their provider. In both emergency and non-emergency situations, consumers are rarely able to seek out and utilize an in-network air ambulance. After they are transported, air ambulance consumers are frequently presented with surprise bills for tens of thousands of dollars, even after their insurer pays the provider.

State regulators have sought to protect consumers from air ambulance balance billing but have been prevented from doing so because certain courts have interpreted the Airline Deregulation Act of 1978 (ADA) to preempt state regulation of air ambulance providers. Under Section 41712, DOT has clear authority to protect consumers from unfair practices on the part of air carriers. We believe that DOT should use this authority to address air ambulance balance billing since states are, to date, blocked from doing so.

The proposed rule seeks comment on whether its definitions are "sufficient to provide the regulated entities, consumers and other stakeholders sufficient notice of what constitutes an unfair or deceptive practice in" specialized subject areas including air ambulances. We recommend that the definitions be modified because they are not sufficient--they should explicitly identify practices of balance billing by air ambulances as unfair.

We believe that the practice of balance billing consumers for tens of thousands of dollars meets the proposed definition of unfair practice when the consumer has no choice in whether they will be transported or in the network status of the provider and when the air ambulance company receives a fair payment from insurance. Consumers are injured by large balance bills and attempts to collect them. Consumers cannot reasonably avoid these bills because they are not in control of the decision to initiate air transport or able to select the provider. This consumer harm is not outweighed by benefits to the air ambulance providers or the markets in general--many air ambulance providers do not balance bill, showing that markets can operate effectively without balance billing.

While balance billing fits the proposed definition of unfair practice, stakeholders would benefit from a more explicit and detailed statement in the final rule that references air ambulances directly. We suggest that DOT address the specialized subject of air ambulances by stating that balance billing, when a consumer has no choice of provider and no reasonable advance knowledge of the amount of the uncovered balance of their bill, and when the covered amount of the bill is reasonable (covering the reasonable costs of providing services, taking into account unpaid services, plus a reasonable profit), is an unfair practice.

Establishing a common understanding of this unfair practice would avoid likely disputes among stakeholders over whether balance billing practices fall under the proposed definition, should it be finalized. More importantly, it would protect consumers from a practice that has affected individuals in every region of the country.

We continue to reject the argument that ending balance billing by air ambulances will leave rural Americans without access to air ambulance services. Rural residents are at risk for excessive balance bills under the status quo and deserve protection that can only be provided by federal action due to the current preemption of any effective state action. Attached is a letter sent by 35 commissioners representing states with rural areas to House leaders in support of eliminating air ambulance surprise billing practices and refuting the argument that this would harm their rural residents.

We recognize that determining balance billing to be an unfair practice is not the only reform necessary to ensure a stable and effective market for medical air transport services. Nonetheless, we urge DOT to take this important step in its current rulemaking. We look forward to continuing the work of NAIC and our member regulators with DOT and other federal officials to ensure that all stakeholders can participate in this market on fair terms.

We appreciate your attention to air ambulance issues as you work to better define the provisions of Section 41712. We urge you to use this opportunity to enhance consumer protection by making a clear statement identifying balance billing as unfair to consumers.

View attachment at: https://www.regulations.gov/contentStreamer?documentId=DOT-OST-2019-0182-0184&attachmentNumber=1&contentType=pdf

Sincerely,

Raymond G. Farmer, NAIC President, Director, South Carolina Department of Insurance

David Altmaier, NAIC President-Elect, Commissioner, Florida Office of Insurance Regulation

Dean L. Cameron, NAIC Vice President, Director, Idaho Department of Insurance

Chlora Lindley-Myers, NAIC Secretary-Treasurer, Director, Missouri Department of Commerce and Insurance

Michael F. Consedine, Chief Executive Officer, National Association of Insurance

Commissioners

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Footnote:

1/ Founded in 1871, the NAIC is the U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and the five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S.

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The proposed rule can be viewed at: https://www.regulations.gov/document?D=DOT-OST-2019-0182-0016

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