FOLIO

FO&L Assists in Scoring a Major Carrier Win on Air Ambulance Fees at SOAH – Case Heads to District Court

Apr 1, 2026 | by FOL

On January 16, 2026, SOAH issued decisions in the two consolidated Air Ambulance Fee Dispute Cases (Docket Numbers 454-15-0681 & 454-15-1877). In these proceedings, a representative group of insurance carriers faced two air ambulance providers companies, PHI Air Medical and Global Medical Response/ Air Evac EMS, Inc.

The Carriers previously prevailed on the issue of federal preemption issue after a decade of litigation in Texas courts. That issue and case history has been discussed extensively in earlier FOLIO articles. The courts remanded the cases back to SOAH to determine a fair and reasonable reimbursement rate. Most carriers had been paying reimbursement calculated at 125% of Medicare rate using 28 TAC 134.203 as a guide. The earlier litigation had determined that this rule did not provide an air ambulance service rate and the applicable legal standard would be a fair and reasonable reimbursement method.

SOAH conducted two multi-day trials in August and September 2025.  The two sides presented competing reimbursement models. The Carrier group retained medical economist Ron Luke, PhD and his firm Research & Planning Consultants, LP as its principal expert to develop a methodology. Dr. Luke build a model using a base line of expected fixed and variable costs for operating an air ambulance facility. To his he added an asserted reasonable margin of profit and annual inflationary adjustment. The resulting Payment Adjustment Factor is linked Medicare reimbursement rates. These reimbursements are slightly higher the 125% of Medicare. Carrier contended this cost-plus model best meet the competing statutory requires for reimbursement under Labor Code Section 413.011(f) to “ensure the quality of medical care” and to “achieve effective medical cost control.”

The Air Ambulance providers hired Robert Town, PhD, also an economist. Dr. Town developed a regression analysis model where he used data from past reimbursements received by each provider from its transports covered by commercial health insurance carriers. An adjusted average of this amount was used set a proposed rate for reimbursement as a percentage of the billed usual and customary charges. This model did not use an index to Medicare rates, but rather would continue to adjust over time based upon received reimbursements. When compared to Medicare the outcome was over 350% of a Medicare reimbursement for the dates at issue. Providers asserted that this was the best measure of a functional market rate for this type of service. The weaknesses in the model was evidence that commercial paid amount was inflated by the threat of balance billing to the patient and the data set reflected only a limited segment of the market mix. The model did not provide a mechanism of cost containment other that the asserted market forces.

These experts and supporting expert and fact witnesses testified at each of the trials to a SOAH court of three judges on each case. Two of these judge sat on both cases.

In the January 16, 2026 decisions, Carrier prevailed with the court adopting Dr. Luke’s model and rejecting Dr. Town’s methodology. Because the two cases covered only services dates 2010 to 2015, the decisions set rates applicable to only those specific years.

Air ambulance bills have two components charges:

• • • The Base Rate, which is generally the fixed costs, and
    • The Mileage Rate, which represents the variable costs of the transport.

The rates change each calendar year.  Under these decisions, the air ambulance rotatory wing rates are as follows:

For the Base Rate (A0431):

Year	CMS Urban Base Payment Rate for RWAA	Actual CMS Yearly Increase	RWAA Inflation Rate	1998 Payment with RWAA Inflation Rate	Equipment & Technology Factor	1998 Payment with RWAA Inflation Rate & Tech Factor	2025 Payment Adjustment Factor
2010	$3,307.89	6.4%	5.0%	$4,217.35	1.010	$4,260.11	128.8%
2011	$3,304.58	-0.1%	8.0%	$4,555.92	1.010	$4,602.12	139.3%
2012	$3,383.89	2.4%	0.7%	$4,589.98	1.010	$4,636.53	137.0%

2013	$3,410.96	0.8%	0.5%	$4,613.85	1.010	$4,660.63	136.6%
2014	$3,445.07	1.0%	2.1%	$4,708.93	1.010	$4,756.68	138.1%
2015	$3,496.75	1.5%	-4.6%	$4,493.60	1.010	$4,539.17	129.8%

For the Mileage Rate (A0436):

Year	CMS AFS Urban Mileage Payment Rate for RWAA	Actual CMS Yearly Increase	RWAA Inflation Rate	1998 Payment with RWAA Inflation Rate	Equipment & Technology Factor	1998 Payment with RWAA Inflation Rate & Tech Factor	2025 Payment Adjustment Factor
2010	$21.53	0.0%	5.0%	$25.38	1.010	$25.64	119.1%
2011	$21.51	-0.1%	8.0%	$27.42	1.010	$27.70	128.8%
2012	$22.03	2.4%	0.7%	$27.63	1.010	$27.91	126.7%
2013	$22.21	0.8%	0.5%	$27.77	1.010	$28.05	126.3%
2014	$22.43	1.0%	2.1%	$28.34	1.010	$28.63	127.6%
2015	$22.77	1.5%	-4.6%	$27.05	1.010	$27.32	120.0%

These rates apply only to helicopter (rotary wing) transports. The vast majority of the cases in the proceedings were rotary wing transports. SOAH determined that Dr. Luke’s model was not a fair and reasonable fixed wing transport reimbursement because the underlying cost data was for rotary wing facilities. Because the burden of proof was on Carriers, the decision ordered full reimbursement of several fixed-wing transport bills. This determination does not set that level of reimbursement as requited for fixed-wing bills. Rather, the decisions only found no fair and reasonable method demonstrated for the cases at issue. Another fixed-wind-specific model could an applied as a fair and reasonable method on future disputes.

Both providers filed motions for rehearing at SOAH. SOAH overruled the motions with a few small changes to one findings of fact and one conclusion of law. The two SOAH decisions became final upon that action on March 2, 2026.

Each of the providers immediately filed suit in Travis County for appeal of these cases. This will follow Administrative Procedure Act procedures and will be under a substantial evidence review standard.

The GMR/Air Evac group is also are re-asserting federal preemption with a motion for contempt and injunctive relief filed in U.S. District Court in Austin on March 16, 2026. GMR/Air Evac bought this motion against TDI, DWC, SOAH, and two of the presiding SOAH judges. They urge the decisions violated the holding in Air Evac EMS, Inc v. Sullivan, 8 F.4^th 346 (5^th Cir. 2011). Providers seeks an injunction against the outcome of the SOAH decisions, damages, and alternatively, relief from a prior injection that prohibited balance billing to the patients. This federal action may stop the ongoing Air Ambulance proceedings at Travis County District Court, SOAH, and at DWC.

A set of over 900 additional air ambulance fee disputes are pending at SOAH under docket number 454-26-05944. SOAH has abated this set of cases for 120 days after the date the test case decisions became final, with the expectation they would promptly proceed to adjudication. Most of these involve later dates of service. Dr. Luke is working up the post-2015 rates for application in this proceeding. Preliminary information is that the SOAH trial on the holding docket cases would conducted in a summary manner, with direct application of the updated rates to the more recent cases. We are still within the 120-day abatement period and awaiting a hearing on the federal contempt motion.

FOL will continue to keep you advised on status of these matters. Please direct any questions to Chuck Finch at CCF@fol.com or 512-435-2158.