CASPER — Wyoming’s effort to curb air ambulance costs was dealt a blow earlier this month when the federal Centers for Medicare and Medicaid Services rejected the plan outright.

“Given the above, it seems we will not be able to approve the state’s application as proposed and we do not have alternative solutions given the nature of the request,” wrote Calder Lynch, the acting deputy administrator of CMS.

The plan had been in the works for a year. It was unique and sought to get around a federal law that largely prohibits states from regulating aircraft, including air ambulances. The plan would’ve essentially treated the transports as a public utility, accepting bids to become Wyoming’s preferred ambulance company. It would’ve also narrowly expanded Medicaid to cover the entire state when it comes to air ambulances while giving Wyoming control over the number of bases around the state.

The plan was submitted to CMS, which oversees the Medicaid program nationally, in the form of an 1115 waiver. The technical-sounding waiver is designed to allow states to experiment or pilot programs that “improve care, increase efficiency and reduce cost,” according to a guide for state legislators. Such waivers require CMS approval to be implemented.

Franz Fuchs, the Health Department analyst who masterminded the plan, said Wednesday he wasn’t surprised that CMS had rejected it.

“We were a little disappointed they weren’t more specific on the reasons they’re denying it,” he said. “It’s pretty cut and dry.”

In the letter, Lynch wrote that the agency was rejecting the request for two reasons: first, on the grounds that the waiver didn’t “promote the objective” of Medicaid; and second, that the waiver wasn’t budget neutral.

“Using the Medicaid administrative structure to provide services to other individuals in the state as a mechanism to avoid the application of federal aviation law is a clear departure from the core, historical mission of the Medicaid program to provide health coverage to the Medicaid eligible population,” Lynch wrote.

Fuchs said the state Health Department will now meet with Gov. Mark Gordon’s office and with legislators who had supported the plan to discuss next steps. Lawmakers could determine to take a different path if they still wanted to address air ambulance costs. The state could also sue CMS for rejecting the waiver. A lawsuit was filed in Kentucky after the agency denied an 1115 waiver.

The price of an air ambulance flight can be staggering. According to a 2017 federal report, the average air ambulance ride from Air Methods — one of the largest operators in the nation that also flies in Wyoming — was over $49,000.

Fuchs’ air ambulance plan had the support of the state and of legislators, but it had critics, too. The air ambulance companies themselves openly opposed it, and two companies submitted letters to CMS urging the agency reject the waiver.

Wyoming’s two largest hospitals, Wyoming Medical Center and Cheyenne Regional, submitted a joint letter with Children’s Hospital Colorado that also criticized the waiver. The hospitals said the plan didn’t include safeguards for pediatric transports, though Fuchs said the waiver didn’t include any safeguards like that because it was designed solely as a framework. The sort of protections that the hospitals sought would’ve been outlined in the state’s implementation of the waiver.