Why air ambulance prices jumped more than 60% over 5 years

Air ambulance prices rose more than 60% from 2012 to 2017 as companies added air bases throughout the country, according to a Government Accountability Office (GAO) report released this month.

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Air ambulances provide emergency transport to critically ill patients, but more and more patients are facing surprise, high medical bills that range from $45,000 to a potentially record-breaking $474,725. As such, GAO sought to determine how often air ambulance medical transports are out-of-network.

To do so, GAO looked at insurance data for air ambulance transports for 2012 and 2017.

According to the report, the median price for helicopter transport rose from $22,000 in 2012 to $36,000 in 2017, while the median price for a fixed-wing transport rose from $25,000 to $41,000. GAO found that, at the same time, the number of air ambulance bases increased. According to GAO, there were 146 fixed-wing bases and 752 helicopter bases in 2012. In 2017, those numbers increased to 182 and 868, respectively.

In addition, GAO found that 69% of the 20,700 air ambulance transports in 2017 were out of network, meaning the air ambulance providers had not contracted with an insurer. As such, insurers might not have covered the air transport costs. For example, GAO said one patient in North Dakota received an air ambulance bill of $34,700. The air ambulance company had billed a total of $41,400 for the transport, of which the patient's insurance company paid just $6,700.

When GAO asked air ambulance companies why they opened new bases, one company said it "evaluates the need" for new bases by asking hospitals about "the number of transports they typically require and the length of time it takes helicopters to arrive to pick up patients."

However, GAO found that about half of the new helicopter bases were added in regions that overlapped with already existing air ambulance coverage by more than 50%. Some stakeholders told GAO that new helicopters "may help enhance available services by, for example, being able to respond to a call if the existing ambulance resources are in use or otherwise available," but GAO noted that "some air ambulance providers told us that when helicopters are added to bases in areas with existing coverage, those helicopters are not serving additional demand."

Why air ambulance prices keep increasing

According to Modern Healthcare, air ambulances are not subject to regulations like certificate-of-need laws, and as one consultant told Modern Healthcare, air ambulance companies take advantage of that. Modern Healthcare reports that, "[w]ithout limits on the number of bases a company can build, emergency air transport providers can keep adding to their fleet and raise their charges to make up for the fact the number of patients needing transport isn't increasing at the same pace."

Aaron Todd, CEO of air ambulance operator Air Methods, acknowledged that the air ambulance industry has gotten too big. "[I]f you ask me personally, do we need 900 air medical helicopters to serve this country, I'd say probably not, maybe 500, 600 could do well, but it's an open market … we don't have certificate-of-need restrictions," he said.

How congress, states have tried to address the problem

While states have taken some action to limit balance billing practices, Congress in October 2018 passed a bill (HR 302), which President Trump signed into law, that requires HHS and the U.S. Department of Transportation (DOT) to create an advisory committee to examine the air ambulance industry.

Among other things, the committee will discuss measures to increase price transparency, improvements to consumer education about air transport insurance coverage, and protections from surprise charges.

The law also requires air ambulance companies to include DOT's complaint hotline and website on all bills. Further, the law requires the DOT secretary to develop an oversight plan for the industry and to issue guidance to states on how to handle billing complaints (Baker, "Vitals," Axios, 3/21; Hellmann, The Hill, 3/21; Luthi, Modern Healthcare, 3/21).

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