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Outsized Air Ambulance Charges Under Scrutiny from Researchers, Congress

August 1, 2019

Air ambulance companies bill consumers and private insurers 4.1 to 9.5 times more than what Medicare pays for the same service, a study from Johns Hopkins University finds.

Researchers reviewed charges of fixed-wing and rotary-wing ambulances using Medicare utilization data from 2012 to 2016 and determined the median charge per trip increased from $24,000 to $39,000 in that time period. The Medicare payment ratio increased by 46 to 61 percent during that time, meaning providers are charging private insurers and self-payers an increasingly higher amount than what Medicaid pays.

The researchers found the Medicare payment ratio for air ambulance services exceeded those for other health care services such as all physicians (2.5), anesthesiology (5.8), interventional radiology (4.5), and neurosurgery (4.0).

Study coauthor Ge Bai told Health Care Newsher research on the subject was motivated by a concern for vulnerable patients not in a position to defend themselves from high costs.

“Air ambulance service is the poster child for the lack of consumer choices on the health care market,” said Bai. “No patient chooses which air ambulance provider to use in advance.

 “Patients cannot say no and walk away when they need the air ambulance to save their lives,” said Bai.

Legislation Pending

Air ambulance fees have been getting increasing attention as state and federal lawmakers debate solutions to surprise medical bills. The Lower Health Care Costs Act cleared the U.S. Senate Health, Education, Labor, and Pensions Committee on June 26 and is now on the Senate calendar for a full vote. The bill would set up a “median contracted rate” system to deal with out-of-network costs, which would include air ambulance services.

“It is time to stop studying the issue of exorbitant air ambulance charges and take action,” said U.S. Sen. Lamar Alexander (R-TN) before the committee vote.

Taking Advantage of the Vulnerable

There is a high likelihood air ambulance services fall outside of a  patient’s insurance network, says the Johns Hopkins report, leaving consumers with extremely high bills.

Bai says a useful framework is the law of salvage.

“Passengers on a sinking ship will agree to anything asked by a rescuer, who might take advantage of passengers’ lack of options to ask an enormous amount,” said Bai. “The law of salvage, however, does not allow rescuers to receive whatever they ask for. Instead, it determines a reasonable amount for the rescue.

“Patients needing air ambulance services are in a similar situation as passengers on a sinking ship, so the policymakers need to set a reasonable amount to protect patients from being overcharged by air ambulance providers,” said Bai.

‘An Extremely Dangerous Proposition’

The high prices are a result of cost-shifting, says Christopher Eastlee, vice president of government relations for the Association of Air Medical Services.

“The reason why the charges are increasing is because the number of Medicare and Medicaid and uninsured patients is increasing,” Eastlee told the industry publication Healthcare Dive.

Eastlee opposes legislation to set prices.

“It is an extremely dangerous proposition to require air ambulance providers to accept a rate that is basically based on what insurers deem appropriate,” Eastlee stated.

AnneMarie Schieber (amschieber@heartland.orgis managing editor of Health Care News.

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Author
AnneMarie Schieber is a research fellow at The Heartland Institute and managing editor of Health Care News, Heartland's monthly newspaper for health care reform.
amschieber@heartland.org @HCPolicy