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Wyoming Requests Medicaid Pay for All Air Ambulance Flights

December 16, 2019

Wyoming, a state with expansive plains and a sparse population, is working on a plan through the Section 1115 waiver process to have the federal government cover air ambulance transportation through Medicaid for all state residents, regardless of income.

The intent, according to the state’s public notice, is to eliminate surprise billing of patients, reduce the cost of service, and increase price transparency for consumers.

The proposal would have Wyoming treat the air ambulance industry like a managed public utility. The state would issue competitive bids on a network of air ambulance providers and support them through “periodic flat payments, similar to a gym membership,” the proposal states. Providers would then “recoup the revenue needed to fund the system from the insurance plans and individuals already paying for transports.”

The Centers for Medicare and Medicaid Services (CMS) accepted the application on November 13. The 30-day comment period ends on December 13.

Unique Challenges

The Wyoming Medicaid Air Ambulance Waiver plan is an attempt to address one of the state’s unique health care challenges. Wyoming is the tenth-largest state geographically, but its population, at 577,737, is smaller than those of 31 of the nation’s biggest cities.

“This [air ambulance] system is broken,” wrote Gov. Mark Gordan in the application. “My constituents are routinely hit with absurdly high surprise bills, and employers are consistently asked to cover escalating costs.”

No one “has any say over how much air ambulance service we need, or how much we are expected to pay for it,” the application states.

By implementing an “all-payer” system through Medicaid, the state can “regulate supply so air ambulance service can be provided efficiently and effectively,” and the bidding process will be “free market,” Wyoming’s website states.

Medicaid coverage for air ambulance trips will be retroactive, meaning a patient does not have to be enrolled in the program beforehand. The state estimates there will be 3,500 air ambulance transports a year, costing Medicaid an additional $45.6 million annually. Currently, 54,982 Wyoming residents are enrolled in Medicaid.

Deep Doubts

Allowing the air ambulance market more freedom would be a better solution, says Seth Myers, president of Air Evac, which provides air ambulance service in Wyoming.

“First, we wouldn’t need a ‘flat fee’ system if insurance companies would negotiate with us in good faith,” said Myers. “We need to cover our costs. Under this waiver request, taxpayers will end up paying an expense that insurance companies should be covering. We don’t need another government program. This is something the state’s insurance commissioner could address.”

The proposal raises red flags, says Myers.

“Wyoming says it wants to create more of a free-market system but wants to regulate the supply,” said Myers. “When government does that, it is anything but free-market. If there is a government-controlled market, private companies will lose money and won’t want to participate. Service and access will suffer.”

Wyoming state senator Dave Kinsky (R-Sheridan) opposes the state’s waiver request for similar reasons.

“It costs $3,000 just to walk through the door of an emergency room,” Kinsky told Health Care News. “It makes sense that air ambulance service would cost more.”

Kinsky says Wyoming is a small, rural state struggling to sustain basic hospital service.

“High-level trauma care is out of the question in all but the largest communities in Wyoming,” said Kinsky. “If we as Wyoming citizens are to have access to high-level trauma care, it must come through air ambulance service. Let’s not forget that nor jeopardize the access.”

Myers says the waiver idea fails to address interstate transport, which is not uncommon for air ambulances in Wyoming.

“The interstate flights of air ambulances are why Congress continues to assert federal jurisdiction over air medical services,” said Myers.

Concern Over Surprise Bills

Air ambulances have been singled out in the recent debate over surprise medical bills.

Consumers may receive a “balance bill” if the air ambulance company falls outside their insurance network and the expense is not covered. The federal Government Accountability Office states the median price for an air ambulance trip is $36,400.

Air ambulance companies say they are compelled by law to send consumers a bill and it is more important to look at amounts actually collected. Data posted on the Wyoming Department of Health’s public notice website shows most of those who use an air ambulance service pay no more than $300 out of pocket because they are covered by a government health care program, and of the 10 percent who do pay out of pocket, the average amount paid is $2,250, with a median payment of $1,200.

“Wyoming is creating a new, statewide government program for a problem that only affects a very limited number of people,” said Myers. “This is the worst type of policymaking: using a few anecdotes to justify an entirely new government program that will cause more harm than good.”

Wrong Kind of Flight?

Another concern about the proposed air ambulance waiver is the loss of critical access to care if providers leave the state or opt out of Medicaid because of low payment rates. Medicaid reimbursement is substantially below the costs of an air ambulance flight, and if payment for every transport were paid at the Medicaid rate or a similarly low rate, providers would no longer be able to operate in the state because they would be forced to take significant losses on each flight.

Providers participate in Medicaid currently and cover their unreimbursed expenses through other payers, particularly private commercial health plans. The proposed system would eliminate this revenue stream by paying for everybody through Medicaid.

“If providers are unable to cover Medicaid losses, you could see providers opt out of the Medicaid program and leave the state altogether,” said Myers.

 

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

 

Internet Info:

Wyoming Air Ambulance Waiver Public Notice: https://airambulancewaiver.wyo.gov

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