Charges to private insurers for air ambulance services in 2016 were more than four times higher than the rate Medicare paid to transport patients via airplane or helicopter, according to a study recently published in Health Affairs.

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For the study, Johns Hopkins University researchers analyzed Medicare utilization and payment data from 2012 to 2016 to examine changes in median charge ratios and charges per trip for air ambulance services. The data encompassed two types of air ambulance services:

• Fixed wing air ambulances; and
• Rotary-wing air ambulances, which make up about 85% of air ambulance services.

Findings

The researchers found that national median charges to private health insurers for air ambulance services in 2016 were between 4.1 to 9.5 times higher than Medicare rates for air ambulance services that year. In comparison, the gap between Medicare rates and private insurance charges for ground ambulance services was 2.8 in 2016, Health Exec reports.

Further, when the researchers calculated the national charge divided by the Medicare rate to get the national median charge ratios, they found an increase of about 60% from 2012 to 2016, reaching $39,000, the Washington Post reports. According to the researchers, the median charge for helicopter air ambulance services in 2016 was $238 per mile.

The researchers also noted that many patients receive large bills from air ambulance providers, because many of the providers do not participate in health insurance networks. Gerard Anderson, a professor of health policy and management at Johns Hopkins and a co-author of the study, said, "If you're somebody who gets injured, and an air ambulance comes, you're going to pay huge amounts because most likely you're out of network and you're going to get a bill for $30,000 or $40,000."

The researchers noted that air ambulance charges have increased even as the number of helicopters and fixed-wing aircrafts conducting trips for medical purposes have grown to the point that the market has become saturated. "The high charges, therefore, might be the result not of lack or entrants or limited supply, but of a market failure," the researchers wrote.

Ge Bai, the study's lead author and an associate professor of health policy and management at Johns Hopkins, further explained the market failure, noting that although there is an overabundance of air ambulance providers in certain geographic regions, patients are not able to comparison shop when they are in need of air ambulance services in emergency situations.

Discussion

According to Modern Healthcare's "Transformation Hub," the study's findings might boost support for a proposal introduced by Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.) to ban air ambulances from so-called "balance billing" practices.

The researchers wrote, "Our results suggest that without congressional or regulatory effort to address air ambulance billing practices, patients—who in emergencies have few options and little bargaining power—are at risk of exposure to excessive charges."

Anderson noted that there currently are virtually no restrictions in place to limit air ambulance costs.

However, the Association of Air Medical Services (AAMS), a major lobbying group for the air ambulance industry, said patients face high out-of-network bills for air ambulance services because Medicare and Medicaid payment rates for the services are inadequate. According to the Post, the industry claims Medicare payment rates for air ambulance services are 40% below costs, which forces air ambulance providers to increase their prices.

AAMS said the federal government needs to conduct research to develop appropriate payment rates to cover the actual cost of air ambulance services. Further, AMMS said the Johns Hopkins study is flawed because it groups helicopter and fixed-wing aircraft services together, when fixed-wing aircrafts are rarely used in cases of emergencies (Myer, "Transformation Hub," Modern Healthcare, 7/1; Rowland, Washington Post, 7/1; Owens, "Vitals," Axios, 7/2; Baxter, HealthExec, 7/3).