Air ambulance costs fly around fixes for surprise medical bills

Reviewed by Alina Shrourou, B.Sc. (Editor)Jun 14 2019

In April 2018, 9-year-old Christian Bolling was hiking with his parents and sister in Virginia's Blue Ridge Mountains, near their home in Roanoke. While climbing some boulders, he lost his footing and fell down a rocky 20-foot drop, fracturing both bones in his lower left leg, his wrist, both sides of his nose and his skull.

A rescue squad carried him out of the woods, and a helicopter flew him to a pediatric hospital trauma unit in Roanoke.

Most of Christian's care was covered by his parents' insurance. But one bill stood out. Med-Trans, the air ambulance company, was not part of the family's health plan network and billed $36,000 for the 34-mile trip from the mountain to the hospital. It was greater than the cost of his two-day hospitalization, scans and cast combined.

"When you're in that moment, you're only thinking about the life of your child," said Christian's mother, Cynthia Bolling, an occupational therapist. "I know that I am being taken advantage of. It's just wrong."

The rising number of complaints about surprise medical bills is spurring efforts on Capitol Hill and at the White House to help consumers. Over and over again, the high cost associated with air ambulance service gives patients the biggest sticker shock — the subject has come up at nearly every Capitol Hill hearing and press conference on surprise medical bills.

Yet air ambulance costs are not addressed in any of the proposals introduced or circulating in Congress. Even a congressional decision last year to set up a panel that would study air ambulance billing hasn't gotten off the ground.

"We're doing a disservice to patients if we protect them from hospital bills but bankrupt them on the way there," said James Gelfand, senior vice president for health policy for the ERISA Industry Committee, known as ERIC, a trade association for large employers.

The issue came up again Wednesday at a House Energy and Commerce subcommittee hearing where Rick Sherlock, president and CEO of the Association of Air Medical Services, the industry group for air ambulances, was among eight witnesses.

Rep. Ben Ray Luján (D-N.M.) sharply questioned Sherlock why costs for air ambulance services have risen by 300 percent in his state since 2006.

"I'm trying to get my hands around why this is costing so much and why so many of my constituents are being hit by surprise bills," Luján said.

Sherlock said that reimbursements from Medicare and Medicaid do not cover the cost of providing services, so charges to private patients must make up that difference.

Air ambulances serve more than 550,000 patients a year, according to industry data, and in many rural areas air ambulances are the only speedy way to get patients to trauma centers and burn units. As more than 100 rural hospitals have closed around the country since 2010, the need has increased for air services.

More than 80 million people can get to a Level 1 or 2 trauma center within an hour only if they're flown by helicopter, according to Sherlock.

The service, though, comes at a cost. According to a recent report from the Government Accountability Office, two-thirds of the more than 34,000 air ambulance transports examined were not in the patients' insurance networks. That can leave patients on the hook for the charges their insurers don't cover, a practice known as "balance billing."

In 2017, GAO found that the median price charged nationally by air ambulance providers was around $36,400 for helicopter rides and even higher for other aircraft. The total generally includes the costs for both the transportation and the medical care aboard the aircraft.

Additionally, the ongoing "Bill of the Month" investigative series by Kaiser Health News and NPR has received more than a dozen such bills, ranging from $28,000 to $97,000.

Cynthia Bolling said her insurance company paid about a third of Christian's air ambulance bill and the family settled this week with Med Trans by agreeing to pay $4,400 out-of-pocket.

Reid Vogel, director of marketing and communications for Med Trans, said the company cannot talk about a private patient because of privacy rules. But he added that the company works with patients to find "equitable solutions" when their bills are not covered by insurance.

Since nearly three-quarters of flights are for patients insured by low-paying Medicare, Tricare and Medicaid, he said, "providers must shift costs to insured patients."

Private insurers usually will pay only an amount close to what Medicare reimburses, which is around $6,500. That gives air ambulance companies an incentive to remain out-of-network, according to a 2017 GAO report.

“A representative from a large independent provider noted that being out of network with insurance is advantageous to the provider because a patient receiving a balance bill will ask for a higher payment from the insurance company, which often results in higher payment to the air ambulance provider than having a pre-negotiated payment rate with the insurer,” the GAO said.

In an interview, Sherlock, of the trade association, disputed the report's findings, saying his members are actively trying to be in-network in more places, although he couldn't provide any specific numbers.

"I think that everywhere they can, they're incentivized to be in-network," he said.

States are hampered in their efforts to ease the strain for residents.

The Airline Deregulation Act of 1978, which was intended to encourage more competition, forbids states to regulate prices for any air carrier, which applies to air ambulances. What's more, many large employers' health insurance is not governed by states but regulated by the federal labor law, known as ERISA.

So a remedy likely has to come from Congress. And it's proven to be a heavy lift.

For example, the committees that deal with regulation of the air industry — the Commerce Committee in the Senate and the Transportation Committee in the House — don't make health policy or regulate health insurance.

Last year, some lawmakers sought to let states regulate air ambulances with a provision in the bill reauthorizing the Federal Aviation Administration.

But that measure was ultimately eliminated. Instead, the bill called for the creation of an advisory committee to study air ambulance prices and surprise bills.

"The air ambulance lobby did a very good job playing defense during FAA authorization," said ERIC's Gelfand.

The panel, which was supposed to be formed within 60 days of the law's enactment date — Oct. 5 — still has not been created.

Representatives from the air ambulance industry don't think congressional action is necessary, although they are calling for higher reimbursements from Medicare.

Chris Eastlee, vice president for government relations for the Association of Air Medical Services, said his group does not favor more congressional regulation of prices but would support mandatory disclosure of costs to the secretary of Health and Human Services. The organization argues that greater transparency will help companies negotiate more in-network contracts.

A fix for surprise bills supported by some researchers and advocates would require every provider within a medical facility to accept any insurance plan that contracts with that hospital. It might also help bring down air ambulance bills, said Loren Adler, associate director of USC-Brookings Schaeffer Initiative for Health Policy.

It would avoid the situation where someone picks an in-network hospital only to find out that a surgeon or anesthesiologist at that hospital doesn't take their insurance. Air transport should also be included in the rule, he said.

"It's the exact same situation as with the out-of-network emergency facility rates," Adler said. "The same solutions should apply."

Gelfand suggested also that the House Ways and Means Committee mandate that air ambulance companies seeking to participate in Medicare must charge in-network rates.

That would require only a small tweak of the legislative language, as he sees it. "Every proposal that includes something to address surprise bills for emergency care, all you have to do is add in the words 'air ambulances,'" Gelfand said.

Right now, the closest any surprise billing proposal has come to addressing air ambulances is a draft legislative plan on medical costs from Sen. Lamar Alexander (R-Tenn.) and Sen. Patty Murray (D-Wash.). They would require bills for air ambulance trips to be itemized to show both medical charges and the transportation charges so patients and health plans can understand them better.