What’s driving sky high costs for air ambulances?
Air ambulances – helicopters or fixed-winged aircraft that are equipped to transport patients requiring emergency or specialized treatment – play a critical role in providing life-saving services to patients across the country. Air ambulances transport patients from the scene of an accident to a hospital or from a hospital to another medical facility such as a trauma, burn or cardiac center. According to the Association of Air Medical Services, air ambulances transport about 400,000 people each year.
How much do air ambulances typically charge and what’s the cost to consumers?
The U.S. Government Accountability Office (GAO) recently reported that average charges for medical helicopter transport increased 60 percent – from $22,100 to $36,000 – between 2012 and 2017. By comparison, a typical ground ambulance costs $800 to $2,000 per trip. While insurance companies usually cover a large portion, patients are often billed for the difference between what the air ambulance charges and what their insurance paid. This is known as "balance billing" or "surprise” medical billing, with such bills often totaling more than $10,000.
Why do air ambulances often result in surprise medicals?
First responders and medical professionals usually determine which air ambulance provider to call based on factors such as proximity to the site of the medical need or established relationships. Patients typically have no control over the selection of the air ambulance provider, and privately-insured patients are often transported by out-of-network providers. A recent analysis by the GAO shows about 69 percent of air ambulance transports for patients with private insurance in 2017 were out-of-network.
Does anyone review or regulate these charges?
Air ambulances fall under the Airline Deregulation Act (ADA), which was enacted in 1978 to help spur airline competition and remove many government regulations of the industry. Currently, air ambulances are subject to federal regulation by the Federal Aviation Administration (FAA) on all operations and safety aspects, while states may regulate the medical aspects of air ambulances, but not aspects that could affect the financial, safety or operation of air ambulances (see table below).
Is Congress acting to address air ambulance costs?
Congress took an important first step in addressing this issue by requiring the creation of the Air Ambulance and Patient Billing Advisory Committee as part of the Federal Aviation Administration Reauthorization Act of 2018. The advisory committee is charged with reviewing options to improve the disclosure of charges and fees for air medical services, informing consumers of insurance options for such services and protecting consumers from balance billing.
What is the role and recommendation of health insurers?
The Blue Cross Blue Shield Association and America’s Health Insurance Plans are seeking to prevent balance billing and create greater transparency to ensure the air ambulance industry more appropriately serves patients and consumers. Policymakers should:
- Require greater consumer transparency in air ambulance billing: In 2017, the Medicare base reimbursement rate for air ambulances was $3,496.75 in metropolitan areas and $5,245.13 in rural areas, but private insurers and consumers are typically charged much more than this, with average charges of about $36,000 in 2017, according to the GAO. The air ambulance industry does not disclose its actual costs, so it is not possible to discern whether, or by how much, their actual costs may be greater than the Medicare reimbursement rate.
- Improve the competitive environment to address the oversupply of air ambulances: The number of medical helicopters has sharply increased in recent years, from less than 400 medical helicopters in 2,000 to over 1,000 in 2015. In 2013, the average air ambulance helicopter flew only 469 flight hours, a 20 percent decline from 2006. With more air ambulances flying fewer hours, companies are raising rates for privately insured patients.
- Define medical necessity to better determine the need for air versus ground services: A 2011 study by Massachusetts General Hospital and Harvard Medical School found many inefficient uses of air ambulances, especially for transport between hospitals and another medical facility. For example, 84 percent of patients were transported between medical facilities via air ambulances despite an estimated driving time of an hour or less.
These and other improvements will help protect patients and lower healthcare costs. More detail on our recommendations are available here.