As air ambulances come under increased scrutiny as a source of surprise medical bills, new research shows those providers do charge significantly more for their services than most others covered under Medicare.
Several efforts to ban surprise medical billing are underway in Congress and in several statehouses. The White House has also called for legislation to ban the practice. While a known source of unexpected and expensive charges, air ambulances were only recently included in bill drafts seeking to curb surprise billing.
Last week, a strong majority of the Senate HELP committee voted in favor of legislation aiming to tackle surprise billing — including by air ambulances.
"It is time to stop studying the issue of exorbitant air ambulance charges and take action," Senate HELP Committee Chairman Lamar Alexander, R-Tenn., said before the committee's vote.
Researchers found air ambulances charged between about 4 and 9.5 times higher than what Medicare actually paid for those services in 2016, according to a Health Affairs study by researchers at Johns Hopkins School of Medicine and Johns Hopkins Carey Business School.
The data, published Monday, provide key insights into a patient's financial exposure, as out-of-network rides are common.
One of the most compelling aspects of the report is comparing the "sky-high" air ambulances charges to charges submitted by other physicians and specialists. The researchers found air ambulance charges are higher than most other covered services when comparing charge ratios.
Yet, industry officials say the high charges are reflective of the vast underpayment by both Medicare and Medicaid. Transports for those without insurance have also increased, officials with the Association of Air Medical Services told Healthcare Dive.
"The reason why the charges are increasing is because the number of Medicare and Medicaid and uninsured patients is increasing," Christopher Eastlee, vice president of government relations for the Association of Air Medical Services, said.
A bill that passed the Senate HELP committee would bar air ambulances from sending patients a surprise bill. Instead, patients would pay in-network cost-sharing rates. Insurers could pay out-of-network air ambulances the median in-network amount based on other contracts they negotiated in the local area.
A House committee is working on a similar effort.
But the air ambulance sector pushed back on the legislation. "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 said.
The new study examining the initial charges from air ambulances is significant as it shows costs a patient may face if the ride is considered out-of-network. A majority of air ambulance rides are out-of-network, which can leave patients at risk of receiving a surprise bill, according to a recent GAO report that analyzed commercial data.
When a service is out-of-network, the patient can be billed the difference between what their insurer pays and the original amount charged by the air ambulance company. The difference between the charge and what the insurer paid can amount to tens of thousand of dollars in some cases.
While this dataset focuses on Medicare data, researcher Ge Bai, an associate professor at both Johns Hopkins business school and school of public health, said it does provide some insight into the commercial market.
"We found the ceiling price. The charge is always the same for every payer, for every patient. We can use the Medicare data to infer the price ceiling privately insured patients might be subject to," Bai told Healthcare Dive.
To make comparisons, the researchers used a formula to quantify the discrepancy between charges and what Medicare paid, which is known as a charge ratio.
In 2014, air ambulance charges were between 3.5 and 9.2 times the Medicare rate. By comparison, the median charge ratio for all physicians working in the U.S. was 2.5 in 2014, according to the report.
Out of 54 medical specialties, only seven had charge ratios greater than 3.5.
- anesthesiology (5.8)
- interventional radiology (4.5)
- emergency medicine (4.0)
- pathology (4.0)
- neurosurgery (4.0)
- diagnostic radiology (3.8)
- nuclear medicine (3.6)
The study also compared regions — providers in the southern and western parts of the country had the highest charge ratio indices.
When comparing providers, or parent companies, researchers found Rocky Mountain Holdings to have the highest charge ratio index of 10.4.
The study suggests the market may already be saturated when it comes to the number of air ambulances, refuting the idea that more entrants could increase competition and in turn drive down costs. "The high charges might be the result not of lack of entrants or limited supply, but of a market failure," according to the report.
Stories of families facing enormous air ambulance bills have attracted the attention of lawmakers. Many have called for a fix at the federal level, given there is little states can do to alleviate the problem because of the way air ambulances are regulated.
Air ambulances are considered air carriers under federal law, and states are prohibited from regulating the price or routes of air carriers.
Last year, when Congress reauthorized funding for the Federal Aviation Administration, it included certain provisions aimed at consumer protections around air ambulances. The authorization bill called for air providers to include a Department of Transportation complaint hotline number on consumers' bills. It also called for the formation of a committee to study the issues.
SOAR, a group committed to preserving access to air ambulances, pushed for the committee to start evaluating the cost of air transportation.
"That process must move forward so that CMS can evaluate the actual cost of providing these life-saving services and establish rates based on that data," the group said in a statement.