Air Ambulance Industry Says Regulation Would Reduce Rural Healthcare Access

To stop air-transport services from surprising consumers with bills of $30,000 or more, a bipartisan bill would regulate charges. The industry says that will cause base closures that will hurt rural areas.

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Legislation aimed at protecting consumers from surprise medical bills could cost rural residents access to air ambulances, leaders in the air medical services industry say.

Language that limits how much air ambulances can charge could result in air medical bases closing due to reduced revenue, industry experts said during recent news conferences. The loss of any bases could prove disastrous for rural residents in need of transportation to hospitals sometimes hundreds of miles away.

Seth Myers, president of Air Evac Lifeteam

“Because nearly 90 percent of patients transported by air medical services live in a rural zip code, air ambulance services are an essential part of healthcare access in these communities. More than 38 air bases across the country have closed since the beginning of the year, unable to continue serving their communities, leaving patients without this critical service,” said Seth Myers, president of Air Evac Lifeteam. “If legislation currently being discussed in Congress is enacted as written, health insurers will have unprecedented power to determine how much they will pay for air medical services, regardless of the actual cost, which will put significant economic pressure on providers and may cause the closure of air medical bases nationally. If passed, we expect the rate and number of closures will increase significantly.”

Earlier this year, Senator Lamar Alexander, R-Tennessee, and Patty Murray, D-Washington, introduced SB 1895, also known as the Lower Health Care Costs Act to address surprise medical billing. One section of the bill would limit reimbursement rates for air medical services to the median in-network rate. However, industry officials say most insurance companies don’t cover air medical services in-network, meaning there is no rate to be set.

Alexander said the bill is necessary because it’s an issue only the federal government can address.

A spokesperson for Alexander’s office said surprise air ambulance bills are a problem that states cannot solve, because the Airline Deregulation Act prevents them from taking action, making it an issue only Congress can address.

According to the Health Care Cost Institute(HCCI), a typical out-of-network ground ambulance bill might be $1,700, while an average out-of-network air ambulance bill would be $30,000–$50,000. A single air ambulance bill can bankrupt a family. In 2016, the national median charges for air ambulance services were between 4 times and nearly 10 times the Medicare rates, according to Health Affairs, a journal on health policy and thought.

Alexander’s office said the Senate health committee heard from dozens of groups saying that any legislation to address surprise billing should include air ambulances. Protections from air ambulance billing is particularly important to rural patients, a spokesperson for Alexander’s office said, because they are typically used for the sickest of patients and for those farthest from hospitals. Patients never have a opportunity to choose their service, the spokesperson said.

“The bipartisan Lower Health Care Costs Act ends the practice of surprise air ambulance bills. We know this is a problem because 70% of air ambulance transports were out-of-network in 2017, at an average price of $36,400, which is clearly unaffordable,” Senator Alexander said in an email interview with the Daily Yonder..

But air ambulance industry leaders fear the legislation would let insurance companies artificially lower rates. In this scenario, insurance providers would pick one air ambulance company to be “in-network”, and negotiate a low rate with them. With only one in-network provider, theirs would by default become the median rate, which would set the rate for all other air ambulance companies in the area.

Currently, there are over 1,100 air medical bases across the country. But the industry is shrinking, said Rick Sherlock, president of the Association of Air Medical Services.

The industry has come under fire of late for increasing prices for air medical transportation services. According to a report from the U.S. Government Accounting Office, in 2012, the median price for a medevac helicopter transport was $22,100. By 2017, that price had risen to $36,400 – a 60 percent increase.

In comparison, according to the National Council on Compensation Insurance, the median cost of a ground ambulance trip has gone from $762 in 2013, to $820 in 2017, a 4 percent increase.

Air ambulance rides are frequently not covered by insurance and the cost of the trip is passed on to the consumer. The industry provides more than 360,000 rides per year, Sherlock said, and of those 70 percent were for patients with Medicare, Medicaid or with no insurance at all.

“We agree patients should be taken out of the middle of a payer dispute, but none of the proposals introduced (in Congress) address the root causes of balanced billing in the air ambulance industry,” Sherlock said. “Emergency air medical providers never make the decision on who to transport. That decision is always made by a requesting physician or a medically trained first responder at the scene of an accident or severe illness.”

Industry leaders said they believe there is a solution to the problem, but were unwilling to provide details. Additionally, the industry could provide no projections on how many air bases may close, calling that “competitive business information.”

Alexander defended his bill, as protecting consumers.

“Unlike what some letters to the editor say, this bill does not allow the federal government to set the rates doctors and hospitals are paid,” Alexander said in an editorial in the Tennessean. “Nor could insurance companies unilaterally set those rates… The free-market will set the price which reflects the cost of providing care in that local area.”

The bill also has the support of insurance providers.

The National Association of Insurance Commissioners said it supports the bill, in part due to the balanced billing for air ambulance services.

“We are writing to express our appreciation for your efforts to call attention to and attempt to address the underlying cost drivers of health care. Specifically, we wish to express our strong support for one particular measure of the Lower Health Care Costs Act—prohibiting surprise bills from air ambulance providers,” the organization said in a letter to Alexander. “We are encouraged that the introduced version of the bill includes protections for consumers from balance billing by air ambulance providers and we urge the committee to maintain these protections as the bill moves forward. …By including protections against surprise billing for air ambulance services in the bill you have demonstrated your commitment to preventing loopholes that would allow some providers to continue to surprise bill.”

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