Because many air ambulance companies are not part of insurance networks, patients often get hit with the huge bills, according to the findings by Johns Hopkins University researchers, whose study was published in the journal Health Affairs.
“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,’’ said Gerard Anderson, a professor of health policy and management at Johns Hopkins and co-author of the study.
There are virtually no cost controls in the system, Anderson added. Even though the number of air ambulance carriers is on the rise, most local markets are still limited to a single carrier without competition, he said.
“You keep raising the price until there is a response,’’ he said. “Maybe Congress will do something. Until that happens, you continue to raise your price because there are no constraints.’’
The Johns Hopkins researchers said the median charge per mile of a helicopter ambulance in 2016 was $238.
The industry says Medicare rates are a poor benchmark for comparison. It claims Medicare air ambulance rates are 40 percent below cost and that air ambulance companies are forced to increase list prices as a result.
“Because of the vast underpayments by Medicare and Medicaid, and to preserve the ability of air medical services to provide access to critical levels of health care for millions of Americans, rates are raised to cover the losses incurred by providing services to Medicare, Medicaid, and uninsured patients,’’ said the industry trade group, the Association of Air Medical Services (AAMS).
It blamed low Medicare and Medicaid reimbursement rates for the closure of 32 air ambulance bases in 2019.
The AAMS also said the Johns Hopkins study is flawed because it lumps helicopter service in with fixed-wing aircraft, which the industry said are infrequently used in emergencies.
Helicopters with advanced medical equipment airlift people from the scene of accidents or move them from smaller hospitals to larger medical centers with more advanced surgical capabilities and burn units. The business has grown exponentially over the past two decades, with private-equity investment ownership of large national chains.
Before 2002 most air ambulances were run by hospitals, according to a 2017 report by Consumers Union, an advocacy group. Then Medicare set higher rates for reimbursement that drew in private business, fueling the boom.
Market concentration is another hallmark of the explosion in use and costs. The Government Accountability Office, a federal watchdog agency, said in 2017 that just three private companies were flying 692 of the industry’s 1,045 helicopters in 2015.
Demand also has grown with the closure of rural hospitals across the country, making it all the more important to move patients longer distances to hospitals in urban centers.
The number of medical helicopters and fixed-wing aircraft in the skies has correspondingly exploded to the point that the market may be saturated, the Johns Hopkins study said.
“The high charges, therefore, might be the result not of lack or entrants or limited supply, but of a market failure,’’ the study said.
State legislators responding to consumer outrage over whopping air transport bills are handcuffed. The Airline Deregulation Act of 1978 prohibits states from regulating routes or rates, the study said.
The air ambulance industry is fighting legislation in Congress that could lower costs for patients and health insurance companies. Seeking to protect patients from surprise medical bills, a Senate bill on health costs would set the price of an ambulance trip by an out-of-network carrier at the median in-network price.
“The legislation would devastate the provision of this service in the United States,’’ the AAMS said in a statement last month.
In 2017, about two-thirds of air ambulance transports for patients with private insurance were out-of-network, the GAO said this year.
Air Methods is the largest carrier in the United States. The Johns Hopkins study said a former parent company of Air Methods air ambulance service ranked highest, with rates that were 10.4 percent above Medicare’s benchmark. The company also was the most commonly used air ambulance service among Medicare patients, accounting for 21 percent of trips in 2016, it said.
Air Methods, which was purchased by private equity firm American Securities in 2017, did not comment but referred to a statement by an industry-backed advocacy group called Save Our Air Medical Resources.
“One hundred percent of emergency air medical providers, not to be confused with nonemergent, fixed wing transports, are called to respond only by EMTs or physicians who determine that the patient should be transported by air,’’ the statement said. “They never self-deploy and go when called, regardless of the patient’s ability to pay.’’