Flying high: Pricing goes unchecked in the air ambulance market

Air Methods says says it is costly to provide 24/7 rescues with state-of-the-art life-saving equipment and well-trained medical staff. (Air Methods)

The air ambulance industry is flying high on the extravagant prices being charged to U.S. consumers at times when they are least mentally, emotionally, and physically equipped to bargain for a better deal.

In fact, the flying ambulance companies should consider disclosing pricing information to consumers, hospitals and insurance companies to prevent people being blindsided by bills that can have “potentially devastating financial impacts,” according to a new government report reported on by ABC News on August 1.

The report, conducted by the nonpartisan Government Accountability Office, studied the prices charged by some air ambulance providers to people who were sick or injured and often unaware of the size of the bills they would get for being flown to hospitals from remote accident scenes.

ABC News investigated industry pricing in 2016, finding that amid the heartwarming stories of lives saved, air ambulances are free to set any price they want. Desperate consumers told ABC News of being charged $40,000 for a short flight, with little help from their insurance plans.

The investigation found that the industry’s largest for-profit player, Air Methods of Englewood, Colorado, regularly employs “balance billing”—which leaves patients on the hook for whatever insurance doesn’t cover. Some consumers heard from debt collectors after they couldn’t pay.

Air Methods posted a profit of $97.9 million in 2016 on revenue of $1.17 billion. The company—which would not comment to ABC on the claims of the newly released report—says it is costly to provide 24/7 rescues at a moment’s notice with state-of-the-art life-saving equipment and well-trained medical staff.

The GAO report found that, because air ambulance providers aren’t allowed to turn away patients with Medicare or Medicaid coverage, costs increase for consumers who have private insurance. The median Medicare reimbursement for helicopter rescue in 2014 was $6,502.

In its investigation, ABC News brought several cases to the attention of Air Methods, including the plight of a Kentucky family who were charged $47,000 for a half-hour flight; and that of an Illinois family who were billed $35,000 for a 37-mile flight that was only a few minutes faster than going by car.

Asked about these types of high bills, Air Methods Vice President Paul Webster told the network news outlet that the company charges patients more than the actual cost of a flight to offset low government reimbursements for the poor and elderly.

“If everybody paid their fair share, you know what the charge for this service would be? Twelve thousand dollars,” Webster told ABC News.

An advocacy group blamed Medicare and Medicaid reimbursements that have not kept pace with increasing fixed costs. The Save Our Air Medical Resources organization said the disparity is growing, especially with regard to rural areas.

“Emergency air medical services provide a life-saving resource to Americans every day, and with rural hospitals closing their doors at alarming rates, these transports are more important than ever,” said SOAR spokesperson Carter Johnson.

The report found that the companies have generated so much money in recent years that the industry has caught the attention of private investors.

“The three large independent air ambulance providers are for-profit and increasingly owned by private equity firms,” the report notes. “The presence of private equity in the air ambulance industry indicates that investors see profit opportunities in the industry.”

The median price of an air ambulance transport doubled between 2010 and 2014, the period studied in the GAO report, from approximately $15,000 to $30,000.

Looking specifically at Air Methods, the largest provider, as ABC did, the average price leaped from $13,000 in 2007 to $49,800 in 2016—an increase of 283%.

Air Methods and two other for-profit providers currently make up 73% percent of the industry—a shift from the 1990s, ABC noted, when hospital-run programs dominated the sector. Private operators often are out of network with insurance plans, and states are unable to regulate them because the companies fall under control of the Airline Deregulation Act of 1978.

The GAO report recommends that the U.S. Department of Transportation should consider requiring air ambulance providers to disclose their prices up-front. The report noted that, while pricing would not benefit those who need immediate medical attention, having a price list could help hospitals decide on the best mode of transport and assist insurers in determining fair reimbursements.

The report also calls for the U.S. Department of Transportation to publicize itself as a place to file complaints and to make those consumer complaints public. It also suggests DOT assess what additional data it needs to understand the industry.

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