An air ambulance helicopter in flight

The median charge for an air ambulance ride in a helicopter was more than $36,000 in 2017. (Image by Ed Uthman licensed under Creative Commons.)

The headline from News 5, the Cleveland ABC affiliate, says it all:

It can happen to anyone of us, an air ambulance ride costing $53,000

It happened to Julie and Paul Hleba. After a motorcycle accident left Paul with a ruptured spleen and fractures of a shoulder blade and some ribs, doctors at a nearby hospital, where he had been driven by ambulance, sent for a helicopter that would transfer him to another hospital.

News 5 reported that after the Hlebas’ insurance paid for $15,000 of the helicopter, the ambulance company, Air Methods, demanded the remaining balance. It was $37,000.

The Hlebas’ experience is one shared by many in the United States, where 69 percent of air ambulance rides are out of network, according to a federal government report. The broader ambulance industry, including both air and ground services, have come under scrutiny for their high costs and their penchant for sending surprise bills. Researchers combing through one insurer’s claims from 2010 to 2016 found that ambulance companies sent surprise bills for more than eight in ten ER visits and hospital admissions, according to ABC News.

Bills from air ambulances add another layer of outrage. In addition to getting a surprise bill that may be larger than their yearly pay, air ambulance patients aren’t able to ask for a cheaper ground ambulance instead.

“I wasn’t given the choice of taking a helicopter ride,” Paul Hleba told News 5. He said because he was conscious and didn’t need surgery, he was well enough for his wife to have driven him the 40 minutes between hospitals.

How much does an air ambulance cost?

A lot more than it costs the company to provide it.

A 2017 report commissioned by Association of Air Medical Services, an industry trade group, found the average cost per transport is just over $11,000. Those same companies charge on average more than three times that amount: The median charge for an air ambulance ride in a helicopter was more than $36,000 in 2017, according to data in the federal report, published this spring by the U.S. Government Accountability Office (GAO). Plane transport, often referred to as “fixed-wing” transport, was even more expensive at $40,000 per trip.

A separate study by Johns Hopkins professors found that from 2012 to 2016, the median air ambulance operator increased their prices by about 60%. Air ambulances charge more than ground ambulances, according to the same study. Air ambulances bill between four and five times the median Medicare rate for a standard trip, and between seven and 10 times the amount per mile traveled. In comparison, ground ambulances charge between 1.7 and 2.8 times what Medicare pays for a standard trip, and 1.7 times its rate for mileage.

Unlike other areas of healthcare, private insurers pay air ambulances about as much as Medicare, or about $6,500, according to KHN. But far from being hemmed in by insurers, ambulance companies have a strategy for maximizing payouts. By remaining out-of-network providers, according the article’s mention of the GAO report, they then charge patients whatever total is left after the insurer’s relatively small payment. Panicked and angry, patients call to demand their insurer pay more of the bill, resulting in more revenue for the ambulance company. Two-thirds of trips the GAO studied were out of network.

There can also be a huge variation in the cost of an air ambulance ride. For its “Bill of the Month” project, Kaiser Health News has received “[bills] ranging from $28,000 to $97,000.”

Why do air ambulance operators charge so much?

Air ambulance companies are open about why they charge high rates to people with private insurance. While private insurers and Medicare each pay around $6,500 for air ambulance services, Medicare “forbids the companies to send patients additional bills,” according to the New York Times. Knowing they can bill privately insured patients for whatever their policy does not cover, the companies do just that. The industry says it has no choice but to charge more for privately insured patients, because more than seven in ten patients “fall into these categories that the industry argue significantly underpay, like patients with Medicare,” according to CNN.

In states with balance billing regulations, patients may be protected by law from having to pay the balance due. In states without such regulations, there are no protections.

The industry’s consolidation, and the growing role of private equity in air ambulance operations, also appears to be playing a role. Just three companies controlled 73% of the industry’s helicopters in 2016, according to the Government Accountability Office. The next year, a private equity firm, American Securities LLC, bought the largest provider, Air Methods, while the second largest air-ambulance provider, owned by private equity firm KKR, bought one of its competitors. The three largest companies are “increasingly owned by private equity firms,” the G.A.O reported, which could help the companies buy smaller rivals to boost their earnings, reducing competition further.

Prices in the industry have risen steeply. “Between 2010 and 2014, the median prices providers charged for helicopter air ambulance service approximately doubled, from around $15,000 to about $30,000 per transport” according to the GAO report.

Alternatives that would promote competition have not taken off. Non-profit air ambulances, which could offer lower rates, have been squeezed out of the industry by “too many helicopters chasing too few patients,” according to the New York Times.

Patients who comparison shop for other healthcare have much less power to choose when it comes to air ambulances, which further reduces the pressure for companies to compete on price. In the rush to an emergency room or other facility, patients have no leverage and aren’t focused on the cost anyway.

“The free market has sort of broken down,” a policy analyst for the Wyoming Department of Health told Kaiser Health News. “Patients and consumers really can’t make informed decisions and vote with their dollars on price and quality.”

Sometimes there are no alternatives even if a patient asks for them. This is the case in many rural areas. “More than 120 rural hospitals have gone out of business since 2005,” according to a 2017 news article by the Human Resources & Services Administration, which cited George Pink, a professor at the University of North Carolina at Chapel Hill. That likely exacerbated the sparseness of emergency room access found in a 2005 JAMA study, which found that for more than one in four people living in the US, their only way to get to a Level I or II trauma center within 45 minutes was by helicopter.

Failure of regulation

Attempts to rein in the industry’s costs have failed. The five states that have passed laws this year “to restrict surprise billing” don’t apply to air ambulances, the New York Times reported, and a legislation before Congress doesn’t address it either.

When states have tried to take on the increases, courts have struck them down because, as this CNN article points out, the 1978 Airline Deregulation Act “removed a state’s ability to control airfares and routes.” Consistently, judges conclude that the federal deregulation law makes regulation of air ambulances a federal responsibility, not a state one. States have even less recourse for self-funded plans, which are regulated at the federal level.

The deregulation act has not stopped states from trying to regulate the companies. North Dakota, West Virginia and Texas have passed legislation to limit costs but were also stymied by the courts. Lawsuits filed against air ambulance companies by residents of Florida and Oklahoma have been also been shot down.

There have been some limited successes. A Virginia law that took effect in March “require[s] hospitals [to] tell patients who don’t have an ‘emergency medical condition’ that they have a choice between air and ground transportation,” according to CNN.

Past federal efforts have been sparse. A bill to “let states regulate air ambulances” failed in 2018, according to NPR, and “committees that deal with regulation of the air industry — the Commerce Committee in the Senate and the Transportation Committee in the House — don’t make health policy or regulate health insurance.”

One glimmer of hope may be in Wyoming, Kaiser Health News reports. Instead of trying to regulate air ambulances directly, it wants to “funnel all medical air transportation in the state through Medicaid,” a maneuver that would let it “treat air ambulances like a public utility” and cap out-of-pocket costs for residents. If the federal government approves Wyoming’s proposal, according to the story, states may use it as a model.

Can I fight these bills?

Yes — and prepare for a fight, too.

According to a 2015 New York Times report, the companies “rarely collect the full amounts when they go after patients, and they often say they will lower the bill in the hope of getting something.” At the same time, companies like Air Methods, with a 30% chunk of the industry’s revenue, fight hard to collect. It placed a lien on one couple’s home when they refused to pay the company $22,150.

If you’re faced with one of these unfortunate bills, Kaiser Health News offers three pieces of advice. Before appealing with the company, the article says, appeal with your insurance company to cover more of the total bill. By going through their in-house process, you may be able to get them to cover more of the total bill.

Second, after getting your insurer to cover as much as possible, get in touch with the air ambulance provider. Remember that you have leverage with the company: They “might be willing to negotiate a settlement for a fraction of the bill to avoid turning to debt collectors, who would pay them pennies on the dollar.” Use their willingness to cut a deal in your favor.

Finally, if you think your family has a higher-than-normal risk of needing an air ambulance, “[m]any air ambulance companies offer membership plans that can cost less than $100 a year,” according to KHN. For its members, “the company will accept whatever payment an insurance company makes without billing the patient for the rest” as it normally would. But there are no guarantees, the article says. Your membership deal won’t work if a different company’s air ambulance is dispatched instead.