By Chris Myers
There’s been no shortage of recent media attention to the costs of emergency air medical services, which the Centers for Medicare & Medicaid Services (CMS) refers to as “air ambulances.” Across the industry, consumers, legislators and payers are asking how a lifesaving 15-minute helicopter ride could cost $30,000 or more — and what can be done to stabilize the industry.
The perception is that air medical transportation has widely out of control prices. This can be directly linked back to the reporting on the high bills some patients face after receiving critical care in the air services. These shocking costs often receive sensationalistic news media coverage and are often due to an air medical provider trying to recover some of their significant financial losses through balance billing. In addition, what many patients believe is a bill is actually an explanation of benefits (EOB) sent from the payer that lays out all charges and what is covered by health plans. However, the total shown on the EOB is not reflective of the payments that are received — oftentimes only a fraction of those charges is actually collected.
We in the emergency air medical service industry agree that the costs patients face in these isolated billing incidents are too high. We value transparency and welcome scrutiny of our business practices and cost structure. Because emergency air medical services are critical to the millions of Americans who depend on them for lifesaving care, all stakeholders must work together to develop a solution that preserves access to patients and creates a sustainable future for the industry.
To arrive at that solution, two things must happen soon: First, the federal government must modernize its antiquated method for reimbursing air medical transports, as current reimbursement rates are not tied to today’s actual costs of providing services. Second, more insurers and other managed care organizations must step up to the negotiating table to reach in-network agreements with emergency air providers.
By reaching this consensus, not only can consumers avoid balance-billing sticker shock, but managed care organizations with in-network air medical coverage can continue to rely on the highest-quality emergency care for their members, lower overall costs, improve outcomes and increase member satisfaction.
24/7/365-readiness at a moment’s notice
Emergency air medical services are provided to transport critically ill or injured patients to the closest appropriate hospital when requested by third-party medical professionals or first responders. Air medical services never dispatch themselves — they are always called to scene or the hospital for an emergency need. Nine out of 10 air medical transport patients have suffered a serious cardiac event, stroke, or trauma — all regardless of the ability of the patient to pay. Our industry is focused exclusively on saving the patient’s life. Rapid transport and immediate medical intervention during flight can give patients the best chance at survival and recovery.
For emergency air medical providers, maintaining a level of 24/7/365-readiness is expensive. At all times, crews must be ready to respond within a moment’s notice. Air medical crews include highly-trained pilots, paramedics, nurses, and other medical professionals, as well as state-of-the-art medical, aviation, and safety equipment.
The cost of this around-the-clock readiness averages nearly $3 million per year for each air base maintained by emergency air medical providers, according to an independent air medical provider cost study, conducted and published last year by Xcenda and prepared for trade group the Association of Air Medical Services (AAMS). Further, 77 percent of air medical providers’ costs are fixed costs associated with operating an air base, giving these companies little leeway in reducing costs on their own.
Low reimbursement leads to cost-shifting
Despite the significant operating costs, emergency air medical transport services account for a minuscule amount of the CMS annual budget — less than 0.1 percent — due to the agency’s low reimbursement rates, which exert a trickle-down economic effect on air medical service rates for private payers and patients.
Medicare, which covers air medical services in emergency cases only, not transfers, established the current air medical service payment rates in 2002 based on an estimated 1998 cost pool. Since then, however, Medicare has increased the payment rates solely by an inflationary factor and has not revalued the payment system to reflect significant market changes. Every year since 2002, yearly healthcare cost growth has been greater, often doubling or more, consumer price growth.
That inequity is part of the reason why the average Medicare per-transport reimbursement of $5,998 covers just 59 percent of the median $10,199 cost per transport, according to the AAMS study. Payments from Medicaid are even lower, averaging $3,463 per transport, while payments from uninsured patients average just $354.
For the air medical providers and the patients who rely on their critical services, the consequences of this imbalance are dramatic. Reimbursement for seven out of every 10 air medical transports does not cover the cost per transport, as five out of every 10 patients are insured through Medicare or Medicaid, and two out of each 10 are uninsured, according to the AAMS. The result is cost-shifting onto the three out of 10 patients who are commercially insured to offset the low reimbursements for Medicare, Medicaid and uninsured patients.
A simple, two-step solution
When this cost-shift happens to patients whose insurers don’t have in-network agreements with emergency medical air providers, balance billing and eye-catching headlines about “sky-high costs” often follow.
While the factors that lead to excessive bills for patients can be complex, the solution is not, requiring just two simple, straightforward steps. First, Congress needs to fix the root cause of the problem — change outdated CMS reimbursement rates that do not reflect the current cost of emergency air medical service. Managed-care organizations’ lobbying groups can drive that change by educating lawmakers about how insurance companies are bearing the cost of these antiquated rates.
Managed care organizations can also negotiate fair and reasonable in-network agreements with air medical providers in their service areas. The good news is that recent progress on this front has been significant, as more insurance companies realize emergency care is a relied-on and medically necessary benefit for all their members, whether it is delivered on the ground or in the air. As evidence, air medical services have increased their network participation by an estimated 20 percent in the past year, according to AAMS. The benefits of in-network agreements, however, extend to more than just the air medical providers. By awarding such coverage, managed care organizations can be assured that their health plan members will continue to have access to the highest quality emergency care, which can save their life or prevent additional adverse health events. In some instances, eliminating care delays enables better outcomes and faster recoveries, which can reduce overall care costs. As they recover, members with in-network air medical coverage will not be burdened by balance bills, improving their satisfaction with their care and health plan. High member-satisfaction rates and in-network air medical coverage benefits can also be useful for marketing health plans to employers and communities, particularly in rural areas.
By following these steps, we can create a sustainable future for emergency medical air services, preserving access to lifesaving healthcare such as trauma and stroke care for the nearly 85 million Americans who live in predominately rural areas that don’t have those services.
Chris Myers is the EVP of reimbursement at Air Methods, the leading air medical service provider.