Flying to the hospital and getting treated for air ambulance sticker shock

July 10, 2019 / By Steve Delaronde

Patients are charged around $1,200 for an ambulance ride to the hospital, while the median price of an air ambulance for privately insured patients is $36,400. Why is the price of air ambulance so expensive, when Uber just announced that it will be offering a helicopter taxi from Manhattan to JFK Airport for $200?

The industry claims that the average helicopter transport costs $11,000, while the average Medicare reimbursement for the service is only $6,556. Medicaid often pays less than Medicare, and commercial plans pay rates similar to Medicare for in-network services. Low rates from private insurers are the reason that 69 percent of the 20,700 air ambulance transports taken by privately insured patients were out-of-network. This results in balance bills amounting to tens of thousands of dollars.

Air ambulance services charge a higher multiple of Medicare rates than most other services. This leaves privately insured patients vulnerable to a large balance bill, and uninsured patients responsible for the entire charge. One study found that air ambulance service charges were 4.1-9.5 times the Medicare rate while only 7 of 54 medical specialties had charge ratios greater than 3.5 times the Medicare rate.

Unfortunately, patients have little control over the decision to use an air ambulance. Air transport is considered during medical emergencies when a person is many miles from medical care and least prepared to make critical decisions. Additionally, the air ambulance service is often predetermined by their arrangement with the hospital and not by whether it is within the insurer’s network.

Since the number of air ambulances in the United States increased from 32 in 1980 to 1,461 in 2018, one would expect prices to decrease given the increased competition. However, the opposite happened. Prices increased in most markets since the three largest air ambulance providers, which are operated by private equity firms, own 73 percent of the industry’s total helicopters.  

What options remain for the unsuspecting person who may find themselves faced with a medical emergency that requires transport by air ambulance?  The 80 million Medicaid enrollees and 60 million Medicare recipients are protected from balance billing practices. However, the 28 million uninsured and two-thirds of Americans with private insurance are at risk of receiving a very large bill. This is especially bad news for the quarter of rural Americans that must travel over 30 minutes to get the nearest acute care facility.

Several states have enacted legislation that limits charges for balance billing. California limits charges to the average contracted rate by service and region, or 125 percent of Medicare reimbursement. There is federal legislation being considered that would cap the rates that can be charged by out-of-network providers, with air ambulance services recently added as one of the included emergency services.

Barring legislation, the only other option for privately insured patients is to know which air ambulance service is in their insurance network and hope they are successful in getting that service used if needed. Another option: Don’t live or venture too far from a hospital that can be quickly and easily reached by land.

Steve Delaronde is director of consulting for populations and payment solutions at 3M Health Information Systems.