The issue: Air medical inclusion in the Airline Deregulation Act (ADA)
FICTION: Air medical exemption from the ADA will not change how air medical services currently operate.
FACT: ADA exemption will reduce access to air medical services and increase costs by allowing each state to regulate air medical services based on arbitrary state, county, or municipal preferences. The resulting patchwork of inconsistent regulations would make it much more difficult for air medical providers to get patients to the best, closest medical facility in an emergency.
What would happen if air medical services were exempted from the ADA?
- States (or counties, or municipalities) would be able to regulate the rates air ambulances charge for “non-aviation” services. This is allowed by H.R. 4 Section 412 (h).
- States (or counties, or municipalities) would be able to regulate what services are requested and where those services deliver patients based on in-network agreements with insurers- taking away that decision from doctors and first-responders. That’s doing what’s right for the insurer, not the patient.
- States (or counties, or municipalities) could bar entry for out-of-state (or out-of-county, or out-of-municipality) providers. This was attempted in North Carolina and will be attempted again if air carriers are not protected by the ADA.
- States (or counties, or municipalities) could set up “exclusive operating areas” similar to those regulated for ground ambulances.
- Anything else States (or counties, or municipalities) might consider “non-aviation services” provided by air ambulance providers. All the protections afforded an air ambulance as an air carrier are stripped away, leaving nothing but question marks and upending 40 years or established legal precedent.
FICTION: Air medical exemption from the ADA will not prevent air medical providers from transporting patients across state lines.
FACT: If individual states are allowed to enact their own regulations, these regulations can vary from state-to-state and affect everything from equipment on board the aircraft, how the aircraft are operated, where the control center is located, and medical staffing. Air medical providers, unable to comply with a set of inconsistent regulations for a flight that would cross state lines, would be forced to transport patients to in-state facilities which might not be the closest or most-appropriate for the patient’s needs. By their very nature, air ambulances operate on an interstate basis transporting more than 30 percent of their patients across state lines for definitive care every day.
Recent attempts to exempt air medical services from the ADA only allow insurers to dramatically reduce the already decreased payments for air medical transport services. This is NOT about what is best for the patient, it’s about what is best for the insurer.
FICTION: Congress never intended to include air carriers engaged in air medical transportation in the Airline Deregulation Act.
FACT: Air Medical transport was clearly contemplated in the discussion of the ADA. A Senate floor colloquy directly discussed “the need for air ambulance services” during debate on the ADA on April 19, 1978. View the air medical portion of the transcript here. Air medical transportation is, first and foremost, an on-demand air carrier operation. An air medical flight is a common carriage operation in which a person is transported from one location to another and whose medical condition is sustained during flight by medical personnel who also are being transported. The primary purpose of an air medical flight is transportation. The Center for Medicare and Medicaid Services (CMS), in its prior incarnation as the Health Care Financing Administration (HCFA) characterizes its payment for air medical services as a transportation benefit. State authority over health care aspects of air medical transportation is clearly preserved and delineated under the ADA. Any statement that the ADA is being used beyond its intent is patently untrue.
FICTION: If air medical services were exempted from the ADA, air ambulances would still be able to respond to the nearest patient and deliver them to the nearest appropriate facilities.
FACT: By exempting air medical services from the ADA, state officials can pass laws and regulations that direct patients to in-network hospitals using in-network air medical services. In states that have attempted these types of regulations, doctors and first responders would have been required to choose providers and hospitals based on in-network insurance agreements, NOT what is best for the patient. The ADA protects patients from these types of regulations.
FICTION: States have NO authority to regulate helicopter air medical services which puts patients at risk.
FACT: Numerous court decisions and DOT opinions clearly have reaffirmed the authority and the ability of states to regulate all medical aspects of air medical transportation. This includes the standards and coordination of patient care, including protocols controlling which air medical operator is called to a scene. Air medical operators never self-dispatch. The decision as to whether an air medical helicopter is necessary to transport any patient is made by a physician at a hospital or medically-trained first responders at the scene of an accident, operating under state authority, and never by the air medical provider. The GAO detailed the clear delineation of state authority over health care and federal authority over aviation under the ADA in its 2010 report:
The issue: Perceived price hikes and balance billing
FICTION: The practice called “balanced billing” by air medical providers takes unfair advantage of patients in their time of need.
FACT: Over the last several years, commercial insurers have shifted their reimbursement practices from “Usual, Customary & Reasonable” rates, driven by the healthcare market, to “Allowed Amounts” that are set by the insurance companies themselves.
Increasingly, commercial insurers do not cover air ambulance transports in a way that protects their beneficiaries, offering “allowable” payments that are well below a fair and reasonable rate for an air medical transport.
Complicating this issue are recent consolidations in the private insurance industry, and the withdrawal of other insurance companies from healthcare exchanges, which often leads to a single dominant insurance provider in a state or region.
It costs on average $2.7 million per year for an air medical base to be operationally ready 24 hours a day, 7 days a week. When an air medical provider is unable to accept the substantially under-cost amount, the insurance company settles with their beneficiary (the patient) and leaves he/she, unknowingly, on the hook for whatever amount remains that their insurer refused to cover. Air medical providers are then forced to try and recoup the costs they’ve already expended for the completed transport.
FICTION: Air medical charges have increased more than 400% over the last 7 years.
FACT: Based on publicly-available Securities and Exchange Commission (SEC) filings, in the seven years between 2009 and 2015, the world’s largest air ambulance provider (Air Methods) has increased their average charge by 169%. To a great extent, price increases have been driven by three factors; increased labor costs, increased costs associated with improving safety, and expansion into rural areas with lower population density resulting lower flight volumes per base.
The single biggest factor increasing cost is the dramatic gap between Medicare reimbursement. According to a study conducted by independent research firm, Xcenda:
- $10,199.00: Median cost of providing one helicopter transport
- $5,998.00: Median Medicare reimbursement (base rate plus mileage) per transport
- $3,463.00: Median Medicaid reimbursement per transport
- 7 out of 10 of patients transported by HAA are either Medicare or Medicaid; the remaining 3 out of 10 patients must subsidize the remaining cost.
FICTION: Air medical companies prefer to stay out-of-network to hold out for higher commercial insurance reimbursement.
FACT: Air medical companies would absolutely rather negotiate fair and reasonable in-network insurance agreements to provide operational stability, to better predict their operating budget, and to avoid the administrative burden of onerous claims processing.
Reimbursement from commercial health insurance varies widely across the country, ranging from current, outdated Medicare rates to payment at or near billed charges. Since Medicare only reimburses about half of the cost for an air ambulance transport, providers cannot survive on Medicare rates alone.
Typically, in states where one insurance carrier controls significant market share, commercial reimbursement rarely covers the insurer’s fair share of the costs associated with the patient’s transport. Conversely, in states where multiple insurance carriers have good competition, the reimbursement tends to close the gap and cover air medical providers’ breakeven costs.
Unfortunately, in some markets, insurance carriers are unwilling to pay or contract at rates that even cover air medical providers’ most basic costs, placing more burden on the insured patient. Fair insurer reimbursement is critical to markets with high Medicare/Medicaid payer mix – the markets that often need access to life-saving air medical services the most.
The issue: An overabundance of aircraft
FICTION: The implementation of the Medicare Fee Schedule caused an enormous increase in the number of air medical helicopters.
FACT: According to “An Economic Analysis of the U.S. Rotary Wing Air Medical Transport Industry,” (prepared by independent research firm, Economic & Planning Systems, Inc., 2013) the number of aircraft in the industry during the year 2000 (two years before the implementation of the fee schedule) was 400, which grew to 753 in 2005 (88% growth over five years) and 929 in 2011 (23% growth over six years) for an overall growth of 132% over 11 years. The ADAMS database number for industry aircraft for 2016 shows 976 full-time helicopters and only marginal growth of 5% since 2011.
Helicopter Air Ambulance Growth Rates:
- 1980- 1985: 156 %
- 1985- 1990: 193%
- 1990- 1995: 27%
- 1995- 2000: 37%
- 2000- 2005: 88%
- 2005- 2011: 23%
- 2011- 2016: 5%
The data demonstrates the industry has grown over the last 37 years, however, 22 of those growth years occurred before the implementation of the Medicare Fee Schedule and measurable growth has only occurred in 9 of the 15 years since the Fee schedule was implemented. This data does not indicate that industry growth reflects a strict correlation to the implementation of the Medicare fee schedule. Industry growth, over a 30-year period, reflects growth in demand for air medical transport services in response to continued closures of rural hospitals and trauma centers.
“The growth in the number of helicopters and their movement into communities have generally made them more available to those in need.”
– “Effects of Industry Changes on Services Are Unclear” GAO-10-907
Growth in Rural Areas: While it is true that the average number of HEMS patients flown per helicopter has gone down over time (from approximately 400 to 360), the average number of hours of flight hours per helicopter has remained relatively stable, therefore it is likely that the distances being transported by the average helicopter has gone up. We conclude from this data that part of the volume growth of the industry has been the expansion of HEMS services to rural areas and improved access, not over utilization.