On March 20, 2019, the Government Accountability Office (GAO) published its report, “Air Ambulance: Available Data Show Privately-Insured Patients Are at Financial Risk”. Congress required the GAO to produce the report in the “Explanatory Statement” for Division H of the “Consolidated Appropriations Act, 2017” (H.R. 244). That language directed the GAO “to submit a report to the Committees on Appropriations of the House of Representatives and the Senate on fixed wing and helicopter air ambulance services, operational costs, and, as available, payment structures no later than 18 months after the enactment of this Act.”

AAMS has consistently supported solutions to increase transparency for emergency air medical services (EAMS), and supported both of the recent congressional directives to GAO to examine the industry and issues related to operational costs, billing, and payment structures. In responding to the GAO’s March 20th report AAMS would like to highlight these key issues:

  • Emergency Air Medical Services provide increased access to rural healthcare. GAO found that the added bases “increased the total area served by helicopter bases by 23 percent.” And “about 60 percent of the new helicopter bases and about half of the new fixed-wing bases…were in rural areas.” This is where the need for air medical services is greatest and air medical providers are working to meet that need.
  • EAMS expansion in rural areas fills the gap in rural healthcare: GAO found that “the prices charged in 2017 were an increase of over 60 percent from 2012…” Filling the growing gap in rural healthcare left by closing hospitals and emergency rooms comes at a cost, and the rural expansion of EAMS is one of several factors in the increased cost. We feel GAO failed to recognize this, as well as the gross underpayment of EAMS by Medicare and Medicaid, as a significant contributor to the increased cost of providing this essential healthcare service.
  • The Airline Deregulation Act is critical to maintaining EAMS ability to transport patients across state, county, and municipal boundaries. 33% of all EAMS patients cross state lines; nearly all cross a county or municipal boundary. The ADA is an essential part of the regulatory framework that allows EAMS to complete their mission on behalf of patients. The economics of EAMS are regulated at the federal level as was intended by the ADA.
  • The Medicare reimbursement shortfall in EAMS reimbursements is contributing to higher patient bills and is undermining the service: We further believe that the report did not highlight the most significant issue regarding “operational costs and, as available, payment structures” as well as the continued operation of EAMS: the significant underpayment by Medicare. This underpayment, coupled with the behavior of some commercial insurers, is leading to a crisis of emergency air medical service availability in the United States and the access to higher level care these aircraft provide.

Underpayment by Medicare

As part of this report, AAMS hoped the GAO would examine the need for increased transparency in EAMS costs and the crucial need for federal policy to address the gross underpayment of EAMS services by Medicare. As noted in the GAO study, which reported data from 2012, “Medicare patients received 35 percent of helicopter transports, privately-insured patients received 32 percent, Medicaid patients received 21 percent, [and] uninsured patients received 9 percent…” AAMS estimates that in 2017, nearly 40 percent of all EAMS patients transported by helicopter are covered by Medicare. The growth in the volume of Medicare covered transports combined with inadequate Medicare payment rates places EAMS suppliers and providers in financial jeopardy.

In 2017, AAMS engaged an independent research firm, Xcenda LLC, to explore the cost of providing emergency air medical transport using common Medicare cost reporting methods and to provide an unbiased report to the Centers for Medicare and Medicaid Services (CMS), the Government Accountability Office (GAO), and members of Congress regarding the actual costs of providing EAMS. That study found that the median cost of providing an emergency helicopter air medical transport was $10,199. Of that cost, the various government payors, and the uninsured, paid the following:

Reported Median Revenue per Transport
(Fiscal Year 2015)
Reported Median Cost per TransportPercentage of Costs Covered
Medicare$5,998$10,19959%
Medicaid$3,463$10,19934%
Self-pay (uninsured)$354$10,1993%

Current Medicare rates were established in 2002 using cost data from 1996. In its final regulation implementing the Medicare Ambulance Fee Schedule, CMS noted that the data was incomplete and required administrative adjustments that, in part, ensured a budget-neutral AFS. (39 FR 9100) This rate has remained unchanged, aside from modest inflation adjustments, since 2002, and as such Medicare payment rates have fallen out of step with the current true costs of providing EAMS.

In 2017, Congress recognized the need to take action and introduced the “Ensuring Access to Air Ambulance Services Act of 2017” (H.R. 3378 and S. 2121). Sponsored by a bipartisan group: Reps. Walorski (R-IN), DelBene (D-WA), Johnson (R-OH) and Ruiz (D-CA) and by Senators Heller (R-NV) and Bennet (D-CO), the bill would have established mandatory cost and quality reporting requirements on air medical operators and updated the Medicare fee schedule for EAMS. The bill was designed and drafted to provide a long-term solution to the shortfall in Medicare reimbursements ensuring access to emergency air medical operations across the country. Unfortunately, Congress failed to act on this bill in the 115th Congress.

Increased Rural Access

GAO reported that the number of air medical bases grew from 752 bases in 2012 to 868 bases in 2017. The report also notes that the total area served by helicopter bases grew by 23 percent over this same period with about 60 percent of the new helicopter bases and about half of the new fixed-wing bases serving rural areas. GAO noted that of the new helicopter bases nearly one-half provided services in areas with pre-existing coverage by another base.

We appreciate GAO’s analysis of the growth of EAMS helicopter bases; however, we believe that the growth in the number of bases alone provides only part of the overall picture of AMS coverage. Between 2017 and 2018, when factoring out “spare” vehicles, the total number of rotary wing vehicles remained stable. This indicates that providers, while opening new bases, are simply redeploying the same number of resources among those new and existing bases.

Given that the majority of the expansion has taken place in rural areas where the need for the services is greatest and demand for an EAMS aircraft is higher, it makes sense that EAMS providers would open new operational bases and redeploy current resources to areas in need. EAMS bases redeploying resources to rural areas is a direct response to the need for timely, efficient EAMS.

These factors exacerbate the underlying causes of balance billing; dramatic underpayment by Medicare, Medicaid, and the uninsured.

Out-of-Network Transports and Balance Billing

The report cites FAIR Health data as showing that “about two-thirds of the…transports with information on network status were out-of-network in 2012 and 2017, respectively.” As with the majority of research studies, the GAO report cites only a sample study. Furthermore, the GAO acknowledged that there is a “lack of national data around balance billing” and only “reviewed data on consumer complaints that two of our selected states had received about specific incidents of balance billing for 2014 through 2018.”. This was based on a sample of small subset of data is not an accurate depiction of the current status of EAMS in-network agreements.

We agree with the GAO’s conclusion that greater acceptance of in-network contracts between EAMS providers and private insurance companies could decrease the impact of balance billing on the commercially insured population. We note that one of the largest EAMS operations in the United States increased their network participation from 2% to 30% in 2018 alone. Unfortunately, not all commercial insurers are as willing to offer and enter into reasonable in-network contracts. AAMS members have reported that several large Blue Cross/Blue Shield plans have refused to discuss the possibility of entering into in-network agreements. The Committees must consider that both commercial insurers and providers play a role in developing these in-network agreements.

AAMS shares the GAO’s concerns regarding balance billing and appreciates the acknowledgement that “providers may agree to reduce amounts that patients would otherwise owe.” All of our members have programs that allow for debt resolution as well as advocating on behalf of the patient for the full benefit of their insurance plan.

The Increasing Cost of Emergency Air Medical Service

GAO found that the increases in the prices charged for EAMS transports may exacerbate the financial risks related to balance billing for those with private insurance. The report states that in 2017, the median price charged by EAMS providers for a transport was approximately $36,400 for a helicopter transport and $40,600 for a fixed-wing transport. These charges represent an increase of over 60 percent from 2012.

The report fails to recognize the costs of providing EAMS. As noted earlier, the 2017 Xcenda study found that median cost of an emergent helicopter transport is approximately $10,199. This cost reflects both fixed and variable costs of providing the service such as: insurance, payroll, supplies, fuel, safety requires, and more.

  • This cost estimate does NOT include the costs of uncompensated care generated by transporting un-insured and under-insured patients and patients covered by under-paying government programs like Medicaid, Indian Health, TRICARE, and others. When those costs (the accumulated deficit from transporting un-insured, under-insured, and under-paying government programs, weighted according to the percentage of patients they cover) are accounted for, the break-even cost of an emergent transport is estimated to be over $26,000.
  • Even including the costs of uncompensated care, the median costs do NOT include any income to ensure air medical services are able to continue to operate. No business can operate at its break-even point with no funding to sustain its operations or to be able to react to unfunded regulatory requirements. A modest positive change in net assets (non-profit companies) or a modest margin (for-profit companies) enable air medical programs to invest in their people (medical licensing, certifications, etc.), new equipment (aircraft, medical equipment, etc.), safety improvements (night vision systems, flight data monitors, etc.), training (flight simulators, medical training, etc.), and other systemic improvements to ensure they provide the finest, patient-centered emergent care possible, 24/7/365, for every patient-in-need.
  • Further complicating the financial situation is a lack of consistency in payments from commercial insurance payers. AAMS members report wide variances in the amounts paid for the same services from different commercial payers (i.e., from $5,000 up to billed charges).

Proposed Solutions

GAO discussed potential “[a]pproaches by states or the federal government to limit balance billing” by targeting “providers, insurers, or both”, but added that “according to research, targeting just providers or insurers can result in undesired outcomes.” GAO also briefly summarized the federal laws affecting state authority over air medical balance billing: the Airline Deregulation Act; the McCarren-Ferguson Act; and the Employee Retirement Income Security Act.

The Airline Deregulation Act is essential to the performance of emergency air medical operations every day. Over 33% of our operations cross state lines; nearly every flight crosses a county or municipal boundary. It is our status as an air carrier, protected by the ADA that allows our operations to take patients where they need to go, as directed by a physician. Helicopter air medical services were considered by Congress during its debate of the ADA in 1978 (124 Cong. Rec. S10673-S10674); the existence of this form of patient transport was both well-known and the impact this legislation would have on our operations was intentional and beneficial for the patients we transport. The ADA’s protections over EAMS must be preserved.

The report describes state efforts to address balance-billing in Montana, New Mexico, North Dakota, Texas, Florida, and Maryland, noting that in three states, legislation “faced challenges in federal district court related to whether their attempts to limit balance billing by air medical providers are preempted by the federal ADA.” This is correct; however, the ADA does not prevent all efforts to address balance billing; for example:

• Montana: The GAO report suggests that the 2017 Montana legislation “made most air ambulance providers more willing to enter into contract negotiations with insurers.” Montana legislation took the patient out of the middle of billing disputes while offering an arbitration process that would allow for resolution. What the GAO report

fails to mention is that Montana has yet to issue rules for the process of arbitration, leaving many EAMS providers with no process in place to resolve issues of underpayment.

Federal Solutions:

  • Advisory Committee for Transparency in the Air Ambulance Industry: Section 418 of the “FAA Reauthorization Act of 2018” (P.L. 115-254) established an advisory committee to focus on EAMS billing and cost issues, which is being organized by the Secretary of Transportation. AAMS fully supported enactment of Section 418 as a way to address EAMS balance billing issues. AAMS supports the establishment of the advisory committee and looks forward to working with its members to develop solutions that protect patients and preserve access to EAMS.
  • Department of Transportation Consumer Protection Division (DOT CPD): Following the recommendations of the 2017 GAO Report (GAO-17-637), the DOT CPD launched a special air medical portal for billing complaints and related issues. To date, DOT CPD has received 26 complaints since beginning the process in January of 2018. AAMS fully supports this process and refers any billing complaints to the DOT CPD.
  • Federal Balance Billing Solutions: AAMS further supports federal balance billing solutions that remove patients from the billing dispute while protecting and preserving patient access to EAMS and the advanced levels of healthcare they provide.ConclusionAs hospitals continue to close throughout the United States, especially in rural areas, EAMS providers are often the only link for critically injured or ill Americans to obtain timely treatment and transportation to definitive healthcare facilities (e.g., Level I and II trauma centers, stroke treatment centers, et alia) during the “Golden Hour” when those highly effective medical interventions can make a significant difference in the patients’ outcomes. The air medical industry dramatically improves access to Level 1 and 2 trauma centers for over 120 million Americans who would not be able to receive emergent care in a timely manner otherwise. Over 90% of air medical flights are for treating trauma, cardiac, and stroke; those conditions that must be treated at advanced medical facilities.The use of emergency air medical services has become an essential component of the healthcare system. Appropriately used air medical critical care transport saves lives and reduces the cost of healthcare. It does so by minimizing the time the critically injured and ill spend as hospital in-patients, by bringing more medical capabilities to the patient than are normally provided by ground emergency medical services, and by helping get the patient to the right specialty care quickly. Dedicated medical helicopters and fixed wing aircraft are mobile flying emergency intensive care units deployed at a moment’s notice to patients whose lives depend on rapid care and transport. While emergency air medical services may appear to be expensive on a single-case basis compared with ground ambulance service, examining the benefits behind the cost on an individual and a system-wide basis shows that it is cost-effective. All of these issues are amplified in the rural healthcare environment, where patients are simultaneously more at risk of severe injury and farther from definitive care than in other environments. Emergency air medical services may be the only options to transport a critically ill and injured patients in that area to the nearest capable medical facility.Emergency Air Medical Services are:
  • Required to respond to all requests for emergency transport without knowledge or regard to the patient’sability to pay.
  • Required by state ambulance regulations to be available 24/7 for response to emergency requests, with somestates requiring a minimum response time.
  • Are always requested by medical professionals (Physicians or First Responders). They do not self-dispatchand have no control over their volume.
  • Not eligible for existing federal programs for hospitals that provide relief for uncompensated care such as theDisproportionate Share Hospital (DSH) program.AAMS members continue to provide this service despite challenges created by federal payment policies and the practices of some commercial insurers to delay payments, deny payments based on medical necessity, and refuse network negotiations that would solve balance billing issues for hundreds of patients. We continue to support federal solutions that protect patients and access to emergency air medical services and hope that though continued dialogue and increased transparency we can reach those solutions.