Air ambulance utilization and charges have been steadily increasing over the past several years, according to a new study.
The average in-network negotiated rate for emergency transport by airplane—excluding mileage charges—rose 76.4%, from $8,855 in 2017 to $15,624 in 2020, according to a FAIR Health analysis of around 35 billion healthcare claims. But most air ambulance rides are out of network, leaving consumers to pay for most of the charges.
The average charge associated with airplane ambulances rose 27.6%, from $19,210 in 2017 to $24,507 in 2020. The average Medicare reimbursement rose 4.7% to $3,216 over that span, the same rate increase as emergency helicopter rides.
The average charge associated with ambulance by helicopter rose 22.2%, from $24,924 in 2017 to $30,446 in 2020.
While the number of air ambulance transports is low–roughly 1 per 4,000 privately insured people per year and 1 in 350 Medicare beneficiaries—utilization for air ambulance claims as a share of all emergency transport rose 30%.
When the No Surprises Act goes into effect Jan. 1, patients will not be responsible for out-of-network charges associated with emergency care. But rising air ambulance charges could still impact patients via higher premiums and out-of-pocket costs, said Robin Gelburd, president of FAIR Health.
“Even though (air ambulance) takes up one small corner of the healthcare system, it has a large impact because of the associated cost,” she said. “Costs are defrayed, allocated across different areas. Ultimately, there is an impact on multiple stakeholders even if the consumer is protected for an individual incident.”
The study shows that in-network insurance companies have limited bargaining power, said Ge Bai, a professor at Johns Hopkins University who found that charges for air ambulance services were 4.1 to 9.5 times higher than what Medicare paid for the same services in 2016 in her own study published in Health Affairs.
“This is not particularly surprising because the demand for air ambulance is very inelastic and insurance companies do not have effective options to steer patients,” she said.
Air ambulance companies have been pushing to join provider networks as they prepare for the new law. The No Surprises Act is expected to curb their negotiating clout, Moody’s Investors Service analysts said in a January report. It will especially impact private equity-owned helicopter ambulance carriers that charge nearly twice as much as air ambulance carriers that are not part of a private equity-owned or publicly traded company, research from the USC-Brookings Schaeffer Initiative for Health Policy revealed.
But air ambulance companies will likely offset out-of-network revenue losses by charging more for in-network claims, Bai said.
“Although the No Surprises Act will hold consumers harmless for balance billing on out-of-network claims at the start of next year, it does not alleviate the imbalance of negotiating power between insurance companies and air ambulance providers,” she said. “The reduction in out-of-network revenue to be caused by the law will be remedied through higher in-network revenue through higher negotiated price, which lead to higher premiums.”
Digestive system issues were the most common diagnoses associated with airplane ambulance rides from 2016 to 2020, followed by heart attack, sprains and fractures, chronic respiratory disease and circulatory system issues, FAIR Health found. Cerebrovascular issues were most commonly associated with helicopter ambulance transport, followed by heart attack, head injury and stroke.
Air ambulance patients were much more likely to be admitted to a hospital than those who arrived by ground, according to the report.
“This has increasingly been on the radar of state departments of insurance and federal officials, but there have been limitations on how these issues could be addressed because of (Federal Aviation Administration) regulations,” Gelburd said. “Hopefully we’re entering into a more systematic approach to protecting consumers, but also gathering data points to refine the way in which ambulance services are reimbursed.”
The Biden administration published an interim surprise billing rule last week, which states that providers and payers can turn to an independent dispute resolution process if an out-of-network provider and payer can’t come to an agreement over payment during a 30-day “open negotiation.”