U.S. Government Accountability Office Examines Soaring Air Ambulance Rates, Potential Regulatory Action

 

In a report requested by U.S. House Committee on Transportation and Infrastructure Chairman Bill Shuster and Ranking Member Peter DeFazio, the U.S. Government Accountability Office (“GAO”) recommended that the U.S. Department of Transportation (“DOT”) take steps to assess and receive complaints about air ambulances and related balance billing, both of which have been a topic of increasing concern for both state and local governments, as well as the insurance industry.

The DOT has indicated it does not believe assessing such data or determining how to best evaluate complaints in the future is needed, however.

Nevertheless, as requested by the Congressmen to review air ambulance pricing, the GAO examined:

(1) the prices charged for air ambulance service,

(2) the factors that affect prices, and

(3) stakeholders’ views on any actions the federal government could take to address air ambulance pricing.

Alarmingly, between 2010 and 2014, the median prices providers charged for helicopter air ambulance service approximately doubled, from around $15,000 to about $30,000 per transport, according to Medicare data from the Centers for Medicare & Medicaid Services and private health insurance data.

Although helicopter air ambulances reduce transport times for critically ill patients during life-threatening emergencies, patients typically have little to no choice over the service or provider given what is usually the emergency nature of the transports.

Air ambulance providers do not turn away patients based on their ability to pay and receive payments from many sources depending on the patient’s coverage-often at rates lower than the price charged.  For example, the Medicare median payment was $6,502 per transport in 2014.  Air ambulance providers might bill a privately insured patient for the difference between the price charged and the insurance payment–a practice called balance billing–when the provider lacks an in-network contract with the insurer.   Thus, patients are billed for charges that have potentially devastating financial impacts.

However, due to a lack of information it is unclear to what extent patients are balance billed.

Factors such as a provider’s proportion of transports provided by payer and competition may play a role in air ambulance prices charged, but data to assess these factors are not available.  For example, selected providers reported that they adjust prices to receive sufficient revenue from private health insurance to account for certain lower-paid transports, such as those covered by Medicare.  

Price increases may also be tied to the industry’s characteristics such as apparent market concentration-the three large independent air ambulance providers reported operating 73 percent of the industry’s total helicopters in 2016.  An analysis of these factors is not possible due to a lack of currently available data such as the number of transports or the industry’s composition by provider.

Selected stakeholders interviewed by the GAO in creating its report proposed various actions to address air ambulance pricing issues, including (1) raising Medicare rates, (2) allowing state-level regulation of air ambulance prices, and (3) improving data collection for the purposes of investigations and transparency regarding prices.

Those stakeholders expressed mixed views on the first two proposals, but none disagreed with the third.  

The GAO explained that the DOT has discretionary authority to investigate potentially unfair practices in air transportation or the sale of air transportation, but has not exercised this authority in regard to helicopter air ambulances.  To do so, DOT officials said they need additional information about the air ambulance industry.  

For example, DOT officials note that they have received few air ambulance complaints since 2006 and report that consumers may not think of DOT as the place to complain.

Although the DOT recently modified its online form to include air ambulance complaints, it has not communicated how to file complaints.

Without doing so and obtaining more industry data, the GAO said the DOT is missing important information needed to put complaints into the context of the overall industry that could affect its assessment on whether to pursue investigations.  Further, stakeholders such as hospital staff could benefit from greater transparency, inasmuch as they currently have limited ability to make air ambulance decisions that serve both the financial interests and medical needs of the patient, the GAO added in its report.

As a solution, the GAO has recommended that the U.S. Secretary of Transportation should:

(1) communicate a method to receive air ambulance, including balance billing, complaints;

(2) take steps to make complaint information publicly available;

(3) assess available data and determine what information could assist in the evaluation of future complaints; and

(4) consider air ambulance consumer disclosure requirements.

As mentioned, the DOT concurred with all but the third recommendation, explaining that additional information is not needed for such purposes.

The GAO emphasized in its report that it stands by its recommendation.

To access the complete report and supporting documents published on July 27, 2017, click here.

In Florida, air ambulance rate regulation has been a major focus for Florida Insurance Consumer Advocate Sha’ron James.  Her Working Group on the issue most recently met this past June.

To go to the Florida Insurance Consumer Advocate’s Emergency Medical Transportation Web page, which lists members of the Working Group and a link to video replays from past meetings, click here.

 

 

 

 

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