Air Ambulance: Available Data Show Privately-Insured Patients Are at Financial Risk
Released: 2019-03-20T00:00:00

Letter

Background

Air ambulance providers use either helicopters or fixed-wing aircraft, as shown in Figure 1, depending on where and how far they are transporting patients.

Helicopters are generally used for transports from the scene of the accident or injury to the hospital or for shorter-distance transports between hospitals. Helicopter bases may be at hospitals, airports, or other types of helipads, and a provider may need to fly from its base to the scene or a hospital to pick up the patient being transported. Air ambulance providers typically respond to calls for helicopter transports within a certain area around their bases in part to ensure appropriate response times.

Fixed-wing aircraft are generally used for longer-distance transports between hospitals. Fixed-wing bases are at airports, and the patient is transported by ground ambulance to and from the airports.

Air ambulance providers respond to emergencies without knowing patients’ health insurance coverage, such as whether the patient has private insurance, Medicare, Medicaid, or no insurance. According to our previous analysis of information from eight selected air ambulance providers, in 2016, Medicare patients received 35 percent of helicopter transports, privately-insured patients received 32 percent, Medicaid patients received 21 percent, uninsured patients received 9 percent, and patients with other types of coverage such as automobile and military- sponsored insurance received a small percentage.

Relatively few patients receive air ambulance transports, but those patients who do generally have no control over the decision to be transported by air ambulance or the selection of the air ambulance provider, as shown in Figure 2. For privately-insured patients, this means they cannot necessarily choose to be transported by air ambulance providers in their insurers’ network and can potentially receive a balance bill from the providers for the difference between the price charged by the provider and the amount paid by the insurer. This amount is in addition to copayments, deductibles, or other types of cost-sharing that patients typically pay under their insurance. Air ambulance providers are prohibited from sending balance bills to Medicare and Medicaid patients, while uninsured patients might be held responsible by the air ambulance provider for the entire price charged.

With many types of health care services, both health care providers and insurers have incentives to negotiate and enter into contracts that specify amounts that providers will accept as payment in full, thereby avoiding the potential for balance bills for those services. Insurers can offer—and health care providers may be willing to accept—payment rates that are much lower than the providers’ charged amounts because the providers may receive more patients as an in-network provider. Furthermore, when patients are choosing insurance plans, they may consider how many or which providers are in-network, particularly for providers such as hospitals or certain physicians.

The emergency nature of most air ambulance transports, as well as their relative rarity and high prices charged, reduces the incentives of both air ambulance providers and insurers to enter into contracts with agreed- upon payment rates, which means air ambulance providers may be more often out-of-network when compared with other types of providers. Decisions by first responders and physicians on which air ambulance provider to call are typically not based on the patient’s insurance plan, meaning that being in-network may not increase air ambulance providers’ transport volume. As a result, according to stakeholders we spoke to, if insurers offer payment rates that are much lower than the air ambulance providers’ charged amounts, the air ambulance providers may be less willing than other health care providers to accept those payment rates. Furthermore, given the relative rarity of air ambulance transports, patients may not anticipate needing air ambulance transports and may not choose insurance plans based on which or how many air ambulance providers are in insurers’ networks.

Approaches by states or the federal government to limit balance billing may target providers, insurers, or both. Examples of approaches described in research on balance billing include a cap on the amount that providers can charge or a requirement for insurers to pay the full amount charged by providers. However, according to the research, targeting just providers or insurers can result in undesired outcomes. Capping the amount providers can charge could result in insurers that underpay for services, which could lead some providers to reduce service or exit the market altogether. Conversely, requiring insurers to pay the full amount charged by providers could result in providers that overcharge for services, which could lead to higher premiums charged to patients.

The authority of states to address issues related to air ambulance balance billing is affected by the following federal laws:

Airline Deregulation Act of 1978 (ADA): A provision in this law preempts state-level economic regulation—i.e., regulating rates, routes, and services—of air carriers authorized by DOT to provide air transportation. In general, courts have held that air ambulances are considered to be air carriers under the ADA’s preemption provision, and courts, DOT, and state attorneys general have determined specific issues related to the air ambulance industry that can and cannot be regulated at the state level.

McCarran-Ferguson Act of 1945: This act affirmed that states have the authority to regulate the business of insurance. For example, states may review insurers’ health insurance plans and premium rates. In instances of balance billing, states can determine whether the insurer paid a provider in accordance with its policy for paying for out-of-network services.

Employee Retirement Income Security Act of 1974 (ERISA): ERISA provides a federal framework for regulating employer-based pension and welfare benefit plans, including health plans. Although states may regulate health insurers, ERISA preemption generally prevents states from directly regulating self-insured employer-based health plans.

In 2017, as previously mentioned, we reported on the increase in prices charged by helicopter air ambulance providers and on the lack of data on the factors that may be affecting prices charged. We also found only limited information was available related to several key aspects of the industry, ranging from basic aspects—such as the composition of the industry by type of air ambulance provider, the prices charged by air ambulance providers, and the number of overall transports—to the more complex, such as the extent of contracting between air ambulance providers and insurers or the extent of balance billing to patients.

Given DOT’s authority to oversee certain aspects of the industry, we made four recommendations to DOT in 2017 to increase transparency and obtain information to better inform their oversight of the air ambulance industry: (1) communicating a method to receive air ambulance complaints, including those regarding balance billing; (2) taking steps to make complaint information publicly available; (3) assessing available federal and industry data to determine what information could assist in the evaluation of future complaints; and (4) considering consumer disclosure requirements for air ambulance providers, such as established prices charged and the extent of contracting with insurers. DOT has taken steps to respond to the first two recommendations, including adding information to its website describing how air ambulance complaints can be registered and used by DOT. It has also listed the number of air ambulance complaints filed with DOT each month starting in January 2018—23 air ambulance complaints have been filed with DOT through November 2018. DOT has not yet acted on the remaining two recommendations.

Air Ambulance Providers Added Bases from 2012 through 2017

Air ambulance providers added helicopter bases from 2012 through 2017, according to our analysis of the ADAMS data. Specifically, there were 752 bases in the 2012 data and 868 bases in the 2017 data. When we compared the data for each year, there were 554 bases in both years of data (i.e., existing bases), 314 bases in the 2017 data only (i.e., new bases), and 198 bases in the 2012 data only (i.e., closed bases); the new and existing bases are shown in Figure 3. This addition in bases also increased the total area served by helicopter bases by 23 percent. Several air ambulance providers told us about their decisions to open new bases. For example, one air ambulance provider told us that one way it evaluates the need for a new base in an area is to ask hospitals in that area about the number of transports they typically require and the length of time it takes helicopters to arrive to pick up patients.

Along with adding helicopter bases, air ambulance providers also added fixed-wing bases from 2012 through 2017, according to our analysis of the ADAMS data. Specifically, there were 146 bases in the 2012 data and 182 bases in the 2017 data. When we compared the data for each year, there were 114 bases in both years of data (i.e., existing bases), 68 bases in the 2017 data only (i.e., new bases), and 32 bases in the 2012 data only (i.e., closed bases); the new and existing bases are shown in Figure 4. Both the existing and new bases are more prevalent in the Western and Southern parts of the United States. Given that fixed-wing aircraft are used for longer-distance transports and that patients are brought to the base rather than picked up by fixed-wing aircraft, we did not measure the area or any changes in the area served by fixed-wing bases, which are usually airports.

Based on our previous work, we further analyzed two trends related to where air ambulance providers have chosen to locate their new bases.

New bases in rural areas: About 60 percent of the new helicopter bases and about half of the new fixed-wing bases in the ADAMS data were in rural areas. We previously reported that some helicopter air ambulance providers told us that the lower population density in rural areas leads to fewer transports per helicopter at rural bases. They also said that, despite the lower population density, rural areas may have greater need for air ambulance transports. This may be due to, for example, the closure of some rural hospitals and the establishment of regional medical facilities, such as cardiac and stroke centers that provide highly specialized care.

New bases in areas with existing coverage: For just under half of the new helicopter bases in the ADAMS data, the area served overlapped with existing air ambulance coverage by more than 50 percent. On one hand, according to some stakeholders we spoke to, the new helicopters may help enhance available services by, for example, being able to respond to a call if the existing ambulance resources are in use or otherwise unavailable. On the other hand, as we have previously reported, some air ambulance providers told us that when helicopters are added to bases in areas with existing coverage, those helicopters are not serving additional demand. As a result, the same number of transports is spread out over more helicopters, reducing the average number of transports per helicopter.

The FAA Reauthorization Act of 2018, which became law in October 2018, requires the FAA to assess the availability of information to the general public related to the location of heliports and helipads used by helicopters providing air ambulance services and to update current databases or, if appropriate, develop a new database containing such information. This could provide additional information about base locations going forward.

Available Data Indicate About Two- Thirds of Air Ambulance Transports for Privately-Insured Patients Were Out-of- Network but Not Extent of Balance Billing for these Services

In the FAIR Health data on air ambulance transports for privately-insured patients, about two-thirds of the approximately 13,100 and 20,700 transports with information on network status were out-of-network in 2012 and 2017, respectively. (See Table 1.) The proportions were similar for both helicopter and fixed-wing transports in each year.

The proportion of out-of-network air ambulance transports in the FAIR Health data set is higher than what research shows for ground ambulance transports and other types of emergency services. For example, one study found that 51 percent of ground ambulance transports in 2014 were out-of-network, and the same study and another one found that 14 and 22 percent of emergency department visits in 2014 and 2015 involved out-of- network physicians, even at in-network hospitals.

Air ambulance providers and insurers we spoke to confirmed that their proportion of out-of-network transports was high in 2017, but some also reported they have recently been entering into more network contracts. For example, one of the large independent air ambulance providers and a national insurer entered into a contract that covered patients in five states as of August 2018. These contracts could decrease the extent of out-of- network transports and balance billing in the future for these states.

Increases in the prices charged for air ambulance transports may exacerbate the financial risks related to balance billing for those with private insurance. In 2017, the median price charged by air ambulance providers for a transport was approximately $36,400 for a helicopter transport and $40,600 for a fixed-wing transport, according to our analysis of FAIR Health data. The prices charged in 2017 were an increase of over 60 percent from 2012, when the median price charged was approximately $22,100 for a helicopter transport and $24,900 for a fixed- wing transport. There is limited information on what insurers pay for out- of-network services.

While out-of-network transports may result in balance billing, the FAIR Health data we analyzed do not indicate the extent to which patients received balance bills and, if so, the size of the bills. In addition, as we previously reported, there is a lack of comprehensive national data about the extent and size of balance bills, and air ambulance providers are generally not required to report such data.

However, some states have attempted to collect information from patients about balance billing for air ambulance services. Therefore, to provide insights into potential balance bill amounts, we reviewed data on consumer complaints that two of our selected states had received about specific incidents of balance billing for 2014 through 2018. Data for Maryland contained about two dozen complaints with information on the specific amount of balance bills, and those amounts ranged from $12,300 to $52,000. Data from North Dakota contained three dozen complaints with information on the specific amount of balance bills, and those amounts ranged from $600 to $66,600, though all but one amount was over $10,000.

Given that providers may agree to reduce amounts that patients would otherwise owe or insurers may increase their payments to providers, along with limited national data, the extent to which patients actually pay the full amounts of balance bills received is also unclear. Generally, officials from air ambulance providers we spoke to said that they first encourage patients to appeal to their insurers for increased payment. If these appeals do not fully address the balance bill, the providers may offer various payment options. For example, officials from one air ambulance provider said that it offers a discount of up to 50 percent off the balance bill if the patient pays the remaining 50 percent immediately. Alternatively, the provider requests detailed financial information—such as income, obligations and debts, and medical bills—to determine whether to potentially offer other discounts or a payment plan. This process can take multiple months, and officials from another air ambulance provider said patients who do not respond to letters and calls may be more likely to be referred to a collections process. Air ambulance providers we spoke with said that they use discretion on how much assistance to offer, and not all patients receive discounts after providing all relevant documentation. Even with discounts, according to data from some air ambulance providers we spoke with, the amount patients pay can still be in the thousands of dollars.

Selected States Have Attempted to Limit Potential Air Ambulance Balance Billing through Insurance Regulation and Public Attention

Four of our selected states attempted to limit balance billing through the regulation of insurers (Montana, New Mexico, North Dakota, and Texas). Additionally, four states have attempted to limit balance billing through education and public pressure on stakeholders (Florida, Maryland, New Mexico, and North Dakota).

Insurance Regulation

Four of the six states we selected—Montana, New Mexico, North Dakota, and Texas—have attempted to limit balance billing by air ambulance providers through the regulation of insurers, as shown in Table 2. Three states have faced challenges in federal district court related to whether their attempts to limit balance billing by air ambulance providers are preempted by the federal ADA. As of January 2019, the case in New Mexico was dismissed on procedural grounds, and the cases in North Dakota and Texas have been decided.

The hold-harmless requirement and dispute resolution process established by Montana’s law is an example of how states are attempting to limit balance billing by regulating the business of insurance. Under the hold-harmless requirement, the financial risk for potential balance billing is transferred from patients to the insurer by limiting the patients’ out-of- pocket costs to their cost-sharing responsibilities. However, according to state officials, the dispute resolution process established by this law had not yet been used as of December 2018. The requirement and process apply to transports for patients covered by Montana-regulated insurance plans. It does not apply to transports for individuals in most self-insured plans subject to ERISA, nor does it apply to transports for individuals, such as tourists, covered by insurance plans regulated by other states. The stated purpose of the law establishing this process is to prevent state residents from incurring excessive out-of-pocket expenses in air ambulance situations in a manner that is not preempted by the ADA.

Officials in Montana and North Dakota reported receiving fewer consumer complaints about balance billing after implementing their laws to limit balance billing. One reason for this decrease in consumer complaints, according to officials in Montana, was that uncertainty over the possible effects of the law has made most air ambulance providers more willing to enter into contract negotiations with insurers. The officials added that shortly after the law’s enactment, a large insurer and a large air ambulance provider entered into a network contract. Additionally, another air ambulance provider in Montana confirmed that although it had provided out-of-network transports, it had not sent balance bills to patients since the law took effect. Officials in both states could not comprehensively report the extent to which instances of balance billing may have decreased in their state.

As required by FAA Reauthorization Act of 2018, the Secretary of Transportation has taken steps to form an advisory committee on air ambulance patient billing. DOT issued a solicitation in December 2018 for applications and nominations for membership on this advisory committee. The committee is to consist of representatives from state insurance regulators, health insurance providers, patient advocacy groups, consumer advocacy groups, and physicians specializing in emergency, trauma, cardiac, or stroke care, among others. The Act directs the advisory committee to issue a report within 180 days of its first meeting and to make recommendations that address the following, among other things:

The disclosure of charges and fees for air ambulance services;

Options and best practices for preventing balance billing—such as improving network and contract negotiation, dispute resolutions between health insurers and air medical service providers, and explanations of insurance coverage;

Steps that states can take to protect consumers consistent with current legal authorities regarding consumer protection; and

The recommendations from our 2017 report, including any additional data that DOT should collect from air ambulance providers and other sources to improve its understanding of the air ambulance market and oversight of the industry.

Education and Public Pressure

Officials in three selected states—Florida, New Mexico, and North Dakota—have provided information to educate consumers and other stakeholders about balance billing for air ambulance transports. The Florida Office of the Insurance Consumer Advocate and the New Mexico Office of Superintendent of Insurance reviewed air ambulance transports in their states and issued public reports with recommendations to improve transparency and education, among other recommendations. Florida’s report, issued in June 2018, recommends that insurers and air ambulance providers improve transparency about the availability of in-network air ambulance providers in a given area and provide information about rate justifications and billing practices to help consumers anticipate potential out-of-network costs. New Mexico’s report, issued in January 2017, recommends educating emergency room physicians and other health care providers about the impact of air ambulance bills on consumers and on how to select in-network air ambulance providers. Additionally, since 2017, the North Dakota Insurance Department has produced a publicly available guide showing which air ambulance providers are in-network with the three insurers in the state. This guide is part of the state’s requirement that, for non-emergency transports, hospitals inform patients about the network status of air ambulance providers. Although the three large independent air ambulance providers we spoke with told us that non-emergency transports comprise only a small percentage of air ambulance transports, officials in North Dakota said some dispatchers and first responders reported using the guide to call in-network air ambulance providers when possible for emergency transports.

Finally, one additional selected state—Maryland—has increased public awareness of air ambulance balance billing, which has generated public pressure on air ambulance providers and insurers to encourage the two sides to negotiate contracts. The Maryland Insurance Administration convened a public meeting in September 2015 with the goal of raising public awareness about air ambulance balance billing in the state. The meeting involved statements from patient, air ambulance, hospital, and insurer stakeholders. One of the large independent air ambulance providers said that public pressure following the meeting, as well as subsequent engagement from the state insurance commissioner, were factors in securing a contract with a large insurer in the state.

Agency Comments

We provided a draft of this report to the Department of Health and Human Services and DOT for review and comment. The Department of Health and Human Services told us they had no comments on the draft report, and DOT provided technical comments that we incorporated as appropriate.

We are sending copies of this report to the appropriate congressional committees, the Administrator of the Centers for Medicare & Medicaid Services, the Secretary of the Department of Transportation, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact James Cosgrove, Director, Health Care at (202) 512-7114 or cosgrovej@gao.gov or Heather Krause, Director, Physical Infrastructure at (202) 512-2834 or krauseh@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix I.

Appendix I: GAO Contacts and Staff Acknowledgments

GAO Contacts

Staff Acknowledgments

In addition to the contacts named above, Lori Achman (Assistant Director), Heather MacLeod (Assistant Director), Corissa Kiyan-Fukumoto (Analyst-in-Charge), William Black, George Bogart, Stephen Brown, Krister Friday, Matthew Green, Barbara Hansen, Giselle Hicks, and Vikki Porter made key contributions to this report.

Related GAO Products

Air Ambulance: Data Collection and Transparency Needed to Enhance DOT Oversight. GAO-17-637. Washington, D.C.: July 27, 2017.

Air Ambulance: Effects of Industry Changes on Services Are Unclear. GAO-10-907. Washington, D.C.: Sept. 30, 2010.