Health Affairs source article | Comments courtesy of Matt Zavadsky
Interesting data report in this month’s Health Affairs.
Original and highlighted versions of the published study attached. Highlighted sections replicated below for your convenience.
Air Ambulances With Sky-High Charges
Ge Bai, Arjun Chanmugam, Valerie Y. Suslow, and Gerard F. Anderson
Charges for air ambulance services were 4.1–9.5 times higher than what Medicare paid for the same services in 2016. The median charge ratios (the charge divided by the Medicare rate) for the services increased by 46–61 percent in 2012–16. Air ambulance charges varied substantially across the US, and some of the largest providers had among the highest charges.
In 2017 two-thirds of air ambulance services with available billing information on network status for privately insured patients were out of network.4 In 2016 the national median charges for air ambulance services were 4.1–9.5 times the Medicare rates; in contrast, the national median charges for ground ambulance services were 2.8 times what Medicare paid (exhibit 1).
As shown in exhibits 1 and 2, the national median charges for initial fees and mileage rates for air ambulances for rotary-wing air ambulances were 5.3 and 7.3 times the Medicare rate, respectively, compared to 4.1 and 9.5 times that rate for fixed-wing air ambulances. In contrast, the national median charges for initial fees and mileage rates for ground ambulances were 1.7–2.8 times the Medicare rate.
Charges increased substantially over this time. The median charge increased by approximately 60 percent, from $24,000 to $39,000, for both types of air ambulances (appendix exhibit A2).6In the same period, the median charge ratios for the mileage rate increased for rotary (55 percent, from 4.7 to 7.3) and fixed wing (46 percent, from 6.5 to 9.5) (exhibit 4). The median ratios for the initial fee also increased, by 61 percent (from 3.3 to 5.3) for rotary and 46 percent (from 2.8 to 4.1) for fixed wing.
The high charges might be the result not of lack of entrants or limited supply, but of a market failure.
Encouraging the market entry of new air ambulance providers could spur competition and reduce charges, but since many incumbent providers possess underused capacity, the market may already be saturated.8 The high charges, therefore, might be the result not of lack of entrants or limited supply, but of a market failure. Patients lack control over which air ambulance provider transports them, nor can they check provider network status or conduct price comparisons in the midst of an emergency serious enough to require air ambulance service.