Mark Huber is an aviation industry veteran who has worked in the flight training, aircraft sales, aircraft component, and airport development businesses. He has flight time in more than 50 different and diverse aircraft, including helicopters, aerobatic aircraft, vintage warbirds, jet fighters, business jets and turboprops, and transport-category aircraft. He has jumped out of several of these—on purpose—with a parachute. His defense and aviation journalism has been published in a variety of national and international periodicals.

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Mark Huber

A group of industry stakeholders interviewed for a new study released by the Government Accountability Office (GAO) cast doubt on the ability of increased Medicare reimbursements to solve the ills of the U.S. air ambulance industry. The industry has long called for higher Medicare reimbursements to mitigate “balanced billing” and other practices seen driving the high costs of air medical transports, whose average median costs climbed to $30,000 from $15,000 between 2010 and 2014, according to the GAO.

 


The average Medicare reimbursement was just $6,502 in 2014, which the industry has long claimed is substantially below actual costs. The nation's largest air ambulance provider, Air Methods, raised its average price per transport to $49,800 in 2016 from $13,000 in 2007—an increase of 283 percent.&nbsp;By last year, the nation's three largest independent air ambulance providers all had average transport costs in excess of $40,000 and the GAO noted that, collectively, they were rapidly increasing market share. The agency noted, “The three large independent providers reported operating 692 air ambulance helicopters in 2015 and 763 in 2016—an increase from 66 to 73 percent of all helicopters in the industry.”

 


However, raising the Medicare reimbursement rate might actually exacerbate the industry's overcapacity/underutilization/high-cost problem. The GAO reported, “Some of these stakeholders noted that increasing Medicare rates could encourage further growth in the industry, which could reduce the average number of transports per helicopter, putting pressure on providers to raise prices charged—thereby exacerbating the problem. Further, industry growth may be an indication that Medicare rates are not too low. We have previously reported that when rates are set too low, access to appropriate care for patients covered by Medicare may be adversely affected. However, the growth in the number of air ambulance helicopters indicates that providers are still deciding to provide service under existing Medicare rates.”

 


The number of Medicare patients as a percentage of overall patient transports is climbing, the number of air medical helicopters went up by more than 10 percent, from 900 to 1,020, between 2010 and 2014, but the number of transports per 1,000 Medicare patients was flat and down slightly among the privately insured. Industry stakeholders attributed this to two trends, the GAO said. “Representatives from three providers stated that there is an issue with overcapacity or oversaturation in the industry and that the helicopters being added to the industry are in areas with existing coverage and not serving additional demand, thereby reducing the average number of transports per helicopter rather than improving access to patients previously not covered by the service. On the other hand, representatives from four other providers told us that the decline in transports per helicopter is attributable to helicopters increasingly being located in rural areas where there is greater need, but less population density, leading to fewer transports per helicopter.”&nbsp;

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