Driven by a combination of consumer demand, simple economics and a desire to avoid negative publicity, more health insurers are adding air medical transportation to their in-network covered services.
In-network coverage offers consumers a discounted, out-of-pocket payment for air medical services, an amount that varies depending on their plan’s benefits. Staying in-network for healthcare services can help consumers avoid unexpected spending as well as balance billing, i.e., the practice of billing a patient for the difference between the plan’s reimbursement and the medical charges from the emergency provider.
Air medical services have increased their network participation by an estimated 20% recently and are actively seeking to negotiate more in-network agreements with health insurers, according to industry group the Association of Air Medical Services (AAMS).
The economics of air medical transport
A recent article in Health Affairs examined the controversy around air medical services and balance billing, a topic that has attracted a significant amount of recent media attention due in large part to the shock patients feel when faced with huge bills for air medical services after undergoing a traumatic life event. “Surprise bills represent charges, and these bills arise in ambulance services for the same reason they emerge in the context of out-of-network care,” the authors stated. “In all of these settings, providers and patients (or their insurers) fail to agree on a price in advance of providing care or services.”
It's this inability of insurers and providers to agree on a price or language that recognizes the emergency nature of air ambulance services that leaves patients feeling as if they are stuck in the middle. Contrary to the claims of the authors, air medical transport providers would prefer to reach in-network agreements with insurers. In-network agreements enable air medical providers to better protect their patients, stabilize operations and ease the administrative burden of claims processing. Despite air medical transport providers’ desire to enter into contracts with commercial insurers, many insurance companies resist contracting at pay rates that even cover the costs of service, insisting on using the Medicare reimbursement rate for air medical services as a guide.
For air ambulance providers, insurers’ unwillingness to agree to fair rates presents a huge financial challenge, as reimbursement for seven out of every 10 air medical transports does not cover the cost per transport. (Five out of every 10 patients are insured through Medicare or Medicaid, and two out of each 10 are uninsured.) The numbers tell the story. At an average per-transport reimbursement of $5,998, Medicare payment covers just 59 percent of the median $10,199 cost per transport, according to an industry study. Payments from Medicaid are even lower, averaging $3,463 per transport, while payments from uninsured patients average just $354.
The result is cost-shifting onto the three out of 10 patients who are commercially insured but out-of-network to offset the low reimbursements for Medicare, Medicaid and uninsured patients. However, by reaching in-network agreements with air emergency providers, health plans can obtain greater certainty over their costs, despite cost-shifting. Following are three major reasons why insurers are increasingly seeking to obtain in-network agreements with air medical services providers.
Increased member stickiness: Patients who have emergency air coverage through commercial insurance or via Medicare or Medicaid do not receive a balance bill for services. These patients are responsible only for their co-payments and deductibles, if applicable.
For health plans, this is an important patient satisfaction consideration. For example, many patients may believe that emergency transportation should be included in their coverage. Once they discover it is not, they may become more likely to leave the plan and encourage others they know to do the same.
Safer transfers between trauma and specialty centers: All types of emergency medical transportation carry inherent safety risks. Few understand this better than the air medical transport industry, which is why these providers place a constant focus on safety and risk mitigation.
Leading air medical service providers staff aircraft with a registered nurse and paramedic-level trained clinicians who have practiced at least three years in an emergency care or intensive care setting. As a result, practice and continued hands-on training are critical to enabling air medical providers’ in-flight technicians to constantly hone their skills.
For example, when clinicians are hired, they spend a significant amount of training time performing emergency-care scenarios on human patient simulators as well as cadavers. Experienced instructors video-record these simulations and review them with clinicians afterwards, which is a tactic shown in clinical studies to be a much more effective form of instruction.
Once a clinician completes their initial training, they then serve as a third member on missions until they have experienced a sufficient number of patient encounters to function independently. Working clinicians must also obtain 100 hours of continuing education every year following industry standards. In addition, leading air ambulance providers review every mission to, in part, identify training or education opportunities.
Better coverage for patients as access to care continues to shrink: As rural hospitals continue to close at an alarming rate – nearly 100 have closed since 2010 and another 600 are at-risk – access to healthcare has become an increasingly dire national issue. Many patients’ long distances from medical facilities plays a significant role.
Today, 85 million out of 325 million Americans have access to a Level 1 or 2 Trauma Care facility within one hour only if they are flown by air-medical transportation. Air ambulance services eliminates those geographic obstacles while providing life-saving interventions during transport, such as clot-busting medications that must be given shortly after a major stroke, and trauma care after an accident.
While balance bills garner most of the headlines, health plans have plenty of other good reasons to enter in-network agreements with emergency medical transport providers – such as greater patient satisfaction, enhanced patient safety and improved financial certainty. As more appreciation for the importance of life-saving air medical transport grows, we expect health insurers will increasingly desire to provide this life-saving benefit for their patients.
Chris Myers is Executive Vice President, Reimbursement & Strategic Initiatives for Air Methods, the nation’s leading air medical service.