This Article is From May 06, 2015

Helicopter to the ER: Air Ambulances Offer a Lifeline, and Then a Sky-High Bill

Helicopter to the ER: Air Ambulances Offer a Lifeline, and Then a Sky-High Bill

An air ambulance crew from Life Star of Kansas delivers a patient to Stormont-Vail Hospital in Topeka, Kansas. (Craig Hacker/The New York Times)

Clarence W. Kendall, a rancher in Pearce, Arizona, was moving bales on top of a haystack when he fell 8 feet and struck his head on the corner of a truck below. His health insurance covered most of the cost of treating the head trauma caused by the accident.

But there was one bill, for $47,182, that his insurance did not pay.

It came from the company that transported Kendall in a helicopter ambulance to a hospital in Tucson on the day of the fall, nearly two years ago. "That initial bill nearly gave me a heart attack," he said. "I thought they'd have to come and get me again." Kendall has not paid the charge, which he said was equivalent to a year's income. As a result, Air Methods, the nation's largest air ambulance operator, with over $1 billion in revenue last year, is suing him.

Kendall's case - and many others like it - provides a window into one of the most lucrative booms in health care in recent years. Air ambulance companies, which indisputably save lives, often in dramatic circumstances, have consistently raised their rates and aggressively expanded their networks, adding scores of expensive new helicopters.

The model has worked because health insurance has covered a large share of the bills.

Now changes in the air ambulance industry may leave patients even more financially vulnerable. Private insurance companies that offer ambulance coverage may not cover the full cost of air ambulances, leaving more patients to pay the difference. And in recent months, those insurers, under pressure to cut health care costs, have been reducing reimbursements for air ambulances. Medicare has typically covered a smaller portion of the bills than private insurance, and Medicaid even less.

Air Methods has often resorted to hard-edged legal tactics to get paid, according to interviews and dozens of lawsuits in courts across the country.

"They hounded us for a long time," said Marc A. Dotson, of Butlerville, Ohio, who filed for bankruptcy in 2013 to avoid a demand for $22,150 from Air Methods after his wife was injured. As part of its efforts to collect, the company placed a lien on the Dotsons' home, records show.

At the same time, profits are under threat from within. Strong revenue over the last decade fed explosive growth in the number of air ambulances, creating an inefficient system in which too many helicopters are chasing too few patients, according to some air ambulance operators and emergency care experts. One side effect may be that smaller, nonprofit air ambulance operators, which make up a significant portion of the industry and may charge less than their large commercial rivals, are finding it harder to survive.

Concern about future revenue recently prompted the air ambulance companies to seek help from Washington. The Association of Air Medical Services, an industry trade group, is promoting legislation that was introduced in the House of Representatives in February. Among other things, the bill would increase Medicare payments to air ambulance companies.

The association asserts that higher payouts are needed to keep up with costs, and it contends that a protracted decline in revenue could cause air ambulance operators to withdraw from certain areas. "The reason this bill needs to pass is that it's about access to health care," said Rick Sherlock, the association's chief executive.

As many as 400,000 people are transported each year by air ambulances, the association estimates. The industry has undoubtedly brought quicker emergency care to certain, largely rural, areas of the country, though the safety of air ambulances has also come under scrutiny in the past, and crashes still occur.

Air Methods has been at the forefront of the expansion, earning a sevenfold increase in profit over the last 10 years. By its own calculations, Air Methods accounts for nearly 30 percent of all air ambulance revenue in the country.

Using numbers in the company's financial filings, Jonathan Hanlon, founder of Research 360, a firm that analyzes companies, calculated that Air Methods' average bill in 2014 was $40,766, compared with roughly $17,262 five years earlier. A law that deregulated the airline industry in the 1970s has prevented states from capping the amount air ambulances can charge.

Asked about the increase, Michael D. Allen, president of domestic air medical services at Air Methods, said charges had risen in part to offset the decline in insurance payments.

Receiving surprisingly large medical bills is not uncommon, of course. But air ambulance charges typically catch patients off guard. In emergencies, they often have no say in how they are transported, and to air ambulance companies' credit, they pick up people regardless of their ability to pay.

Some patients said they were puzzled why relatively short rides could cost so much and added that the bills only contributed to more stress during their recovery period, when their injuries prevented them from returning to work. Others questioned whether a regular ambulance, a much cheaper option, would have been a more appropriate response for the injuries they suffered. Some patients even contended that they could have reached the hospital more quickly by road than air.

One of these patients was Diana L. Kidd, a family lawyer in New Paltz, New York. After a motorcycle accident in July 2012, she was taken to the Catskill Regional Medical Center. From there, an Air Methods helicopter transported her to a trauma unit at Westchester Medical Center. The company charged Kidd $36,646, a bill that fell to her because her insurance did not cover ambulance transportation.

She has not paid the bill and is countersuing Air Methods, which had sued to collect the payment. Kidd has calculated that a regular ambulance would have made it to the trauma center in well under the 1 hour and 55 minutes that she said she was charged for. "I could have been taken by ambulance," she said. "There is nothing in the record to indicate that I couldn't have been."

Air ambulance companies rarely collect the full amounts when they go after patients, and they often say they will lower the bill in the hope of getting something. Kidd said Air Methods representatives had offered to cut her bill to $10,000 if she provided personal information to show that she lacked the money to pay, something she declined to do. Kendall, the rancher, said Air Methods had offered to lower his bill to $33,000, a sum he said he thought was still too high. Kendall said that he told the company he would not pay more than $10,000.

While Air Methods may be willing to reduce bills, it also pushes hard in court to be paid. The company, for instance, put a lien on the house belonging to Dotson and his wife, Patricia, as it pursued its claim. Most of that amount was for transporting Dotson to a hospital after she fell from a horse. By filing for bankruptcy, the Dotsons were able to expunge the Air Methods debt, but Dotson said that action had damaged their credit.

Asked about putting a lien on a patient's house, Christina Brodsly, a spokeswoman for Air Methods, said, "Every patient who makes a good-faith attempt to work through payment or our hardship process has never endured having property liens." She said that less than 1 percent of patients transported ended up in court proceedings. The company declined to discuss the specific cases, citing patient privacy laws.

After years of industry expansion and higher bills, it is not clear that patients are better served. Some of the expansion, air ambulance operators say, was driven by companies moving into states and regions where government payouts were higher, rather than by patient need. They contend there is now an oversupply of air ambulances.

The numbers provide some support for that view. In 2013, there were an average of 469 flight hours per helicopter, a nearly 20 percent decline from 2006, and the lowest number since at least 1980, according to research by Dr. Ira J. Blumen, a professor of medicine at the University of Chicago and an expert in emergency medical transport.

"There are not enough flights to support the helicopters that are in the market right now," Greg Hildenbrand, executive director of Life Star of Kansas, a nonprofit air ambulance organization in Topeka, Kansas. The proliferation of helicopters, he said, has made life tougher for many nonprofits, which may charge less than profit-making entities. "We've been on a knife edge for seven years now."

Crucial data in the debate over air ambulance bills are the initial investment and the cost of running a medical helicopter. A new single-engine helicopter equipped as an emergency ambulance can cost as much as $4 million, while a twin-engine helicopter can cost more than double that. Hildenbrand calculated that each flight cost his operation $7,400 last year, counting all costs involved. Two other operators said their costs were close to that figure. But Sherlock, of the air ambulance trade group, calculated that the cost of an average flight was $9,000 to $10,000.

By using more aggressive efforts to secure payments and charging an average of $40,000, Air Methods may be collecting more from patients than other operators do. Even so, there are signs that the pressures of the industry are catching up with the company. Air Methods' financial records suggest that collecting payments takes longer now - a trend that might worsen if more insurance companies reduce reimbursements.

Kendall might be one of the nonpayers. "I refuse to pay what I assumed to be an extremely exorbitant amount of money," he said.
 
© 2015, The New York Times News Service
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