Air Ambulances, an Unregulated Lifeline, Cost $80,000 for Some Patients

Federal law bans states from regulating air ambulance companies, leaving patients with exorbitant out-of-pocket medical bills.
by | June 7, 2016
(AP/Wilfredo Lee)

After a colleague's son accrued a bill in the tens of thousands for being picked up by an air ambulance following a nasty car accident, North Dakota state Sen. Judy Lee, a lifelong Republican and advocate for small government, dropped her resistance to regulations.

She introduced legislation last year that would incentivize air ambulance companies to accept insurance. The bill easily became law, but it was immediately challenged in court. Why? Because a federal 1978 law prohibits governments from imposing any restrictions or rules on airline companies -- and that includes air ambulances.

Sure enough, a federal judge in March sided with Valley Med Flight, the independent air ambulance company that filed the lawsuit, and struck down the law.

For many state officials, especially those in rural areas, the Airline Deregulation Act of 1978 is archaic. As rural hospitals close around the country, the law is financially harming more and more patients who may have to rely on air ambulances to get them to faraway hospitals in emergency situations. Even when patients have insurance, they're often left with exorbitant bills in the tens of thousands of dollars. (In life and death situations, though, medical bills may be better than none. In Puerto Rico, the island's only air ambulance company suspended services this week.)

Rebecca Ternes, deputy commissioner of the North Dakota Insurance Department, has been getting complaints about the out-of-pocket costs associated with air ambulances for some time.

“The smallest charge I’ve ever seen was $18,000, and the highest I’ve ever seen was $80,000,” she said.

The costs are so high for a variety of reasons, but one of the biggest is insurance networks. When someone needs to be airlifted, there's no time to shop around for the company that takes their health insurance. Most often, whichever air ambulance is closest is the one that comes to pick patients up.

North Dakota's law would have required air ambulance businesses that want to be on the "primary call list" to take insurance from companies that cover 75 percent of the state’s population. If they had refused, the air ambulance businesses would have been placed on the “secondary call list,” likely getting less calls.

This issue is consuming the office of Montana’s state auditor.

“We have these independent companies that are refusing to get in-network for insurance companies because they feel that they don’t get paid enough," said Jesse Laslovich, chief legal counsel for the auditor. "There’s no one for the consumer to turn to in these instances, so they’ve been turning to us."

He says he’s in ongoing talks with an air ambulance working group to try to get more companies to accept insurance.

But Rick Sherlock, president of the Association of Air Medical Services, argues the industry is already regulated enough.

“We have the FAA [Federal Aviation Administration] on the federal level that we must comply with. And then there’s medicine, which resides on the state level,” he said.

Thirty percent of air ambulance rides cross state lines. If states were allowed to create their own rules for air ambulance companies, Sherlock says it would lead to a patchwork of boundaries that wouldn't necessarily benefit patients. For example, a company could be in-network for an insurance company in one state but out-of-network in the state it transports the patient to. This could still result in high balance bills.

According to Sherlock, much of what's driving the cost of air ambulances is the cost of uncompensated care.

“Alabama and Pennsylvania, for example, only reimburse companies $200 for air transport under Medicaid,” he said.

For many, it’s hard to swallow the idea that there can’t be some compromise between states and the private companies.

“This isn’t a partisan issue, this is a people issue. We’re not trying to inhibit commerce or trade, we’re just trying to protect people,” said Ternes. “In rural states, air ambulances are a critical provider.”

Still, the fact remains that air ambulances are protected by federal law from state regulation -- and efforts to change that have failed. Earlier this year, U.S. Sens. Jon Tester of Montana and John Hoeven of North Dakota tried to amend FAA reauthorization legislation to let states regulate air ambulance companies.

Ternes also worries that North Dakota’s unsuccessful attempt will make other states much more cautious about introducing similar bills. But in Montana, Laslovich is hopeful that they can come to an agreement that's fair for residents without violating federal law.

“The law is the law, but I see a crack there," he said, "and I think we can find a way to help people out."

Correction: A previous version of this article incorrectly stated that Judy Lee's son was in a car accident. Her colleague's son was in a car accident.