Air ambulances, which transport the sick and injured to hospitals from accident locations, are very expensive — and coming under renewed scrutiny in the battle to restrain unexpected health care costs.
In a new report, Moody’s Investor Service estimated air medical services collect $35,000 to $40,000 per transport from private insurers, compared to Medicare collections of just $5,000 to $6,000 and Medicaid collections of $3,500 to $4,000.
The firm notes that only 20% of air ambulance company’s operating costs are flexible, making it hard to operate below $35,000 per ride.
“To maintain their current levels of profitability, we estimate that the average private insurer reimbursement per flight must remain in the $35,000-$37,500 range,” Moody’s analysts wrote.
While a small detail, air ambulances can add a whole new layer of unexpected costs for both patients and providers. Surprise billing, or balance billing from out-of-network health care providers, has been cited by patients as one of the most financially debilitating factors.
The aerial mode of emergency transport has been heavily criticized, given that 69% of air ambulance providers are out-of-network — which makes it even more costly than normal.
By themselves, transport and operations are an expensive line-item that puts upward pressure on health care costs, something lawmakers are trying to rein in.
Earlier this year, Kaiser Health News reported that Congress overlooked air ambulances in their surprise billing legislation, which can cost anywhere between the high $20,000s to almost a whopping $100,000 per ride.
The median reported cost per flight is just over $10,000, according to the Association of Air Medical Services. That number is significant, because the proposed legislation in Congress would require a cap of the median in-network rates for insured patients.
For their part, air ambulance companies have argued that the low payout of government clients is made up by charging more to private ones. It underscored a dynamic pointed out by Moody’s, which is cuts in private payor rates would likely require an increase in government rates.
“Air medical providers would much rather negotiate fair and reasonable in-network insurance agreements,” the AAMS states on its website.
However, “in some markets, commercial insurance carriers are unwilling to pay or contract at rates that even cover air medical providers’ most basic costs, placing more burden on the insured patient,” it added.
Anjalee Khemlani is a reporter at Yahoo Finance. Follow her on Twitter: @AnjKhem