Air ambulance companies under scrutiny for excessive costs

Despite their lifesaving capabilities, Montana lawmakers might regulate air medical services


By Troy Carter
Associated Press

BOZEMAN, Mont. — Earlier this month, a Summit Air Ambulance helicopter raced up Hyalite Canyon south of Bozeman in search of a skier impaled on a tree.

Emergency responders with skis, snowmobiles and four-wheelers also were mustered.

Summit's twin 560-horsepower Pratt & Whitney turboshaft engines on its Agusta 109E easily pushed the helicopter over the trailhead. The crew was the first to see the skier.

The pilot traced the ski tracks up to the patient. It was too steep, so the crew landed in the parking lot and relayed the location.

"We got basic patient info and started prepping," said Emily 'M' Rex, Summit's flight nurse.

She helped set the skier on the ground, then loaded him into the red and white Agusta. It then took seven minutes to reach Bozeman Health Deaconess Hospital.

Rex said it was a good example of a local rescue, which includes about 30 percent of Summit's flights. Most flights are transfers from one hospital to another.

Despite their lifesaving capabilities, Summit Air Ambulance and similar companies are under scrutiny, the Bozeman Daily Chronicle reported. Lawmakers in Helena might regulate air medical services. People taking emergency flights are getting stuck with huge bills. And insurance companies aren't covering the total costs.

Yet air ambulances provide a needed service in rural areas with lots of backcountry, and the cost of flights, pilots, nurses and paramedics is expensive.

"We have to close the gap and educate the public and insurance companies about the real costs of operating these services," said Ron Walter, Summit's director of clinical operations.

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Amy Thomson, 38, was on a fixed-wing air ambulance flight last year. The Butte woman took her 2-month-old daughter Isla Rose to St. James Hospital after her weight gain had slowed. A pediatrician diagnosed respiratory syncytial virus, her heart was swollen, and she needed to get to Seattle Children's immediately.

There were two air ambulance options available, one from Missoula and another from Seattle. The receiving doctor in Seattle made the choice, not Thomson. The team from Seattle was better equipped and trained so they would come to Butte. The mother was in crisis mode. She can't remember getting to the airport.

"Being in the hospital with your baby is hard enough, then to be told she has a heart defect and not understanding what is going on while being told you need to be transferred to Seattle Children's," Thomson said. "The fear of losing your child changes you."

The flight was the longest hour of her life. The entire ordeal took three months. Isla Rose had open chest surgery and a tough recovery. She couldn't even eat. Thomson watched as her baby starved. But things slowly improved. She's fine now.

The week they got home, Amy and her husband Pat opened a $43,000 bill from Airlift Northwest. The total was $56,000, but their insurance company, PacificSource Health Plans, had already paid $13,000, the cap in the policy.

"I was somewhat in denial thinking our insurance would take care of it," Thomson said.

She was wrong.

"It was another layer of trauma. You just assume it's part of your medical coverage," she said.

She called Airlift Northwest's billing number and had a meltdown. There was some swearing. "It's not like we went out and bought a $56,000 car we couldn't afford," she said.

She was assigned a critical care case manager. It didn't help. She filed a complaint with the insurance commissioner's office. It didn't help.

And they couldn't apply for the air ambulance's hardship assistance until she went through the insurance company's appeal process. Even then, multiple people advised her against signing anything from Airlift Northwest's billing department who started to call more often. The hardship application included questions about their income, retirement savings and mortgage. She kept fighting.

She talked to lawmakers and the Patient Advocate Foundation. She maxed out every deadline in the appeal, trying to buy time because for her, the process was time consuming. And in the meantime Amy and Pat bought a $59 membership in a life flight network to prevent another bill if Isla Rose had to go back.

In February 2015, on the same day she was set to retain a private attorney, Amy got a call from PacificSource. They agreed to pay more after the insurance commissioner's office had said the policy language was too vague and the air ambulance company wrote off the rest.

"There's definitely an ethical problem with this whole setup," she said. "Life flight companies are making good profits when people are at their most vulnerable."

Thomson felt like she'd won a victory.

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Stories like Amy's have sparked a policy discussion in Helena. In April, House Joint Resolution 29 passed the House 71-28 and the Senate 35-14. It created an official legislative study of air ambulances, being conducted by the Economic Affairs Interim Committee. Rep. Ryan Lynch, D-Butte, is the chair.

"The folks that are calling me don't mind paying their fair share," Lynch said. "But these exorbitant costs. How does a $69 annual membership erase these $50,000 balance bills?"

The committee is still gathering information and taking testimony from stakeholders. They're looking at what other states have done and are set to meet Dec. 2.

Lynch said he understands that some, but not all, companies might be charging more and aggressively collecting.

"But it's like campaign finance laws," he said. "You might have 99 percent of the candidates doing the right thing but the rules are for everyone."

It seems like a given that there is going to be some regulation proposed in the 2017 legislative session. The first hurdle for the committee is trying to figure out what it can actually do. Simply capping their rates isn't possible.

The 1978 Airline Deregulation Act doesn't allow pricing regulations. So the goal is to get the air ambulances to negotiate lower rates with insurance providers like Blue Cross Blue Shield.

Other states have come up with workarounds, using their authority to regulate insurance and medical practices. In Montana, air ambulances are exempt from the insurance code. If that were to change, lawmakers in Helena could restrict out-of-network air ambulances from balance billing patients with HMO or PPO plans like other states have.

The committee also could require hospitals and search and rescue operations to call preferred ambulances first, in essence forcing air ambulances to negotiate rates with insurance companies. To do so they'd write a preferred and secondary call list like North Dakota created earlier this year. It immediately led to a legal challenge by Valley Med air ambulance of Grand Forks, North Dakota.

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Summit is also sensitive to the balance billing stories.

"We do three things to address the balance billing issue," Walter said.

The first is that they have a "compassionate billing policy" that means they'll write off bills owed by poor people after a means test. Second, they cap their mileage charges at 200 miles. "This is our way of saying that we're not like a taxi cab," Walter said.

The third is memberships, like the one Amy and Pat bought from Airlift Northwest.

Not only has Summit been pitching them to individuals to avoid paying for flights, but it's trying to get local governments to buy a membership for every resident in their county. They priced a plan for Gallatin County at $300,000.

The Gallatin County Commission politely declined, but Madison County accepted. A few days later, the Montana Association of Counties issued a warning to every county commissioner in the state.

"Montana counties are strongly urged not to enter into any direct contracts with subscription service air ambulance providers," it said.

It offered a few reasons, the most succinct being that there was no guarantee that Summit would be the company to transport their constituents. A recent count showed at least 13 services with licenses in Montana, plus out-of-state companies, like Airlift NorthWest.

Walter suspects the insurance companies are behind the warning. They refuse to negotiate a reasonable compensation, he said, which is why "community-based services" like Summit sell the memberships.

Memberships offsets the overhead costs and the losses they take from their compassionate billing and other community service flights, such as helping search and rescue efforts, which don't make money.

Decades ago, air ambulances were hospital-based services like Billings Clinic's MedFlight. The services were in-network providers with negotiated prices that didn't balance bill patients.

But now hospitals would rather outsource air ambulance service.

"Bozeman Deaconess asked (Summit) to look at coming here and we did," Walter said.

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Summit's base in Belgrade averages a call per day.

During a test flight to the Ross Pass trail on top of the Bridger Mountains, it took eight minutes to roll the aircraft out of the hanger, load crew, fire the engines, clear the tower and take off. Reaching the peak was another four minutes.

A crew of nurses and paramedics, who work two 24-hour shifts per week, is always at the base. There's the rotation of pilots, on their federally regulated schedule, and an on-call, 24/7 aircraft mechanic. Summit also staffs a fixed-wing crew in Helena. The small jet can reach Bozeman in less than 30 minutes.

Each morning they go through a routine, inspecting the aircraft, their gear and refresher training in both basic and advanced care.

These professionals require salaries and technical training to keep certifications current. Their advanced care medical equipment, all portable and certified for flight, plus safety equipment like cutting-edge night vision, are expensive.

The helicopter itself costs over $6 million. A single rotor bolt costs $15,000. A rotor control arm, which requires frequent replacement, costs $3,000. As the mechanic notes, maintenance isn't something you can cut corners on. Then there's the medical upgrades. The simple metal brackets that hold up monitors in the patient area cost $30,000.

Walter said Summit loses money on Medicaid and sometimes breaks even on Medicare patients whose reimbursements are capped by Congress.

On that front, the industry is asking Congress to increase Medicare reimbursements and has a bill, H.R. 822, by Rep. Pete Sessions, a Texas Republican. The bill would increase Medicare reimbursements by 20 percent in 2016 and another 5 percent by 2019.

Ten years ago there were 753 helicopters providing air medical services inside the U.S. There are 1,045 in 2015, 10 more than in 2014, according to the Association of Air Medical Services' Atlas and Database.

That means millions of Americans, particularly in rural areas, are getting access to critical care at a time when the number of emergency rooms is shrinking.

Some places like Butte became served by multiple companies. Summit's parent company, Reach, recently shuttered its Butte base. But it doesn't translate into competitive pricing.

"As more providers come into the market, the pie must be shared," Walter said. "And there's high overhead so it's actually raised costs."

Information from: Bozeman Daily Chronicle

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