The average cost of an air ambulance flight is around $11,000. Some customers, though – who likely take that flight on one of the most frightening days of their lives – are billed upwards of $60,000 months later.

“In Wyoming, air ambulance services are not an ‘option’ or a ‘luxury,’” Gov. Mark Gordon wrote in an Oct. 15 letter to Alex Azar, the secretary of the U.S. Department of Health and Human Services. “It is nothing short of necessary, lifesaving infrastructure. Whether a helicopter airlifts a truck driver out of a remote I-80 pileup in the middle of the Red Desert, or a fixed-wing ambulance flies a vulnerable newborn from a small hospital in Wheatland to a neonatal intensive care unit in Denver, Wyoming’s citizens must have this vital capability.

“As governor of a frontier state, however, it is clear to me that the way we pay for this system is broken,” Gordon wrote.

Gordon’s letter was a part of a Medicaid waiver application filed by the state under the Social Security Act that would expand Medicaid coverage to all Wyoming residents for the specific and sole benefit of air ambulance transport. The Wyoming Department of Health submitted the waiver request to the federal government Nov. 8, and it was posted for federal public comment period until Dec. 13. While the state has unofficially heard the waiver may be denied, the Wyoming Department of Health is seeking an official response from the federal government.

“We’re making the case that we can improve access to care for our current Medicaid members ... but the real impetus for the waiver is less to do with Medicaid, and more to do with people receiving surprise bills and the high prices employers are paying on the private side,” WDH policy analyst Franz Fuchs said.

According to the state, the average cost of an air ambulance flight is too high, which increases prices paid and so-called surprise billing. This is largely caused by a growing number of air ambulance providers chasing a set amount of calls, and uneven access around the state.

Under the Wyoming Medicaid Air Ambulance Waiver, the state proposes to treat air ambulance like a public utility, similar to how a small town might structure police or fire response. By relying on free-market principles to maximize value, competitive bidding could result in more transparent pricing for patients, and lower costs overall.

Most air ambulance trips in Wyoming are hospital-to-hospital transports, though people are rescued off-site in Wyoming’s rural areas. In 2018, there were a total of 4,046 air ambulance trips made in Wyoming, including 911 scene response and interfacility trips.

Few air ambulance companies are in-network for Wyoming residents, in part because of difficulties with insurer negotiations. Anecdotally, individual people have reported being billed between $30,000 and $100,000 by air ambulance service providers.

“That is called surprise billing, and it depends on your insurance and what coverage you have,” Fuchs said. “Some insurers pay any provider what is billed. Other insurers – thinking about it from the insurance perspective – have a tendency to want to keep their costs down, so they can keep premiums down. When they get these very large bills from an (air transport) company, the only way they can control those costs is by denying those claims or cutting them out of the network. They pay (air ambulance service providers) a certain amount, leaving the patient on the hook for everything else.”

Because the system represents what Fuchs called a free-market failure, the Medicaid waiver is aimed at the root cause of the issue.

In an open letter to the Wyoming Department of Health dated Sept. 30, Colorado-based air ambulance service provider Air Methods voiced its opposition to the Medicaid waiver application.

“The waiver application poses a direct risk to all Wyoming patients, including Medicaid beneficiaries, through diminished access to emergency critical care services,” Air Methods said.

Being ready to respond to a dispatch call requires “substantial investment and involves significant fixed costs,” Air Methods stated. An aircraft fleet with highly trained clinicians, pilots and mechanics must be ready to answer emergency calls 24 hours a day, seven days a week, 365 days of the year. Air Methods said the average cost of operating a base is roughly $2.9 million annually, with 85% of these costs being fixed.

The WDH does not dispute the fixed costs are high, but instead says the waiver would address an uneven distribution of air ambulance carriers in the state – there are too many on the western side of Wyoming and not enough in the east.

“The geographic spread is really uneven. We have a ton of air ambulance in certain counties, mostly on the western side of the state, Fremont County, the Basin … maybe too much. Then there is very little air ambulance on the eastern part of the state,” he said.

And while the fixed costs of an air ambulance fleet may not change, the distribution – and overall number of vehicles in the state – can.

“The cost per flight, yes, you have to load all their fixed costs, no matter how much volume they get,” Fuchs said. “They have to maintain a helicopter; they have to pay for their staff, even if there are no patients; they have to pay for maintenance.”

The only variable cost is for fuel, and so the cost per flight really depends on the volume of flights needed. This means the more injured or ill patients a company transports per day, the lower the overall cost is. However, with more aircraft on the ground in Wyoming, and improperly distributed aircraft, competition for those flights creates an oversupply.

“Most air ambulance companies are owned by private equity firms. They have gone private, and they are putting more and more helicopters into certain areas,” Fuchs said. “The cost per flight, because there are more planes, are going up.”

As of 2017, the estimated average cost per flight was $11,000, and Medicaid will pay $8,000 to $5,000 of that. Private air ambulance carriers know they only will get a fixed amount from a federal program, so they front-load costs onto privately insured patients, Fuchs said.

“Medicare isn’t going to haggle. The people on Medicaid or who are uninsured that pay $8,000, they load all that (excess cost) onto the people who will pay. The bill price, then, for the average employer is about $36,000,” Fuchs said.

“The reason why the bills are so astronomical is because of all the effects in the industry, but the main problem we are seeing is the under-utilization,” he explained. “There are a ton of helicopters and planes sitting around not being used.”

Even distribution and competitive free-market bidding could bring costs down, Fuchs said.

Sheila Bush, executive director of the Wyoming Medical Society, said her organization has elected to not take a position on this issue.

“WMS is deeply invested in the ability for Wyoming patients to access high-quality care in a timely fashion, especially when that care is emergent. We also share the concerns of our state lawmakers regarding the expenses associated with air ambulance transfers in Wyoming and the burden these costs place on patients who often have no way of anticipating, or taking action to control, those expenses,” she said.

But the problem is complex.

“WMS owes it to both the air ambulance service providers and the public to continue our study of the problem before coming to any firm conclusions,” she said.

In the interim, though, for those 4,000 people who had to be airlifted in Wyoming, and especially those who are left with a high bill, air ambulance companies say the average paid out-of-pocket cost is $300.

The WDH is not not exactly sure what happens, Fuchs said. Do people negotiate down, and just pay a smaller amount? Do they go on a payment plan? Do they declare bankruptcy?

“We don’t know exactly what is happening on the payment side, but what we do know is that what is being paid is a small fraction of the overall bills,” Fuchs said. “My advice would be to negotiate. Don’t just take the bill at face value. You can negotiate with the air ambulance company on what you will actually pay.”

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