The reason that for-profit, private air ambulance companies have substantially raised their rates is that they can’t afford to exist on current insurance reimbursements, according to industry sources.
Prior to 2008, private air ambulance companies aggressively expanded their networks when health insurance companies weren’t disputing too many costs, according to results of a New York Times investigation published May 5 of last year.
In fact, strong revenue prior to the Great Recession fed explosive growth in the number of air ambulances. Scores of new helicopters, including twin-engine aircraft costing up to $8 million apiece, entered the market, the Times reported.
But when the economy worsened, insurance companies began setting caps on reimbursements at the same time the national air ambulance market became over-saturated, the investigation showed.
The result was an inefficient system in which too many helicopters were chasing too few patients, the Times reported.
While hospital-based services have other avenues to make up for lower reimbursements, private medical helicopter companies labeled as out-of-network by insurers had little choice but to either raise their prices dramatically or go out of business, according to the newspaper’s investigation.
In reality, few companies expect patients to dip into their own pockets and pay the full coverage gap, according to a number of industry sources. But complaints rose sharply after some of these firms resorted to hard-edged legal tactics to get paid, according to interviews and dozens of lawsuits in courts across the country.
Asserting that higher payouts are needed to keep up with costs, industry trade group are seeking increases from the U.S. government.
If that doesn’t happen, those groups warn it could cause private air ambulance service to withdraw from areas where their presence can mean the difference between life and death.