Federal agency calls on air ambulance industry to increase transparency in pricing

— -- The air ambulance industry should consider disclosing pricing information to consumers, hospitals and insurance companies to prevent people being blindsided by bills that can have “potentially devastating financial impacts,” according to a new government report.

The report, released last week by the nonpartisan Government Accountability Office, studied the prices charged by some air ambulance providers to people who were sick or injured and often unaware of the size of the bills they would get. ABC News investigated industry pricing in 2016, finding that amid the heartwarming stories of lives saved, air ambulances are free to set any price they want.

Desperate consumers told ABC News of being charged $40,000 for a short flight, with little help from their insurance plans. The investigation found that the industry’s largest for-profit player, Air Methods of Englewood, Colo., regularly employs “balance billing,” in which patients are on the hook for whatever insurance doesn’t cover. Some consumers heard from debt collectors after they couldn’t pay. Air Methods declined ABC News’ request for comment on the GAO report.

Air Methods posted a profit of $97.9 million in 2016 on revenue of $1.17 billion. The company, which provides service in 48 states, says it is expensive to provide 24-hour service at the ready with state-of-the-art equipment and well-trained medical staff.

The GAO report found that because air ambulance providers aren’t allowed to turn away patients with Medicare or Medicaid, they increase the price for consumers who have private insurance. The median Medicare reimbursement in 2014 was $6,502.

In its investigation, ABC News brought several cases to the attention of Air Methods, including a Kentucky family that was billed $47,000 for a half-hour flight and an Illinois family that was billed $35,000 for a 37-mile flight that was only a few minutes faster than going by car. Asked about these types of high bills, Air Methods Vice President Paul Webster said the company charges patients more than the actual cost of a flight to offset low government reimbursements for the poor and elderly.

“If everybody paid their fair share, you know what the charge for this service would be? Twelve thousand dollars,” Webster told ABC News.

An industry group blamed Medicare and Medicaid reimbursements that have not kept pace with increasing fixed costs. The Save Our Air Medical Resources campaign (SOAR) said the disparity is growing, especially with regard to rural areas.

“Emergency air medical services provide a life-saving resource to Americans every day, and with rural hospitals closing their doors at alarming rates, these transports are more important than ever,” said SOAR spokesman Carter Johnson.

The report found that the companies have generated so much money in recent years that the industry has caught the attention of private investors.

“The three large independent air ambulance providers are for-profit and increasingly owned by private equity firms,” the report notes. “The presence of private equity in the air ambulance industry indicates that investors see profit opportunities in the industry.”

The median price of an air ambulance transport doubled between 2010 and 2014, the period studied in the GAO report, from approximately $15,000 to $30,000. Looking specifically at Air Methods, the largest provider, the average price leaped from $13,000 in 2007 to $49,800 in 2016 -- an increase of 283 percent, the report said.

Air Methods and two other for-profit providers currently make up 73 percent of the industry – a shift from the 1990s, when hospital-run programs dominated. Private operators often are out of network with insurance plans, and states are helpless to regulate them because the companies fall under the Airline Deregulation Act of 1978.

The GAO report recommends the U.S. Department of Transportation consider requiring air ambulance providers to disclose their prices up front. The report noted that even though that wouldn’t help ill or injured consumers, having a price list could help hospitals decide on the best mode of transport and assist insurers in determining fair reimbursements.

The report also calls for the U.S. Department of Transportation to publicize itself as a place to file complaints and to make those consumer complaints public. It also suggests DOT assess what additional data it needs to understand the industry.

In a response attached to the report, Bryan Slater, Assistant Secretary for Administration at the Department of Transportation, said the department “cannot regulate where the air ambulance offers its services, what it charges for them, or from whom it seeks payment.” He also dismissed the idea of a broader review of industry data and questioned whether a disclosing prices up front would be practical.

“We are concerned about the effectiveness of disclosure requirements for a significant portion of the industry’s operations, specifically transporting patients in emergencies,” wrote Slater.