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"thousand air ambulance" Discussed on The Indicator from Planet Money

The Indicator from Planet Money

09:45 min | 1 year ago

"thousand air ambulance" Discussed on The Indicator from Planet Money

"I'm Rachel Cohn. How are Ya High Cardiac? How are you good good so you were for a little while a producer on the indicator I was is yeah? You're now helping out at one of our favorite podcasts rival podcast but you still love it called reply. All you've come back because you've brought us this really intriguing story about air ambulances. Yeah Right. Where does the story begin so the story takes place back in two thousand and eight back then? This man named David Jones got into a terrible the accident on a New Jersey highway. He was driving with his girlfriend at the time now. His wife Juliet when their car flipped over and tumbled at sixty five miles an hour onto onto the highway shoulder so badly injured. I take it really badly injured. So what happened. was actually first responders called an ambulance. That's like the helicopter that comes to the side of the highway highway when you're in a terrible bad traffic and you can't get them out any other way. They call exactly so David was flown out. I so I remember that hearing the ambulance unplanned completely out of the car getting. It's actually still trapped in the car so emergency services had to cut her out which took awhile and so they ended up calling a second air ambulance a few hours later. You said that eventually they made a full recovery. Yeah but there was a nasty surprise involves here. I tell us about that exactly so they were actually going over their bills for their treatment together when they realized that they were charged. Different amounts for their area blitz transports like very different amounts had at a note written Com contemporaneous. Lee that like I. It's funny just looking at the no it says Seventeen hundred for me and thirteen thousand for Juliette. Seventeen hundred for David and thirteen thousand dollars for Juliette even though they were transported the exact same distance since from the same accident site to the same hospital. Yeah I mean there was one difference aside from the price and that's who flew them so David was flown by public provider fighter but Juliet was flown by a for profit company. Okay and that is the topic of today's show. This is from planet money. Everybody I'm Carlos Garcia and I'm Rachel Cohn yes on today's show we are talking about ambulances. This part of the American healthcare industry where prices have skyrocketed and where the normal laws of supply and demand. Don't don't seem to apply a support for this podcast and the following message come from salesforce. A customer relationship management solution committed to helping you deliver the personalized experiences that customers want salesforce bringing companies and customers together visit salesforce dot com slash. Learn more to understand how Aaron ruined services became so expensive you actually have to go go back to a time when they were cheaper a time when hospitals were the largest provider of the service air ambulances really grew out of emergency rooms that decided. Hey we have a way to get people here faster. They were owned by hospitals. They were part of the hospital system. They were on the master hospital bill and often covered covered by insurance because it was a hospital service. So that is Dr Marty mccarey. He's a surgeon and professor of Health Policy and management at Johns Hopkins University. Dr Doc mccarey wrote about the air ambulance industry in a book. You recently published called the price. We pay appropriately enough. Actually he says that for a long time hospitals roles were not making money from their ambulances in fact some hospitals were even providing air transport at a loss air ambulances traditionally have not been a real real revenue center for hospitals because they make money on the patients once they arrive at the hospital from all the services provided and so throughout the nineteen eighties and nineteen nineties. And that was the business model. Hospitals were not trying to make money on the air transport itself. They provided that services because they start charging patients once they got to who the hospitals so hospitals provided air ambulances for the majority of air transports and so although there were some government groups and independent private. Have IT companies who were providing this service. In addition to hospitals there were virtually no for profit providers companies that were trying to make a profit but in two thousand and two. This began to change that year. The government rolled out a new policy. That changed the amount of money that area means providers could make from transporting Medicare and Medicaid patients. Basically what you need to know. Is that the new policy made it more lucrative for independent ambulance providers that's groups other than hospitals to offer the service so under the previous system. Independent providers typically made less money for transporting Medicare and Medicaid patients than hospital providers but under the new system all all providers were paid at the same rates. And what this did was to incentivize outside group's thinking of investing in air ambulances. Because now they were assured more money for transporting Medicare and Medicaid patients but also they could now provide these services for this whole other group of patients. People not covered by Medicare and Medicaid aid. Other words people who had private insurance and private companies and private equity firms in particular realized if those patients could be billed independently of the hospital an outside of their insurance network there was virtually no limit to what they could be charged and so quickly this second back industry grew of private equity companies buying these air ambulances from hospitals managing the services and price gouging patients going around the Master Hospital Bill. The result is that the number of Aaron balances in the US nearly doubled in the vast majority today are owned by for profit providers. And so here here is where the normal dynamics of supply and demand start to go askew they start to get a little weird see in a normal market that big increase in supply. The supply of air ambulance providers would usually mean a good thing for consumers because consumers have more choice means more competition between those providers and usually means it's cheaper prices for consumers but in the area milli- market. That's not what happens. That's because customers in this market can't shop around and compare prices and services says in an emergency situation. The customer doesn't choose which air ambulance provider to call. I mean the customer might even be unconscious rate the first responders or hospital workers. There's are usually who call an ambulance so this big increase in supply. It doesn't bring down the price for people getting air transported instead the exact opposite happen. Prices have gone on way up so the medium price for example charged by an air ambulance for a helicopter transport in the United States. That is now more than thirty. Six thousand dollars dollars an air methods which is the name of the largest air ambulance provider. It went from charging an average price of thirteen thousand dollars per air transport in two thousand seven in two charging fifty thousand dollars in two thousand sixteen now to be clear. These are the prices that fall on people with private insurance. If you get into an accident and you're on on Medicare or Medicaid you're bill will be covered by the government but if you're one of the millions of people with private insurance you could be stuck with a very expensive bill. I mean many private insurance companies only pay ambulance providers roughly the same amount that the government pays them which is like between three to five thousand dollars and that it means that the remainder of the bill maybe tens of thousands of dollars is left up to you to pay. I think the natural question there Rachel is. How did this happen? Why did the price go up so much? Even though all these new air ambulance providers got into the business well if you ask the Association of Air Medical Services About this and we you did there the industry group that represents ambulances. They suggest that Aaron balances have become more expensive to provide. They say there's been an increase in the number of Medicare patients as well as an increase in the number of rural hospitals that have closed which means air ambulances have to travel a longer distances and operate in less populous areas which which brings greater costs but Dr mccarey he sees things differently so he says that the main reason these companies are charging so much for their services is because they can. There's nothing to stop them. Not the patients who in that moment are at their most vulnerable and not even insurance companies who typically would act as the interface between patients and the provider seat unlike costlo's independent private providers of air. Ambulances usually do not have pre negotiated rates with insurance companies. The Government Accountability Office did a major study recently where they looked at over. Twenty Thousand Air Ambulance transports that took place in two thousand seventeen and they found that more than two thirds of those transports they were not in the patient's insurance network in other words. Those patients were not covered for their transports. And when that's the case in other words when a patient is out out of network the only thing that constrains the price that they can be charged by an ambulance company is what they believe. The accident victim will be able to pay they send a bill for ten million million dollars. A penny of it will never be paid. But if they set the bill at just above what's considered payable then they'll be a mass effort for it to try to pay these bills and in fact that's exactly what we see. Yeah we see a situation where people might have to go into a lot of debt and really strain their finances just to. I would pay off that bill. Rachel thanks so much for bringing us. This super interesting story Cardiff deserted indicator was produced by Lena Sons. Scary fact check out. Lewis our editors Patty Hirsch in indicator is a production of N._p._R...

Rachel Cohn Medicare Thousand Air Ambulance David Jones Dr Marty mccarey Master Hospital Bill Aaron Medicaid Juliet United States Association of Air Medical Ser New Jersey Juliette producer Johns Hopkins University professor of Health Policy