MY 2 CENTS’ WORTH
By Randy Mains A TREMOR IN THE FORCE
ON DECEMBER 22, 2016 A STATE DISTRICT COURT JUDGE IN AUSTIN UPHELD A RULING, GIVING THE STATE OF TEXAS THE RIGHT TO REGULATE FEES PAID TO AIR AMBULANCES FOR TRANSPORTING PATIENTS COVERED BY WORKERS’ COMPENSATION INSURANCE. ON THE SURFACE IT DOESN’T LOOK LIKE THAT RULING AFFECTS THE AMERICAN HAA (HELICOPTER AIR AMBULANCE) INDUSTRY, BUT IT COULD PROVE TO CHANGE THE FABRIC OF THE INDUSTRY. THE RULING HAS THE POTENTIAL TO CREATE A NEGATIVE RIPPLE EFFECT IN OUR INDUSTRY, IF
SUCCESSFULLY ARGUED AND
USED AS A PRECEDENT IN OTHER STATE CLASS-ACTION LAWSUITS CURRENTLY FILED AGAINST FOR-PROFIT HAA PROVIDERS.
Air medical companies have legally operated under the umbrella of the 1978 Airline Deregulation Act. This Act was originally crafted to remove government control of airfares as a way to promote healthy competition. This gave the consumer a choice of which airline they patronized based on a price they would be willing to pay. Air ambulance patients do not have a choice -- and are not told what the air ambulance company will charge until after the transport, which is the core of the legal argument.
In July 2015, over a dozen clients in
Oklahoma City were billed thousands of dollars for an air ambulance transport. The clients asked a judge to certify a lawsuit as a class-action, naming several
8 Mar/Apr 2017
air ambulance companies in that suit. The claim: “They’re making profit margins [of] in excess of 750%, huge profit margins they’re trying to get from the average public.”
One client, former OSU basketball coach Tommy Wade, was flown by medical helicopter when he had a heart attack. He noted, “$38,000 for a 20-minute air flight from Stillwater to Oklahoma City? I told them I can’t pay the bill. I can’t afford it.”
When a pilot friend from Germany heard about what a typical for-profit HAA flight costs he said, “Sounds like schaden profit to me.” (That’s German for profiting from another person’s misfortune.)
Law Professor and commercial helicopter pilot, Henry Perrett Jr. doesn’t agree. In a recent article he wrote for the Journal of Law, Technology & Policy, (Fall 2016, Vol. 2016 Issue 2) entitled, “An Arm and a Leg: Paying for Helicopter Air Ambulances,” he writes:
“It is easy to attack the high list prices for self-payers as a form of price gouging, suggesting some kind of moral failure in the leadership of HAA operators. But, it is not a moral failing; it is simply the market and microeconomics at work. Fixed costs are what they are; variable costs are what they are; the frequency of the need for HAA services is determined by the fortuity of accidents and acute illnesses.”
In Professor Perrett’s 89-page article he observes, “One interpretation of the data suggests that there is simply an oversupply
of HAA operators and that the best policy is to keep reimbursement rates where they are to starve the weakest operators out of the market.”
But the general public doesn’t see it that way, which for many for-profit operators, has become a public relations nightmare. For example, a class-action lawsuit in Colorado claims, “The average bill from one air
medical provider tripled from
$13,198 in 2007 to $40,766 in 2014. In 2016 it is not uncommon to receive a bill from that same provider of over $50,000.”
Responding to a 2015 article in the New York Times entitled “Air Ambulances Offer a Lifeline, Then a Sky-high Bill.” A former HAA pilot in Marin County wrote in to say: “For nearly 29 years, I was pilot on both hospital and community-based Emergency Medical Helicopters, for profit and nonprofit providers. I saw the industry grow from a few dozen helicopters to well over 1,000. I witnessed billing go from a few thousand dollars to several tens of thousands of dollars per transport. Most importantly, the severity of the patients we transported, on average, decreased and the time from injury to arrival in the appropriate facility increased. There are more helicopters chasing fewer acutely injured patients. The majority of patients do not need to go by air especially if a risk
analysis is done. Helicopter EMS
flying is exceedingly risky as is borne out in the statistics. I would be hard pressed to put my own family member on one of these helicopters unless I did the risk assessment to determine if their condition was critical enough to warrant the high risk
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