AAMS study identifies funding shortfalls

The US-based Association of Air Medical Services (AAMS) has announced the publication of the Air Medical Services Cost Study Report, which was conducted by the research firm Xcenda LLC on behalf of AAMS.

The study findings include that the median reported cost of an emergent air medical transport is $10,199. Medicare payment rates cover only 59 per cent of actual costs on average, and over 1/3 of respondents reported negative margins for emergent air medical services. The percentage of the US population covered by air medical services, within a 15-to-20-minute response area, has grown from 71.2 per cent in 2003 to 86.4 per cent in 2016.

Rick Sherlock, AAMS president and CEO said that a study of this kind was long overdue: “It has been AAMS’s position for some time that Medicare payments do not adequately match costs. The results of the cost study have validated our stance. The data provides a baseline for transport providers industry-wide regardless of business model.”

The Association added: “AAMS commissioned the study in response to an evident need for reputable, independent research, specific to air medical transport, to quantify the costs associated with providing emergent air medical transports. Further, the study examines the appropriateness of the 2002 Medicare rate-setting methodology for air medical services and current payment adequacy. The resulting report provides independent substantiation of actual costs to the Centers for Medicare and Medicaid Services (CMS) and Members of Congress.”

According to the study, the shortfall in payments from some missions have a knock-on effect for private payers: “Inadequate payment from public payers and the uncompensated care costs providers incur while treating uninsured patients have a trickle-down economic effect and play an important role in rates for air medical services for private payers and patients. While Medicare may be covering between 59 per cent and 73 per cent of costs, per-transport cost deficits for Medicaid and uninsured patients are even greater. These deficits in aggregate would require private payers to cover at least $15,984, in addition to the cost of the transport to allow providers to break even, taking into consideration the patient payer mix observed in the study sample. The median reported commercial revenue per transport fell short of this amount at $23,518, indicating that in many cases, total operating costs are not covered by payers in the aggregate. Evidence of this issue was observed in the study sample, as over one-third of providers reported negative margins in fiscal year 2015 for emergent air medical services.”

Xcenda contacted air medical providers billing Medicare in 2014, the most current billing information publicly available at the time of this study, said AAMS, including fixed-wing, rotor-wing, for-profit, non-profit, independent and hospital-based providers. Cost data were aggregated and analysed at a per-transport and per-base level, and the differences between programme types, tax status, size, and geographic location were also examined, said the Association. The study’s respondents represent 51 per cent of all air medical bases in the US and captured 46 per cent of air medical services billed to Medicare, AAMS explained.

Read the full report here.

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