Toby Sidlo, a tour boat captain on Kauai, was going out for a pass during a beach football game when he fell into a bonfire and severely burned 30 percent of his body.
Hawaii air ambulance providers
Average cost per flight
Annual transports nationwide
The 35-year-old Kalaheo resident in July 2014 suffered critical, potentially life-threatening injuries that could not be appropriately treated on the island, so doctors decided to medevac him to Straub Clinic & Hospital’s intensive care burn unit on Oahu.
Several months later Sidlo received a $36,000 bill for the air ambulance service from Hawaii Life Flight Inc., one of two emergency medical air transport providers operating in the state. The total bill was roughly $50,000, and his health insurance covered about $14,000.
“I can’t afford to pay that,” said Sidlo, who was also hit with $230,000 in medical bills, most of which were covered by insurance and a hospital financial assistance program. “I was in a really bad state. It was urgent.”
Sidlo has mostly recovered from his injuries, but he is still struggling to settle his air ambulance bill. His case illustrates the high costs of emergency air transportation services, which are essential on the neighbor islands, with limited health care services and specialists.
The two companies operating in the state — Hawaii Life Flight and AMR Air Hawaii — do not list their prices online, but Hawaii Life Flight charges thousands of dollars more than AMR for similar flights, according to Honolulu Star-Advertiser research.
A Hawaii Life Flight bill for emergency transportation from Hilo to Oahu in December 2013 totaled $70,580. It lists a base rate of $16,441 and a charge of $219 per mile, bringing the mileage total to $54,139.
AMR said it charges a base rate of $14,000 per flight and $25 per mile. The same flight from Hilo to Oahu would be about $20,000 on AMR. Both operate the same aircraft, King Air twin-engine turboprop airplanes, and also have medical helicopters.
In 2010 Hawaii Life Flight merged with AirMed Hawaii, leaving only one carrier in the islands until AMR Air entered the market in 2013. Following the merger, air ambulance rates skyrocketed, said Speedy Bailey, general manager of AMR, which is part of the state’s ground ambulance provider American Medical Response.
“We entered the marketplace basically two years ago because we were getting complaints from our patients on the ground that they were getting large air ambulance bills,” said Bailey. “When we saw the rates, we were very concerned. We wanted to have a quality option and a price option. We believe you can do business in Hawaii and not overcharge.”
Shanon Pollock, vice president of business development for Hawaii Life Flight’s parent company, Air Medical Resource Group, based in South Jordan, Utah, said in an email the company works with each patient to adjust their bills to a “level that is custom fit to match their unique financial situation.”
“In some cases, this means we write-off the entire balance. The average out-of-pocket expense for a Hawaii Life Flight air medical transport is very low for our patients,” he said. “We are committed to excellent medical care during the flight and excellent financial care following the flight. To that end, we have not sent a single patient to collections for a balance bill in our nine years of serving the great state of Hawaii.”
Hawaii Life Flight sets its rates at an “industry standard level,” Pollock said. Those rates allow the company to maintain aircraft and medical personnel ready to serve patients from rural communities within an hour of being contacted, he said.
The rates are set so the company can remain financially viable even while it transports “patients who are less fortunate and have no insurance coverage,” Pollock added.
“We assure the patients we transport (that they) will not experience any significant cost burdens,” he said.
Air ambulance companies are required to transport patients regardless of their ability to pay.
On the other hand, states are prohibited from regulating air ambulance rates under the federal Airline Deregulation Act, passed in 1978, so air carriers are free to charge whatever the market will bear.
“You can fly a patient to New York for $70,000,” Bailey said. “The difference between an air ambulance and flying to the mainland is you have a choice on who you want to fly with. We were hoping that people would have a choice, but sometimes they’re not offered that.”
Doctors most often select the company that can transport the patient the quickest, said state Sen. Josh Green (D, Kailua-Kona-Kau), an emergency room doctor at Kohala Hospital.
“The very definition of ‘transfer’ means life-threatening, otherwise we would be treating them. I know that some physicians choose one service over another based on availability,” Green said. “If it’s time-sensitive and we know it will make a difference in a patient’s life, we’re going to decide what’s the fastest to get them there. Often an hour or two can be the difference between life or death.”
“All things being equal, the cheaper flight would be preferable,” he added. “I never ask how much it costs. I never favor one over the other based on costs. I have to make sure the patient doesn’t have a tragic outcome.”
Shirlee Shumway, 87, thought she was having a heart attack in 2009 on the Big Island when an air ambulance was called to fly her to Oahu. She later received a $44,650 bill.
“I almost fainted when I saw it,” said Shumway, who was medevaced again the following year for $24,280 after a fall fractured her femur. “It was horrendous. The reason I thought maybe it was so terribly expensive is because they had medics aboard. I just had no idea that it cost that much to fly.”
Shumway’s bill was paid by her Kaiser Permanente insurance plan and Medicare, the government health insurance program for seniors.
Sidlo, the burn patient from Kauai, hasn’t resolved his $36,000 bill from Hawaii Life Flight. Sidlo is suing his health insurer, Kaiser, for refusing to pay the bulk of the bill from the air ambulance company.
The class-action lawsuit filed in U.S. District Court on July 15 claims Kaiser is responsible for the charges under a contract that stipulates full reimbursement for medically necessary air ambulance services, minus a 20 percent patient copay. Kaiser, which said it doesn’t have a contract with Hawaii Life Flight, declined to comment on the pending litigation.
The Association of Air Medical Services, based in Virginia, said air ambulance companies have to charge high rates to make up for their low reimbursement rates from most patients.
For every 10 patients flown, two are uninsured and might pay nothing, while five are covered by Medicare and Medicaid, government insurance programs that don’t cover the cost of care, said association spokeswoman Blair Beggan.
In the past 10 years the Medicare air ambulance fee schedule has not been adjusted, resulting in a payment-to-cost deficit of more than 70 percent, she said.
The industry trade group is pushing legislation in Congress to increase Medicare reimbursements to air ambulance companies.
“We are trying to level the playing field by having Medicare pay its fair share,” Beggan said.
In Hawaii, Medicare’s average reimbursement rate per flight is about $5,000, while Medicaid pays approximately $3,000, Bailey said. The Hawaii Medical Service Association and Kaiser, the state’s largest health insurers, declined to comment on average reimbursement rates for air medical transports.
Nationally, Medicare pays about $6,000 on average per flight, said Joel Hochhalter, an industry consultant based in Nevada.
“Medicaid barely pays for the gas. You’re lucky to get $1,000,” he said, adding that the average operating cost per flight ranges from $7,000 to $8,000.
Medicare and Medicaid account for as much as 70 percent of the patient population for air medical carriers, he said.
“As Medicare (reimbursement) goes down, Medicaid goes down, commercial insurance goes down, prices have to go up to maintain some kind of balance,” he said. “We cannot refuse to transport a patient if they don’t have the ability to pay. We just have to respond and transport. Unfortunately, everybody in health care feels the brunt of that.”
Hochhalter, who’s been in this industry for 20 years and previously had his own air ambulance company, said government and private insurance carriers are “reducing reimbursements for everything in heath care.”
Meanwhile, air ambulance providers face significant costs that include paying for workers that must be available around the clock, as well as rising jet fuel and aircraft maintenance expenses. Medical flight crews typically include a registered nurse, a paramedic and one or two pilots.
Hochhalter said the air ambulance system operates in the same fashion as hospitals that rely on commercial insurers to bring their facilities to a break-even or profitable operating state.
“Nobody gets paid 100 percent of billed charges. (Health insurers) want the public to think the cost of health care is exorbitant and it’s all somebody else’s fault,” Hochhalter said. “Our heath care system is broken and it needs to be fixed, but it’s not the fault of an air medical provider. What they cost the health care system is a rounding error in dollars when you talk about hospital and X-ray charges. Commercial payers, just like at a hospital, have to make up the difference in order for these guys to survive. If they’re not there, people die.”