United States Government Accountability Office GAO Report to Congressional Requesters September 2010 AIR AMBULANCE Effects of Industry Changes on Services Are Unclear GAO-10-907 September 2010 AIR AMBULANCE Accountability (cid:129) Integrity (cid:129) Reliability Effects of Industry Changes on Services Are Unclear Highlights of GAO-10-907, a report to congressional requesters Why GAO Did This Study What GAO Found Changes in the air ambulance From 1999 through 2008, the number of patients transported by helicopter air industry’s size and structure have led ambulance increased from just over 200,000 to over 270,000, or by about 35 to differences of opinion about the percent, and the number of dedicated air ambulance helicopters increased implications for air ambulance use, from 360 to 677, or by about 88 percent. During the same period, the structure safety, and services. Some industry of the industry changed from a preponderance of providers affiliated with a stakeholders believe that greater specific hospital to a fairly even split between hospital-based and independent state regulation would be good for providers, often located outside hospitals, in suburban or rural communities. consumers. While states can regulate Perspectives on the implications of these changes vary. Supporters of the the medical aspects of air existing regulatory framework say that the growth in the number of ambulances, the Airline Deregulation helicopters provides, among other things, flexibility to perform aircraft Act (ADA) preempts states from maintenance on some helicopters while keeping others available to respond economic regulation—i.e., regulating as needed. Proponents of a change in the regulatory framework maintain that rates, routes, and services—of air the growth in helicopters has led to medically unnecessary flights. These ambulances. Other stakeholders view stakeholders assert that high fixed costs create economic pressure to fly in the industry changes as having been unsafe weather and use less costly small helicopters that limit some patient beneficial to consumers and see no need for a regulatory change. services. GAO found few data that support either perspective. Asked to review the U.S. air Court cases and advisory opinions from the Department of Transportation ambulance industry, GAO examined (DOT) have helped to clarify the relationship between federal and state (1) changes in the industry in the last oversight and regulation of the air ambulance industry, but DOT has decade and the implications of these acknowledged a continuing lack of clarity in some areas. Generally, the changes on the availability of air federal government has authority and oversight concerning the economic and ambulances and patient services and safety aspects of the industry; states—which are preempted from regulating (2) the relationship between federal matters related to prices, routes, and services—have authority over the and state oversight and regulation of medical aspects. However, when both economic and medical or safety and the industry. GAO analyzed available medical issues are involved, questions about jurisdiction may arise. To data about the industry; synthesized resolve such questions, states have sought DOT’s opinion and, in response, empirically based literature on the DOT has issued eight opinion letters since 1986. Some state officials have industry; visited four air ambulance expressed concerns, particularly in relation to a DOT opinion letter on Hawaii providers with differing views on the laws, that the open-ended nature of the opinion could allow any medical industry changes; and interviewed regulation to be challenged as an economic regulation and thus be preempted federal and industry officials. under the ADA. States can continue to seek DOT’s opinion on a case-by-case GAO is not making recommendations basis, as further questions surface. Additionally, states can also contract in this report. GAO incorporated directly with air ambulance providers, which would allow states to control comments on a draft this report from specific services as the customer. the appropriate federal agencies and key industry and emergency medical Air Ambulance Helicopter services stakeholders. View GAO-10-907 or key components. For more information, contact Gerald L. Dillingham, Ph.D., (202) 512-2834, [email protected]. United States Government Accountability Office Contents Letter 1 Background 3 The Air Ambulance Industry Has Seen Growth and Structural Change, but Perspectives Differ on Implications for Availability, Efficient Use, Safety, and Services Provided 6 Federal and State Courts and DOT Have Clarified Some Boundaries of Federal and State Regulation of Air Ambulances, but Questions Remain 20 Agency and External Comments and Our Evaluation 26 Appendix I Scope and Methods 29 Appendix II Literature Synthesis 32 Appendix III Key Court Cases and Opinion Letters from DOT or State Attorneys General 36 Appendix IV Comments from the National Transportation Safety Board 41 Appendix V GAO Contact and Staff Acknowledgments 46 Bibliography 47 Tables Table 1: Differing Results of Sequential Helicopter Requests 13 Table 2: Perceived and Intentional Call Jumping 14 Table 3: Issues Related to Air Ambulances That Courts, DOT, and State Attorneys General Have Ruled Can and Can Not Be Regulated by States 23 Page i GAO-10-907 Air Ambulance Table 4: Summary of Key Court Cases Related to the Air Ambulance Industry 36 Table 5: Summary of DOT or State Attorneys General Opinions Related to the Air Ambulance Industry 37 Figures Figure 1: Percentage of Payments for Air Ambulance Transports Received from Different Sources 5 Figure 2: Number of Air Ambulance Helicopters and Patient Transports, 1999 through 2008 7 Figure 3: Number of Air Ambulance Helicopters in Each State in 2009 8 Figure 4: Schematic Representation of Helicopter Air Ambulance Geographic Coverage When Based at a Hospital Compared with Bases in the Community 10 Figure 5: Example of a Medical Bay in a Single-Engine Helicopter 17 Figure 6: Depiction of Aviation and Medical Components of an Air Ambulance 21 Figure 7: Literature Synthesis Process and Results 35 Page ii GAO-10-907 Air Ambulance Abbreviations AAMS Association of Air Medical Services ACCT Association for Critical Care Transport ADA Airline Deregulation Act of 1978 ADAMS Atlas and Database of Air Medical Services AMOA Air Medical Operators Association ASRS Aviation Safety Reporting System CUBRC Calspan-University of Buffalo Research Center DOT Department of Transportation EMS emergency medical services EVENT Emergency Medical Service Voluntary Event Notification Tool NAEMSP National Association of EMS Physicians NASEMO National Association of State EMS Officials FAA Federal Aviation Administration NTSB National Transportation Safety Board This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately. Page iii GAO-10-907 Air Ambulance United States Government Accountability Office Washington, DC 20548 September 30, 2010 The Honorable John L. Mica Ranking Member Committee on Transportation and Infrastructure House of Representatives The Honorable Jerry F. Costello Chairman The Honorable Thomas E. Petri Ranking Member Subcommittee on Aviation Committee on Transportation and Infrastructure House of Representatives The Honorable Jason Altmire House of Representatives The Honorable John D. Rockfeller Chairman The Honorable Kay Bailey Hutchinson Ranking Member Committee on Commerce, Science, and Transportation United States Senate During the past decade, the air ambulance industry has grown and its structure has changed. Air ambulances are generally helicopters or fixed- wing aircraft that are specifically outfitted to transport ill or injured persons. Air ambulances may transport patients from accident scenes to hospitals, or transport patients between hospitals to receive more sophisticated medical care at specialty facilities such as trauma, burn, or cardiac centers. Most air ambulance companies operate as commercial entities and are subject to a mixture of federal and state regulation. The industry is subject to Federal Aviation Administration (FAA) safety regulations covering areas such as pilot training requirements, flight equipment, and aircraft configuration. States can regulate the medical aspects of air ambulances, but the Airline Deregulation Act of 1978 preempts states from economic regulation—i.e., regulating rates, routes, and services—of air ambulances. Some industry stakeholders are concerned with the growth in the industry and view the industry’s changes as having a negative effect on the services provided to patients. These stakeholders generally support changing the regulatory and oversight Page 1 GAO-10-907 Air Ambulance framework to provide states more regulatory authority. Other groups of stakeholders view the growth in the industry as having been beneficial to society and generally don’t support such a change. Given the differences of opinion about the effects of the air ambulance industry’s growth and changes to its structure, you asked us to review the U.S. air ambulance industry. To do this, we examined: (1) how the industry changed in the last decade and the implications of these changes for the availability of services, efficient use of air ambulance resources, safety, and services provided and (2) the relationship between federal and state oversight and regulation of the air ambulance industry. To examine these issues, we obtained and analyzed available data that provided information on the growth and evolution of the industry, shifts in business models, and the types of air ambulance aircraft that are used to provide services. Specifically, we obtained and analyzed data on the trends in air ambulance industry growth from a research database1 and from the Atlas and Database of Air Medical Services (ADAMS).2 We also analyzed Medicare payment data. We reached out to the air ambulance community by emailing more than 400 air ambulance providers, industry associations, and state emergency medical services (EMS) officials, asking that they provide us any data, information, published or unpublished reports, papers, articles, or other potentially relevant sources of information of which they would like us to be aware. We also conducted a comprehensive literature search to identify peer-reviewed studies that reached empirically based conclusions on air ambulance practices or outcomes. We identified and synthesized over 250 studies related to the air ambulance industry, dating as far back as 1975. We reviewed past GAO reports, transcripts of congressional and National Transportation Safety Board (NTSB) hearings, industry association position papers, and other industry documents. In addition, we conducted interviews with representatives from the key air ambulance associations—Association of Air Medical Services (AAMS), Association for Critical Care Transport (ACCT), and the Air Medical 1With permission, we used the data compiled by Ira J. Blumen, MD; Medical/Program Director, University of Chicago Aeromedical Network, University of Chicago Medical Center; Professor, Section of Emergency Medicine, University of Chicago. We determined that these data are sufficiently reliable for our purposes. 2The Atlas and Database of Air Medical Services shows, among other things, the number and location of fixed wing and helicopter air ambulances in each state. It has been published annually since 2004 as a partnership effort between the Association of Air Medical Services and the Calspan-University of Buffalo Research Center (CUBRC). We determined that these data are sufficiently reliable for our purposes. Page 2 GAO-10-907 Air Ambulance Operators Association (AMOA). We also met with the National Association of State EMS Officials (NASEMSO). We conducted four site visits to air ambulance providers that reflected differing geographic locations, business models, and opinions about the implications of changes in the industry. To analyze the relationship between federal and state oversight and regulatory responsibilities, we reviewed federal and state court cases and opinions issued by the Department of Transportation’s (DOT) Office of General Counsel. We also discussed the implications of industry trends and federal and state authority with the key industry stakeholders mentioned above, as well as with officials at FAA, the National Highway Traffic Safety Administration, NTSB; as well as representatives of NASEMSO. See appendix I for a more complete description of our scope and methodology and appendix II for a more complete description of our literature review and synthesis. We conducted this review from December 2009 to September 2010, in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. Background Air ambulances can play an important role in transporting patients with time critical injuries and conditions to medical facilities and providing patients with advanced care while en route. Air ambulances transported more than 270,000 patients in 2008, and their use is widely believed to improve the chances of survival for trauma victims and other critical patients. Composing more than 80 percent of air ambulance aircraft, helicopter air ambulances transport patients from the scene of an accident to a hospital or perform short-distance interhospital patient transfers. Because fixed-wing aircraft only fly between airports, they are not typically used to transport injured patients from an accident scene. Patients are transported by ground to and from the airport. Fixed-wing air ambulances generally perform more long-distance interhospital transports, often moving patients from a hospital to a distant specialized facility. Just over half of air ambulance transports are for moving patients between hospital facilities, one-third are for transporting victims from the accident scene to a hospital, and the remainder are for other purposes, such as Page 3 GAO-10-907 Air Ambulance organ transports or specialty care flights such as for pediatric and neonatal patients. Most air ambulances carry a pilot and a two-person medical crew. The medical crew may include a physician, nurse, paramedic, emergency medical technician, or other medical personnel. According to AAMS, the typical medical crew includes a critical care nurse and a paramedic. A critical care nurse has specialized training in responding to life-threatening health problems, such as those faced by many patients who are transported on air ambulances. Paramedics represent the highest licensure level of prehospital emergency care in most states, as they have enhanced skills and can administer a range of medications and interventions. Other caregivers and physicians may be added to a medical crew if the patient’s condition necessitates further care. Air Ambulance Providers In the air ambulance industry, the business model is generally defined by Operate Under Three Basic the entity that owns or contracts for the aviation and medical services that Business Models are provided. Air ambulance providers generally use one of the following three business models. (cid:129) Hospital-based: a hospital generally controls the business by providing medical services and staff while usually contracting out for the aviation component, including the pilots, mechanics, and aircraft. (cid:129) Independent: operations are not controlled or run by a specific medical facility. Independent providers may directly employ, or can contract for, the medical and flight crews to provide air ambulance services.3 (cid:129) Government operator: a state or local government or military unit owns and operates the air ambulances. However, a large number of variations exist within these structures. Some providers have adopted a “hybrid” model or have established joint ventures with hospitals. 3The hospital-based model is sometimes referred to as the “traditional model,” while the independent provider model is sometimes referred to as the “community based model.” In this report, we use the terms hospital-based and independent provider, respectively, to refer to these models. Page 4 GAO-10-907 Air Ambulance Air Ambulance Providers Air ambulance companies receive payment for transports from several Receive Revenue from a sources, including private health insurance, government programs such as Variety of Sources, Medicare and Medicaid, and the patient. While industry revenue and payment data are not widely available, we obtained data on the percentage Including Federal of total income that four air ambulance providers receive from each Medicare and Medicaid source. (See fig. 1.) For these four companies, private insurance Programs companies or Medicare paid for most of the transport costs. A relatively small percentage of the costs were paid for by the patient themselves. Figure 1: Percentage of Payments for Air Ambulance Transports Received from Different Sources Percentage 100 90 80 70 60 50 40 30 20 10 0 Insurance Medicare Medicaid Patient Sources of payment Company A Company B Company C Company D Source: GAO analysis of air ambulance company data. Note: Includes providers of various sizes that operate under variations of the hospital-based or independent business models. Does not include government operators. From 2002 through 2006, the Centers for Medicare and Medicaid Services, the agency within the Department of Health and Human Services that administers Medicare and Medicaid, phased in a national fee schedule for air ambulance providers as a part of a series of Medicare payment reforms Page 5 GAO-10-907 Air Ambulance