Cases like these, detailed in a report by Attorney General Andrea Campbell’s office, are all too common in Massachusetts. When a sick person calls for an ambulance, they have no control over who responds. Yet too often, people with commercial health insurance are saddled with hefty bills, the casualty of a system that effectively lets ambulance providers charge what they want and insurers pay what they want, leaving consumers footing the bill. A report by U.S. PIRG Education Fund found that in 2019 the median cost to a Massachusetts patient for a surprise ambulance bill was $1,024.
A Massachusetts man thought to be having a stroke was taken by ambulance to a hospital 4 miles away — then received a bill for $3,299. A relative requested an ambulance check for an unemployed man with depression. The unemployed man got a $2,540 bill.
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The federal “No Surprises Act,” which went into effect in 2022, eliminated surprise billing for most medical services by establishing a process providers and insurers must use to resolve billing disputes. The legislation excluded ground ambulance transport because of the issue’s complexity, and instead formed an advisory committee.
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Earlier this month that committee recommended prohibiting “balance billing,” when patients are billed for the balance between what an ambulance provider charges and an insurer pays, while capping out of pocket costs at $100. But it did not fully address how to pay for ambulance services.
Massachusetts should follow the lead of at least 10 other states and eliminate balance billing, so payments are determined between providers and insurers. It is unfair that savvy consumers can challenge bills and get them reduced, while others are left fending off collection agencies. It is unconscionable that people who need ambulances hesitate to call one fearing an expensive bill.
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Yet a balance billing ban needs to be coupled with policies that ensure ambulance companies are paid sufficiently to cover the cost of service.
Part of the problem is most ambulance rides are for patients with government insurance, and reimbursement rates do not cover costs. In Boston, according to data compiled by groups representing ambulance providers, the average cost per transport is $903. Medicare pays $494 or $586, depending on the kind of ambulance, while Medicaid pays $334 or $396.
Ambulances also do not get insurance reimbursement when they respond but do not transport a patient, which happens frequently.
Because of this underfunding, ambulance companies rely on the approximately 15 to 25 percent of ambulance patients with commercial insurance to cover their costs. According to a report by the Massachusetts Health Policy Commission, commercial insurers paid ambulance companies a median of $1,156 for basic life support and $1,302 for advanced life support in 2019. The median amounts charged by ambulance companies were $1,661 and $2,404, respectively.
A little more than half of municipalities provide their own municipal ambulance services, while the rest contract with private ambulances. Insurers pay municipal services roughly double what they pay private companies, according to the HPC. Private companies get additional revenue from contracts for non-emergency medical transportation and tend to operate in denser cities with more patients.
A driver of the problem is that ambulance providers, especially municipal ones, often don’t contract with insurers the way many medical providers do when they agree to pay bargained prices for “in-network” care. Two-thirds of ambulance transports billed to commercial insurance in 2022 were out of network, according to Campbell’s report. Providers told Campbell’s office in a survey that in-network reimbursement rates are too low, and they need to maximize commercial reimbursement. As an out-of-network provider, the ambulance is not limited in what it can charge, and customers are often stuck with large copays or balance bills.
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The problem has worsened over the years as the care provided by ambulance services has gotten more advanced and expensive.
The most common solution in other states is the creation of a default out-of-network rate. California and Texas, for example, let municipalities set rates for out-of-network ambulance rides, which is the solution supported by ambulance companies. But that is problematic because, as this board argued previously, it would drive up prices and eliminate any incentive for providers to negotiate with insurers.
Connecticut and Maine both have statewide default rates, with Connecticut setting rates annually and Maine capping rates at 200 percent of the Medicare rate. Some states do not set rates but mandate the process used to govern payment disputes.
Massachusetts insurers have suggested imposing a rate similar to what they asked the state to consider for other medical services — 135 percent of the Medicare rate. A 2021 report by the Executive Office of Health and Human Services proposed establishing a default rate for all out-of-network medical services equal to the median in-network rate. The problem with lower rates, however, is they do not account for unique factors applicable to ambulances. Ambulances can’t have waiting rooms and are required to respond quickly and treat everyone regardless of insurance or geographic location.
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Ultimately, government needs to raise Medicare and Medicaid rates and pay for each response, regardless of whether a patient is transported. This would then give providers leeway to adhere to a reasonable default out-of-network rate for commercial payers.
That should be coupled with exploring ways to reduce costs. If municipalities lack sufficient volume to make service efficient, regionalization could be explored. Campbell’s report stresses the need to reduce the demand on ambulances, with initiatives like Boston’s Squad 80, which responds to calls in areas with high levels of substance abuse and homelessness and provides medical assistance on-site. Some public funding may be necessary to help high-cost communities, like rural areas with small populations and no nearby hospital.
The current system is broken. Federal and state lawmakers need to find a solution that protects consumers from exorbitant bills while ensuring the sustainability of vital emergency medical services.
Editorials represent the views of the Boston Globe Editorial Board. Follow us @GlobeOpinion.
Ban expensive surprise bills for ambulance rides
