Lynchburg, Virginia: Family discovers true cost of air ambulances

When a doctor at Winchester Medical Center told Michelle Penrod her 2-year-old son needed to be flown by helicopter to University of Virginia Medical Center, she did not hesitate.

Little did Penrod know her son’s helicopter ride still would be causing her family of six financial woes three months later.

A few hours before boarding the helicopter, Penrod had discovered her youngest son, Michael, with an empty bottle of antidepressants that had been left out accidentally by a relative while the Lynchburg family was visiting her in-laws. He proudly presented her with the bottle and said, ‘Mommy, I had candy.’

She rushed him to Winchester Medical Center’s emergency department.

After her son was treated with medicine to counteract the side effects of the large dose of medication, a doctor at the hospital made the call to move Michael to UVa’s Pediatric Intensive Care Unit so he could be treated further. The family agreed to the transport.

In Charlottesville, Michael was given blood tests and observed overnight before going home the next day, almost completely recovered from the episode, according to Michelle Penrod and her husband Joseph Penrod.

“I think we were very, very fortunate because the medication he overdosed on was not very toxic,” Joseph Penrod said in an interview. “We felt less lucky when the bills started showing up.”

Although the family’s health insurance provided through the state and administered by Anthem Blue Cross Blue Shield covered almost all of the costs for Michael’s medical treatment in Winchester and in Charlottesville, only a small fraction of the $48,000 bill for the helicopter transport was covered by their insurance.

Once the couple found out Anthem only would pay about $8,000 toward the staggering bill, they started totaling up assets and considering their options. Joseph Penrod is a biology professor at Central Virginia Community College, and Michelle Penrod home-schools their four sons.

“Counting taxes, [the bill is] more than I can make in a year,” Joseph Penrod said. “If I were expected to pay that immediately, then in order to produce or liberate that amount of liquid asset, I would have to go through all of the assets we’ve put in to our house. We would have to sell the house in order to pay that bill.”

Although the large bill shocked the Penrods, according to www.health.costhelper.com, a firm that provides consumer information about goods and services, an average air ambulance ride can cost between $2,000 and $50,000 depending on the flight distance, fuel costs and medical services needed in flight.

According to Anthem spokesperson Scott Golden, the reason the Penrods only were reimbursed a portion of the total helicopter charge is because PHI Air Medical does not contract with the insurance company because the two companies cannot agree on a contract.

Because PHI Air Medical is out of network for Anthem, the Penrods were “balance billed,” which means PHI Air Medical has the ability to charge the family the rest of the amount the insurance company did not pay to cover the cost of transport. According to Golden, if PHI Air Medical was in network, it would not be able to charge the Penrods the rest of the $40,000 charge after Anthem had paid its portion.

PHI Air Medical is the only air ambulance company in Virginia that does not contract with Anthem, Golden said. The company does not contract with any insurer in Virginia. According to Winchester Medical Center’s Emergency Department Director Jennifer Murray, PHI is the only air ambulance company that operates in the Winchester area.

In order to try and solve the problem of the bill hanging over their heads, Joseph Penrod first contacted Virginia’s Department of Human Resources Management, which negotiates with insurance companies on behalf of state employees. After hearing the department would not be able to assist them, the Penrods submitted an official appeal to Anthem and are waiting for a response.

If that does not work, they will be negotiating with PHI Air Medical to try and get part of the bill forgiven.

“PHI can destroy me if they want, or they can ask me to pay nothing if they want,” Joseph Penrod said. “It’s in their best interest to get as much money from me as possible. I think they’re going to be strongly financially motivated to get as much money out of me as they can, so I don’t expect that negotiation to make me feel really good.”

According to PHI Air Medical’s spokesperson Brad Deutser, the company has a robust program for working with patients to find agreements that prevent air ambulance bills from negatively affecting their clients.

“Over the past 12 months, PHI has received over 500 applications nationwide for its special consideration program,” Deutser said. “The program has an almost 100 percent application approval rate resulting in significant discounts, acceptance of partial payments or even complete write-offs of the balance burden left to the patient after efforts to work with the insurance company have been exhausted.”

But Doug Gray, executive director of the Virginia Association of Health Plans, a lobbying group, gives a different account of PHI’s business practices. He accused the company of habitually operating in areas where they are the only air ambulance provider and staying out of network to increase its bottom line.

“PHI is well known for not contracting with any insurer,” Gray said. “Their business model is to bill the customer whatever they like and not give the patient any notice. What they’re doing is just taking advantage of unsuspecting people.”

The company has six bases in Virginia, located in Lynchburg, Harrisonburg, Front Royal, Leesburg, Manassas and Fredericksburg, according to the company’s website.

In Lynchburg, PHI provides backup for the rare times when Centra’s helicopter is out of commission, according to Centra spokesperson Diane Ludwig. Anthem contracts with Centra Health, so if its customers are transported by the Centra helicopter, they will not be subject to a large bill. Between 430 and 450 patients are transported annually by Centra’s helicopter, Ludwig said.

If a patient is picked up by PHI because Centra’s helicopter is out of service, the bill will still come from Centra and be treated as “in network” if an insurance provider covers the Centra health system, according to Ludwig.

While at the hospital with Michael, Michelle Penrod said she was focused on the emergency at hand and did not even consider the possible financial implications of taking the ride with her son the doctors ordered. The helicopter was already on its way before she was told they were being transferred.

“I was worried about Michael, so I was trying to keep calm, so I wasn’t in the frame of mind [to] say, ‘what are you asking me to do?’” Michelle Penrod said. “The medical professionals told us what was going to happen, so me just thinking about Michael, I didn’t stop to question them.”

Winchester Medical Center could not be reached to comment on whether or not doctors take into account the financial impacts helicopter transport could have on patients when they make the decision to call the aircraft.

According to Gray, patients always are able to refuse a helicopter transport but they are not often given adequate information to assess their options because physicians are encouraging the move and no pricing is available on site before the decision is made.

“You can always refuse care if you want to, but the question is will it cause the patient harm,” Gray said. “What you’ll hear from the hospital is that an emergency is an emergency and it has to be done, but I don’t know about that. If you’re able to be transported to another hospital, you’re most likely stable enough to wait. Every emergency is different.”

According a March 2017 report on air ambulance billing issues compiled by www.consumersunion.org, the policy and action division of Consumer Reports, insurance departments from nine states received 55 consumer complaints between 2013 and 2016 that total $3.8 million in air ambulance charges.

With numerous families like the Penrods struggling with high air ambulance bills in Virginia and nationwide, Virginia’s General Assembly unanimously passed HB 1728 during the 2017 session, which instructed the Virginia Department of Health to review regulations for air ambulances.

Sponsored by Del. Margaret Ransone, R-Kinsale, the bill convened a working group consisting of stakeholders from across the industry, including government officials, air ambulance companies — including PHI — and lobbying groups such as the Virginia Association of Health Plans. Ransone could not be reached for comment.

While the group’s report is not expected to be released until Dec. 1, Virginia Association of Health Plans Director of Policy Kyle Shreve, who was part of the review effort, said the group found the biggest problems arise when companies do not contract with insurance companies and leave patients with only one choice and a large bill.

“What happens is when there’s one provider in the region, [air ambulances] either demand ridiculously high rates or they don’t contract at all because they can stay out of network and actually make more money,” Shreve said.

Because the problem is due to a breakdown of contract negotiations between companies, Shreve said the problem is difficult to address with policy, especially since the federal government largely is responsible for air ambulance regulation.

“Under the Airline Deregulation Act of 1978, the federal government has stated that they’re the ones that get to regulate aircraft, including air ambulance providers,” Shreve said. “That severely limits you as a state policy maker.”

In order to improve transparency in the air ambulance business, Rep. Jackie Walorski, R-Ind., introduced the Ensuring Access to Air Ambulance Services Act of 2017 in July. The bill, which has not gained traction, would require the reporting of additional data by air ambulance companies in order to reform the reimbursements for services under Medicare.

Montana and North Dakota also passed legislation in 2017 to try to protect consumers from massive air ambulance bills. Montana’s Senate Bill 44 requires insurance companies to shield their customers from the heavy cost of life-saving helicopter rides by paying the bill, negotiating a settlement or fighting the air ambulance company in court.

New legislation in North Dakota requires health providers to give consumers a guide showing which air ambulance companies operating in North Dakota have contracts with the state’s three major insurers so customers do not willingly accept a ride that could bankrupt them later.

Despite the financial problems this caused the family, the Penrods do not regret taking the helicopter.

Because of the lack of a contract between Anthem and PHI Air Medical that allowed the insurance company to contribute only a partial amount, Joseph Penrod believes Anthem is being negligent in taking care of his family.

“There isn’t an agreement with PHI with Anthem,” he said. “They don’t do that because the air transport company wants to charge as much as they want, and the insurance company doesn’t want to pay for it so they won’t ever agree on an amount. This is a situation where you can pay Anthem as much as you want, and they are going to give us as little they can.”

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