To determine the economic impact of federal prospective payments and the potential effect if private insurance payers were to implement similar prospective payments, we examined payments under Medicare diagnosis-related grouping (DRG) reimbursement policies for 105 Medicare and 357 non-Medicare patients admitted to a tertiary care center via air transport. Among the 105 Medicare patients, the average length of stay was 11.4 days and the mortality rate was 24%. Hospital charges exceeded DRG reimbursement for 74% of Medicare patients. A comparison of previous Medicare payment policies to current federal DRG reimbursement resulted in a revenue loss to the hospital of $667,229 ($6335 per patient). For the 357 non-Medicare patients, the average length of stay was 10.8 days, the mortality rate was 10%, and hospital charges exceeded Medicare DRG reimbursement for 78% of the patients. Implementation of DRG-like payments by non-Medicare insurers would create a hospital revenue loss of $2,493,048 ($6983 per patient). We conclude that unless current and planned prospective payment policies are modified, the use of aeromedical transport services to recruit large numbers of critically ill patients to tertiary care centers is economically prohibitive.