When American Medical Response’s (AMR’s) five-year contract came up for renegotiation in San Joaquin County, Calif., the company proposed a steep hike in fees. Under the new contract, approved in March by county supervisors, BLS services will rise from $740 to $931 (a 26 percent increase) and ALS will rise from $1,091 to $1,767—a 61 percent jump.
Last summer in Los Angeles, the City Council approved an increase in BLS fees charged by the fire department from $712 to $974 and $1,004 to $1,373 for ALS, a 37 percent increase. That was the second fee increase in two years. And in Avon, Ohio, a town of about 10,000 on the shore of Lake Erie that’s best known for its annual Duct Tape Festival, the City Council approved an ordinance in February to raise fees from $500 for ALS and $400 for BLS to $650 and $500, a 30 and 25 percent rise, respectively.
No one tracks national trends in EMS fees. But anecdotally, both government-based EMS and private ambulance companies report that increasing financial pressure is causing many of them to increase fees. Among the pressures: Gas prices and health insurance costs are rising; payments from Medicare and Medicaid continue to fall farther behind the true cost of providing service—a 2007 report by the Government Accountability Office estimated that the Medicare reimbursement rate was 6 percent below cost in urban areas and 17 percent in very rural areas—and there are more of those patients than ever. At the same time, tax-based support from local governments is dwindling as they feel the pinch from the recession.
“What we’re seeing across the nation in talking to providers is that the pressure of local governments to reduce subsidy levels because they just don’t have the funds is forcing services to get more efficient and seek other avenues for revenue,” says Stephen Williamson, president of the American Ambulance Association. “The cities that subsidize the services are in such bad shape that they can’t afford the subsidies or to increase the subsidies to match the increase in volumes.”
Of course, not every ambulance service is subsidized, including AMR in San Joaquin County—yet the government’s finances are still affecting them. There, the county government is facing an approximately $36 million deficit for the 2011–12 fiscal year, and all county departments have been asked to make significant budget cuts.
Under AMR’s contract extension in San Joaquin, the company’s annual payment to the county for “monitoring” the contract will rise from about $260,000 next year to $475,000 by year five of the contract.
Dan Burch, director of county EMS services, says the fee increase included in the new contract, which also permits an additional 7.25 percent fee hike in each subsequent year, was necessary not only for AMR to maintain its current level of service, but also to cover the purchase of a new fleet of 25 ambulances to replace those with more than 250,000 miles and to add additional EMS supervisors.
The county has also seen an increase in patients covered by Medi-Cal, California’s Medicaid program, and a reduction in the number of people with private insurance.
“The fee increases reflect the increasing costs of doing business, increasing fuel prices and also a shift in payer mix,” Burch says. “With the economy as it is, there are fewer people with commercial insurance, more people on Medicare and Medi-Cal and more uninsured.”
Private insurance, Burch says, subsidizes the set amounts paid by Medicare and Medi-Cal. Since Medicare and Medi-Cal make up about 60 percent of transports, that’s a lot of subsidizing, he adds.
“Those with commercial insurance are having to make up what the government isn’t paying. It’s a cost shift,” Burch says. “It’s the commercial insurance that pays the bulk of transport. If you have a great commercial-public mix, that works OK. But the fewer commercial insurance payers you have, the higher your fees that have to cover the costs of doing business.”
The county also requires all of its ambulance providers to have a “fee forgiveness program” for those without health insurance or those who would face a major financial burden if they had to pay, which also adds to the cost of doing business. (AMR answers about 90 percent of calls, but there are other smaller EMS providers, including a fire department and two community-based not-for-profit ambulance services.)
Instituting other sources of revenue … or not
Fees alone aren’t the only source of revenue. There are base rates, but also add-on fees for mileage, oxygen and other supplies. In Avon, mileage was hiked from $7 to $10 a mile. In San Joaquin, per-mile costs will increase from $30.78 to $37.50, while the price of oxygen will rise from $89.61 to $110.32.
Which additional fees an ambulance service can charge varies based on local codes and contracts, Burch says.
And even when fee increases seem high, ambulance services get only a fraction of what they’d like to charge, says Williamson, who is also president of Emergency Medical Services Authority, a public utility model service that operates in Tulsa and Oklahoma City and the surrounding region. Last time they raised rates, an analysis showed they actually received about 8 cents on the dollar.
“It’s funny money,” Williamson says. “What you bill isn’t what you expect to get.”
As the payer mix is increasingly skewed toward Medicare/Medicaid patients, Williams expects the financial pressures to worsen. “We are facing the perfect storm for the next few years,” he says. “The Baby Boomers were born between 1946 and 1964, and they’re turning 60. We’re going to have more people with Medicare and less with private insurance.”
Still, some services are holding the line on fee increases, either by choice or because the regulations they operate under don’t allow them much wiggle room.
In Connecticut, EMS is regulated by the state Department of Public Health, Office of Emergency Medical Services (OEMS), which sets rates EMS providers may charge. Each year, EMS providers have the choice of accepting the common inflation rate as calculated by OEMS or going to a rate hearing application and applying for a higher retail rate, says Bruce Baxter, CEO of New Britain EMS, a nonprofit.
“The vast majority of services accept the common inflation rate,” Baxter says. “In New Britain, where the vast majority of our patients are Medicaid or Medicare recipients, we accept the state common inflation factor, which was 3 percent this year.”
In Idaho, Ada County Paramedics, which has a budget that’s made up of 30 percent tax support and 70 percent user fees, actually reduced fees by 3 percent last year. “We know people are having more difficulty paying their bills,” says Director Troy Hagen. They managed to do that by holding labor costs steady, he adds.
“It is not sustainable long term but hopefully it got us through the worst of the financial downturn,” he says. “We’ve seen cost increases in fuel, supply and equipment costs. That may push us to change fees.”
Balancing fees with service
The fees aren’t only numbers on a balance sheet, Burch says. The fees charged by EMS also reflect choices local governments make about the quality and level of service they want to offer residents.
When San Joaquin entered into contract negotiations, Burch did a fee analysis of 10 nearby California counties that included required staffing levels and response times. His county requires an urban response time of 7 minutes, 29 seconds 90 percent of the time. Stanislaus County, where the cost of ALS is $2,191, requires a similar urban response time. Sonoma County, where ALS costs $2,044, requires an even quicker response time of 6:59.
In contrast, Contra Costa County requires an 11:45 urban response time—and its ALS fee is $1,742, while Santa Clara County, with similar response time requirements, has a $1,439 fee for ALS.
And while other counties permit additional charges—Stanislaus, for example, allows medics to tack on a $50 charge for personal protective equipment—San Joaquin doesn’t permit that fee.
“If we had lowered our performance requirement, we could really drive down the cost of transport,” Burch says. “But because we are asking for this higher performance level, they have to be able to staff to meet that.”
He added: “Just comparing fees doesn’t give you an accurate picture. You have to consider the performance requirements and expectations.”
