Charging for EMS Services and the Reality of Reimbursement-Part 3 of our Government and Elected Officials Series

As we proceed with this blog series, I encourage you to read the first two parts if you haven't already. Part 1 covered the various EMS delivery models and provided a brief explanation of each. Part 2 explored the background of EMS and the healthcare system, highlighting their mutual impact. Part 3 will now delve into the different aspects of EMS billing, focusing specifically on questions you might encounter as government leaders. This is a concise overview aimed at simplifying a complex yet crucial element of an EMS system.

It is important to understand that ambulance services and the level of care they provide vary depending on need and location, which ultimately affects the cost of service. This concept can be better understood by comparing it to law enforcement. In a police department, all officers receive consistent training upon graduating from the academy, with regulations ensuring uniformity. Similarly, EMS levels of care and training are standardized, with specific educational requirements, training, and testing necessary for certification. Although the initial training is consistent, the costs and operations of systems can differ greatly. For example, in law enforcement, a small town might have a part-time officer or rely on the county sheriff, while a larger city police department may have different equipment and capabilities, even though the foundational law enforcement training is the same for both. In EMS, a rural area might have one ambulance for their county and use part-time staff or volunteers, while a municipal service may have multiple ambulances staffed with full-time employees. Each community must decide the level of EMS service they desire, which influences the operational costs.

This doesn't imply that smaller or rural EMS services offer a lower level of care compared to larger agencies. In reality, many rural ambulance services often require equipment and training for transferring patients from smaller to larger hospitals, sometimes surpassing their urban counterparts. They might carry and use equipment like IV pumps and ventilators, which may not be necessary in certain urban areas. The main distinction lies in the costs associated with readiness.

Cost Variations

An example of these variations unfolds in the following scenario: A full-time paramedic ambulance service in a municipality provides 24-hour coverage from multiple stations. A motor vehicle crash occurs in a rural area 3 miles south of their jurisdiction, which is the jurisdiction of a smaller rural service with one ambulance. Due to multiple injuries, the smaller service requests mutual aid for an ambulance from the municipality. Upon arrival, the rural service requests a medical helicopter because of the severity of the injuries and the number of patients. The medical helicopter transports the most critical patient, while the municipal service transports another seriously injured patient. The original ambulance from the smaller service transports the third seriously injured patient.

The three individuals injured belong to the same family and all survive. 2 weeks after the crash, the family receives three bills from different providers.

• Air Ambulance Transport - $30,000

• Municipal Ambulance Transport - $2,500

• Small Ambulance Transport - $200

The family is upset because their auto and health insurance will only partially cover the air ambulance and ground ambulance expenses. They are understandably frustrated because they perceive the three transport modes as providing the same service. Moreover, they did not request the air ambulance or the more expensive ground ambulance. The family then receives a hospital bill totaling over $150,000, which insurance mostly covers, so they have no issue with that bill. Their frustration lies in the high cost of ambulance transportation, as their insurance only covered part of it, leaving them responsible for the remainder. There are two main reasons this situation could arise, as explained below, and it's important to explore these differences for a complete understanding.

• Air Ambulance - expenses include the aircraft, pilot, mechanics, Critical Care Nurse/Paramedic, fuel, and round-the-clock immediate availability.

  
  

• Municipal Ambulance provides a 24-hour paramedic-level crew ready to respond from a strategically located station. The system includes multiple ambulances to ensure coverage even when supporting other agencies. It handles 10,000 runs per year and uses a third-party billing service to ensure compliance and maximize revenue capture.

  
  

• Jurisdictional ambulance operates a single ambulance service with 500 responses annually, relying on part-time staff and volunteers to go to the station and respond to the scene once staffed. The service prides itself on minimizing costs while delivering valuable service to the community. They fundraise for equipment and vehicles, and many of their EMTs and Paramedics are experienced, working full-time for other EMS services. They charge a flat fee of $200, but if insurance doesn't cover it, they write it off without follow-up.

Please note that the following are generalities of insurance related to emergency medical services transport. Insurance and billing are complex topics, and I am not presenting myself as an expert in this area.

• Auto Insurance- The family has opted for auto insurance that meets the required minimum coverage. They have a high deductible and limited medical coverage.

  
  

• Health Insurance- The family selected a high-deductible policy that offers 100% ambulance coverage, but only after the deductible is reached. Since they have not met the deductible, all ambulance expenses have been applied towards the deductible, leading to direct billing for the total or allowed amounts per the policy. The hospital submits their claim to the insurance carriers and starts their process of recovering costs.

  
  

• Deductible- Even if the deductible had been satisfied before the incident, Medicare and Medicaid restrict payments for ambulance transport, and there are rules about what can be charged to the patient or supplemental insurance. Private insurance typically pays an amount they determine. While this doesn't prevent billing the remaining balance to the patient, many insurers prefer you to accept their payment terms (participate). In some cases, if you don't participate, the insurance company sends the payment to the insured, and you must then recover it from them.

Additionally, many people refer to ambulance transport as a "ride," and within our profession, an ambulance is often called a bus or taxi. Although unintentional, such terminology perpetuates a misunderstanding of the care provided and the costs involved. A larger issue, to be addressed in a future blog post, is why many patients are taken to the hospital for minor or unnecessary reasons. Here's a hint: Insurance does NOT cover response and treatment at the scene, only hospital transports. There’s liability for healthcare providers who don’t send a patient to the hospital by ambulance, even if it's nearby. There’s also liability for not transporting a patient if something was overlooked in the assessment. These are legitimate concerns, but solutions exist if there were a better general understanding of EMS.

The Red Herring of Revenue

Calculating revenue for ambulance services might appear straightforward, but a quick online search reveals many instances of estimation errors. As I mentioned at the start of this series, and most EMS colleagues would concur, while EMS does generate income, it is not a cost-neutral or profitable service. There are cases where systems are cost-effective, but this typically involves regionalization and the same service handling both 911 and non-emergency patient transport or contracting with a private ambulance service.

Key Considerations for Government Officials Before Making Decisions

• Revenue is not simply call volume multiplied by your billing rate.

  • A significant portion of calls are non-transport and not currently reimbursed by insurance. Without hospital transport, the EMS agency receives no payment. Depending on your area, the non-transport rate can be around 40% of call volume.

    
    

  • For reimbursed transports, some patients lack insurance and will never pay. In areas with many visitors, even insured patients may not pay if it goes toward their deductible.

    
    

  • Medicare and Medicaid payments are restricted to specific amounts and categories. With a large Medicare and/or Medicaid population, this might have a major impact on revenue. For example, you might charge $2,000, but if only $1,000 is allowed, Medicare will pay you $800, and you can only seek the remaining allowed amount. This means charging their supplemental insurance or them $200. (Numbers and percentages are examples.) Medicare Advantage Plans are even more complex.

    
    

  • Be cautious when calculating additional funding from government programs like GEMT (Ground Emergency Medical Transportation). Although beneficial, government-funded programs can change rapidly and if your EMS agency is dependent on that revenue, and it is no longer available, it could impact your budget and operations significantly.

    
    

  • Costs for EMS including personnel and equipment continue to rapidly increase, while insurance reimbursement stays fairly constant. A fully equipped ambulance is in the $500,000 range and pay is increasing in most areas for EMTs and Paramedics. According to MedPac.gov (the Medicare Payment Advisory Commission) in 2023 only 1% of the Medicare fee-for-service fund is dedicated to ambulance services annually. MedPac indicates during the same timeframe that 13% of Medicare fee-for-service beneficiaries utilize ambulance service at least once per year.

    
    

  • Agency leadership, in collaboration with government officials, should establish a minimum staffing level for police, fire, and EMS. While these services significantly affect budgets, inadequate resources and staffing can lead to challenging situations when failures occur due to understaffing. You cannot staff for every possible scenario, but it's important to avoid staffing solely for routine responses. Although truly serious incidents may represent only 10% of call volume, these are the times when citizens expect an appropriately resourced response.

One advantage EMS has over police and fire services in terms of cost recovery is the ability to charge for services and receive reimbursement from both government and private insurance. As government officials, deciding how aggressively to pursue this revenue source is crucial. It's important to recognize that being less aggressive in recovering these funds will have a greater impact on your budget and taxpayers. Be wary of arguments suggesting that taxpayers already cover EMS services and should not incur additional charges. While this may seem reasonable, the reality is that any shortfall not covered by insurance and payments will need to be compensated with additional tax revenue.

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Part 4 of our series will explore the training, skills, and certification levels in EMS.

Future Topics:

• Why the approach to measuring response times as a key metric for 911 quality is evolving and how this change benefits government agencies.

• Staffing models and key considerations for personnel and shift types.

• The value of ambulance service accreditation and why it should be considered.