Expert EMS Billing

EMS in Unprecedented Times: Federal Funding Uncertainty in 2025 and Beyond

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Widespread layoffs. Looming budget cuts. Federal funding freezes. Tariff uncertainty. Behind the attention-grabbing headlines are critical questions from EMS agencies that need answers:

  • Will government payers continue to reimburse ambulance claims amid funding freezes?
  • How will federal cuts to Medicaid affect reimbursement?
  • Will Medicare payments take a hit?
  • Are Medicaid Supplemental Payment programs like GEMT at risk?
  • How can you navigate through tariffs?

The Rapidly Evolving Landscape

First, a Civics 101 lesson. Congress is the legislative branch of the federal government and holds the power of the purse, meaning it has authority over government spending. For substantial changes to occur, such as cuts in Medicaid or Medicare spending, Congress must pass legislation or budgets. Early signs in the current administration point to Congress creating a framework for sizeable spending cuts, but specifics are lacking at this point.

In the meantime, the Executive Branch has been issuing spending freezes through executive orders. There is no doubt that many government entities and individuals have been substantially impacted by those freezes, but major spending changes need to pass through Congress. Additionally, the courts have challenged many of these freezes, resulting in judicial orders for spending to continue.

At the time of this writing, the House budget resolution under consideration aims to cut at least $880 billion in costs over the next ten years. Experts say a substantial portion will need to come from Medicaid spending. Dissention is already rising; public sentiment indicates that not enough money is spent on Medicaid. According to a Kaiser Family Foundation Poll conducted February 14-19, only about 20% of respondents felt that too much was being spent on Medicaid and that it should be cut. Even among voters who supported Trump in the election, only 34% felt that too much was being spent on Medicaid. Around 19% of the U.S. population relies on Medicaid for health coverage[1], so Congresspersons’ constituents would be undoubtedly affected by cuts.

Medicaid is jointly funded by states and the federal government. Contributions vary state to state, but range from over 50% to 80%. What would happen if the federal government reduced its portion of the contribution? With roughly 19% of EMS patients covered by Medicaid in a time where Medicaid already under-reimburses providers for the costs of emergency ambulance transports, it’s not a stretch to say that EMS providers would be impacted.

States Backed Into a Corner

If federal Medicaid funding was reduced, the states would be put in a difficult situation. In the short term, states could cover the shortfall, but most are not in a financial position to do this for very long. Other options include reducing the amount reimbursed for services (e.g., announcing a 50% cut in reimbursement rates, which are already very low to start with for most Medicaid programs) or reducing the number of covered individuals. These options could start a domino effect of negative consequences for EMS providers, as the number of uninsured individuals would grow while the Medicaid-insured population would decline. Uninsured patients rarely pay their EMS bills in full (or at all).

Similarly, with Medicare, reduced payments are unlikely to occur quickly. Medicare add-on payments were just extended through the end of the federal fiscal year, leaving long-term and higher levels of extension uncertain. The budget extension has not addressed the longer-term, substantial cuts that Congress and the Presidential administration are considering. The 4% PAYGO sequestration[2], deferred for several years as part of funding the Infrastructure Recovery Act, is also up in the air.

And then there’s the Ground Data Ambulances Collection System (GADCS). The Medicare Payment Advisory Commission (MedPAC), tasked with advising Congress on Medicare issues, analyzed the initial dataset resulting from the GADCS that all EMS agencies were required to participate in. We were hopeful that the data and MedPAC’s final report, due in June 2026, would result in a substantive increase in Medicare allowance amounts for ambulance transports. But given the various staffing cuts and focus on spending reductions, it would not be surprising to see a delay or end to the current efforts to seek increased/fair reimbursements from Medicare.

It’s also unlikely that a consensus will be easily obtained on how to apply the recommendations that the Advisory Committee on Ground Ambulance and Patient Billing (GAPB) made regarding ground ambulance services vis-à-vis the federal No Surprises Act. With that said, addressing surprise medical bills is a topic that the current administration has said is a priority; hopefully that is not done without some thought and review of the GAPB report.

Major Unknowns

In addition to the various areas already covered, substantial changes to the global tariff structure appear to be likely. On the surface, EMS agencies are service providers and thus would not be substantially impacted by a change in the tariff structure. However, depending on how things play out, supply costs could rise depending on from where required items (ambulances, equipment, supplies) are sourced. Additionally, there are concerns that new tariff structures will cause inflation to rise, which would put pressure on agencies to increase wages, the largest expense item for EMS systems by far.

At this point, there are many more questions than answers. One thing that appears to be certain: uncertainty.

In this industry, we react to the unexpected. From 9/11 to the opioid epidemic to Covid-19, emergency responders have adapted and moved forward during plenty of “unprecedented times.” EMS providers will undoubtedly find ways to overcome any new challenge. But it shouldn’t have to be this way. We encourage all involved in the EMS industry to get involved:

  • Build relationships with local, state, and federal legislators. Regular meetings, phone calls, and emails can build strong working relationships, allowing EMS providers to educate them on the challenges faced by the EMS community and the need for improved funding. A good start is to write to your Congressional leaders and let them know how critical federal funds are for your organizations and communities.
  • Join established organizations and advocacy groups. This list of EMS Associations hosted by NHTSA’s Office of EMS (OEMS) shows organizations with which the OEMS collaborates most frequently, giving them a voice on the federal level. A unified voice has more impact when lobbying for legislative changes.
  • Utilize digital and media outreach. EMS professionals can use social media platforms to raise awareness about funding issues, or even work with local news outlets highlight the challenges of EMS underfunding. Op-eds and opinion pieces for local newspapers or online publications can also have impact. Bringing public attention to the issues can pressure lawmakers to act.

Even small efforts and actions can make a big difference. EMS personnel and their supporters have the power to advocate for both preservation of and increases in reimbursement and funding, paving the way for more sustainable, efficient, and effective emergency medical services.

[1] Source: US Census Bureau, Health Insurance Coverage in the United States: 2023, September 2024.

[2] The 5% PAYGO sequestration refers to a mandatory spending reduction triggered by the PAYGO (Pay-As-You-Go) rules, which require offsets for new federal spending. For several years, this sequestration was deferred to support funding for the Infrastructure Recovery Act. For EMS, this sequestration could potentially reduce Medicare payments to providers, impacting their funding. However, the deferral allowed EMS services along with other federally funded services to avoid these reductions during the period when the infrastructure act was funded.

Death and Taxes: Sustaining the Lifeline of EMS Services

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This article was originally published on EMS World in February 2025. You can check it out here.

In our previous article, Behind the Sirens: The Hidden Costs of EMS Readiness, we explored the costs involved in maintaining 911 EMS readiness with a midsize Midwestern agency called “Any Town Fire & Rescue Department” or ATFRD. In this follow-up, we’ll examine the funding sources that support municipal EMS systems.

Introduction: The Life Behind the Lights

Late one stormy night in Some Town, a 9-1-1 dispatcher answers a call about a young mother struggling to breathe. Within minutes, EMTs from Some Town Fire & Rescue Department (STFRD) arrive, stabilize her condition, and rush her to the hospital. Behind this fraught moment lies a stark reality: EMS services depend on an intricate web of funding to ensure their readiness every day, every hour.

But who pays for this critical safety net?

This article delves into the urgent matter of EMS funding, illuminating the financial gaps that pose a threat to these life-saving services. It also presents potential solutions to bridge these gaps, underlining the need for immediate and concerted action.

The Costs of Readiness: Why It’s So Expensive to Save Lives

Every EMS agency operates on two overlapping principles: readiness and response. Maintaining ambulances, equipment, medications, and staff requires funding, even when no emergencies occur. Yet readiness funding routinely falls short of covering its true costs.

In most municipal EMS systems, revenue comes from two primary sources:

  1. Direct Cost Recovery: Revenue comes from billing insurers and patients for emergency transports.
  2. Tax-Based Funding: Revenue comes from property taxes, municipal general funds, and special assessments.

However, these sources often do not sufficiently cover the needs. A staggering 80–90% of EMS transports involve uninsured patients or those covered by fixed-reimbursement government payers, such as Medicare and Medicaid. The reimbursements tied to these transports often fall short of actual costs, leaving EMS agencies to fill the financial gap through taxpayer support.

Funding Breakdown: How Agencies Like STFRD Stay Afloat

Using publicly available data, we analyzed the funding mix for EMS agencies. Here’s what we found:

  • Direct Billing Revenue: Typically covers 20–35% of total costs.
  • Supplemental Medicaid Payments: Provides additional funds in some states.
  • Tax-Based Revenue: Fills the majority of funding gaps.

For example, at STFRD:

  • 36% of EMS funding comes from property taxes.
  • 22% comes from the municipal general fund.
  • 11% comes from supplemental Medicaid payments.

Without the Medicaid program, funding gaps force STFRD to draw even more from property taxes, placing a heavier burden on the local community and forcing the municipality to make funding trade-offs.

Case Study: The Financial Gap at STFRD

Each ambulance transport at STFRD costs approximately $1,500, but they recoup just $490 per trip through billing. The remaining $1,010 must come from elsewhere—primarily from property taxes and supplemental funds.

This financial gap directly affects STFRD’s operations, potentially leading to service cuts, increased tax burden, or the need for better reimbursement rates. Additionally, if state Medicaid programs aren’t available, the same difficult decisions loom: raise taxes, cut services, or advocate for better reimbursement rates.

A Broken Model: Why EMS Funding Needs Advocacy

What if we viewed EMS funding like public utilities? Municipal water service requires an infrastructure (i.e., the storage, treatment facilities, pipes, and pipelines) to provide water to households and businesses at any moment; EMS readiness is an equally critical public service with infrastructure costs. Actual water usage fees apply to end-user usage. A household that consumes 1000 gallons of water pays a different amount on their water bill than those that use 100 gallons during the same period.

Following this analogy, taxes would cover the infrastructure of a 24/7 EMS service (like municipal water service infrastructure), and the cost of the actual ambulance transport would be covered by the patient receiving the service (like the water bill).

However, when reimbursements are insufficient, the burden shifts to taxpayers, stretching municipal budgets already allocated to schools, infrastructure, and public safety.

The question is: How do we ensure sustainability without breaking the system—or the community?

A Way Forward: Transparency, Advocacy, and Solutions

Sustainable EMS funding requires a multi-faceted approach:

  • Transparency with Taxpayers: Agencies must communicate funding needs and the actual costs of EMS readiness.
  • Fair Reimbursement Rates: A key pillar of sustainable EMS funding is the need for Medicare, Medicaid, and insurers to cover costs that truly reflect the actual expense of emergency transport. This fair reimbursement is essential to the financial sustainability of EMS services.
  • Community Engagement: Residents must understand that EMS isn’t just a service; it’s a shared responsibility. Their active involvement and understanding play a significant role in sustaining EMS funding, empowering them to contribute to the safety of their community.

Conclusion: Beyond Death and Taxes

As STFRD prepares for its next budget meeting, its leaders must weigh impossible choices: service cuts, tax increases, or sustained advocacy. They—and every municipal EMS agency—face this truth: sustainable EMS funding is not an individual task but a collective effort that requires unity, collaboration, and the active participation of all stakeholders.

Connect with Digitech today for expert advice on maximizing your EMS billing and funding strategies. Let’s build a sustainable future for emergency services.

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Behind the Sirens: The Hidden Costs of EMS Readiness

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This article was originally published on EMS World in August 2024. You can check it out here.

You are the EMS Chief of a midsize Midwestern agency called “Any Town Fire & Rescue Department” or ATFRD. It’s 2 AM, and the call comes in — a 45-year-old male with chest pain. Your crew jumps into action, the ambulance’s red lights flashing through the deserted streets. This scene, a lifeline in moments of crisis, is repeated countless times across the country daily. But what does it take to keep this service available around the clock? The costs are staggering and often hidden from view. Let’s delve into the actual price of maintaining emergency ambulance services and our financial challenges.

The Hidden Infrastructure of EMS

As the crew responds, consider the intricate web of readiness behind this response. Maintaining an EMS system capable of responding to emergencies 24/7 involves substantial costs. While the spotlight is often on the staggering costs of ambulance services for patients, there’s less focus on what each EMS incident costs the provider. These expenses extend far beyond the visible efforts of our paramedics and EMTs and include the readiness of staff, facilities, equipment, and supplies.

At Digitech, we process bills for over 5 million EMS incidents annually and assist clients in reporting cost data to CMS. To provide a clear picture of the true costs of readiness, we analyzed 2023 data from 11 diverse ambulance service providers across six states, including Fire-based and EMS-only services. This analysis reveals the extensive financial demands of maintaining an EMS operation.

Breaking Down the Costs: Where Your Budget Goes

Understanding the detailed cost breakdown is essential for managing an efficient EMS operation. Here’s a comprehensive look at the categories involved:

Capital Costs – 2%

  • Depreciation of buildings, vehicles, and operational equipment
  • Leases, rental, and interest costs

Salaries – 57%

  • Regular, overtime, vacation, and holiday pay for all EMS staff, including EMTs, paramedics, chiefs, 911 call technicians, dispatchers, and support staff

Benefits – 25%

  • Employer-paid health and life insurance, retirement plans, payroll taxes, and tuition assistance

NOTE: While salaries and benefits are over 80% of an EMS agency’s costs, the industry still faces a staffing crisis; wages are simply not high enough to keep pace with the cost of living and pay in other competing fields. In New York City, EMT salaries start at $39,386 annually. That’s less than the pay for an app delivery worker making the new city minimum wage of $19.56 plus tips while working 40 hours a week.

Medical Supplies – 1%

  • Non-capital medical supplies such as medications, monitors, and consumables

Fleet Maintenance – 3%

  • Maintenance parts, labor costs, and fuel for vehicle upkeep

Other Admin – 12%

  • Professional services, contracted labor, medical director costs, training, utilities, and communications

Case Study: Any Town Fire & Rescue Department

Let’s zoom out to understand the broader financial picture. The average cost for ATFRD to run one ambulance trip is nearly $2,000. Most ambulances make multiple trips daily, so the cost of keeping an ambulance operational and ready to respond is significant.

Cost Per Transport Breakdown

Using the example from above, here’s how the cost from ATFRD breaks down:

Accounting $24.98
Administrative $15.24
Ambulance Salaries $8.61
Contracts for Equipment Service $6.07
Contracted Services – Ambulance $1.39
Dispatch Service $128.55
Dues and Subscriptions $1.05
General Insurance $43.42
Housekeeping $4.58
Legal $1.19
Medical Supplies $30.07
Minor Equipment $37.59
Minor Medical Equipment $2.45
Other A&G $4.39
Other A&G $3.02
Salaries $1,124.59
Salaries (Fringe Benefits) $458.22
Supplies $34.61
Training $9.77
Utilities $14.85
Total $1,954.60

The Financial Gap: Charges vs. Costs

Your ATFRD crew stabilizes the patient and transports him to the hospital. This vital service comes at a significant cost. The disparity between the transport cost and the patient’s charge is substantial. In 2020, the average charge for an ALS emergency ground ambulance service was $758 (report), while the Medicare reimbursement for the same service was only $463. This leaves providers like ATFRD facing a significant shortfall for each transport unless they align fee schedules to costs, a decision with many downsides.

Moreover, for uninsured patients, ATFRD often recovers very little of the billed amount — not because the patients do not want to pay their bills but because they simply cannot. The collection rate for this “self-pay” group may be 5% or lower, meaning that if 1,000 uninsured patients are charged $1,000 each for an ALS transport, it would cost (ATFRD, for example) $1,955,000, and they may only recoup $50,000 on $1,000,000 invoiced.

Conclusion: Bridging the Financial Divide

As the patient receives definitive care at the hospital, your crew is already preparing for the next call. The cost of their service is the furthest thing from their minds — they are rightly focused on responding to that call and delivering high-quality pre-hospital medical care. However, for EMS leaders and administrators, understanding the true costs of EMS services is the first step towards bridging the financial divide. We must advocate for fair reimbursement rates that support our agencies and ensure sustainability. The math doesn’t add up, and while the solution isn’t simple, acknowledging and addressing these financial gaps is crucial for the future of EMS.

By shedding light on these hidden costs, we aim to foster a deeper understanding among our peers and drive the necessary changes to support our EMS providers. Together, we can work towards sustainable solutions that ensure our readiness and capability to serve our communities effectively.

The next call is just minutes away. Are we ready?

Shock Advised: EMS Economics in Critical Condition

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This article was originally published on EMS World in May 2024. You can check it out here.

As our nation celebrates the 50th anniversary of EMS Week this month, a time when we’re honoring the profession and celebrating our country’s dedicated clinicians, there’s something we don’t seem to be talking about enough: our broken EMS reimbursement model. A model that’s still tied to EMS’ roots based on payment for transport, and classified by the Centers for Medicare & Medicaid Services (CMS) as a “Supplier of Services,” like durable medical equipment, rather than a Provider.

EMS professionals are highly trained, delivering advanced medical care. Assessing and treating physically ill, critically injured, and mentally at-risk patients. They’re more than a ride or a supplier of goods, and the outdated reimbursement model is failing private agencies and municipal EMS alike.

The good news is that key EMS organizations are working to change the broken system. The National Association of EMTs, the American Ambulance Association, the International Association of Fire Chiefs, and others are making efforts to influence key policy-makers. 

Yes, it’s complicated. The challenges with each payer are different. For Medicaid and Medicare, it’s typically very low payments that come nowhere close to reimbursing agencies for the cost of care, supplies, and transport. Commercial insurance for ambulance service varies widely from policy to policy with the “allowable” amount typically arbitrary, often tied to some multiple of the Medicare ambulance fee schedule or an opaque “usual and customary” amount. Once the insurance company sets their “allowable,” the difference between the charge and the “allowable” becomes stranded. This remaining balance ends up becoming the patient’s responsibility. Patients are further punished because any stranded amounts are typically not credited against any deductibles or out-of-pocket maximums associated with their insurance policy. This dilemma is what’s led to patient protective legislation such as the No Surprises Act (currently not applicable to ground ambulance services, but under review by the federal Advisory Committee on Ground Ambulance and Patient Billing). In the absence of federal rules, several states are taking action to pass legislation that protects patients. Washington, Indiana, Delaware, Maine, and Colorado have recently set up new protections from large ambulance bills.1

“For commercial insurance, the challenge is that some insurers will arbitrarily decide what they think is a fair payment for the service,” explains Maxine D’Agostino, Vice President of Billing Services at Digitech, a provider of EMS billing and technology services. “This leads to agencies not getting full reimbursement for the services provided, and also leads to remaining balances that are billed directly to patients, which the insurance industry has successfully labeled as ‘balance billing.’”

Jonathan Washko, MBA, FACPE, NRP, AEMD, Assistant Vice President of Northwell Health’s Center for EMS and a subject matter expert notes, “Because EMS generates revenue, people believe we have a pot of gold and that we’re reimbursed like healthcare. If they see a $5,000 ambulance bill, first there’s sticker shock, and everybody thinks we collect that $5,000, but we don’t. We may charge $5,000, but we may collect $500 if we are lucky.”

To complicate matters, costs nationwide are rising dramatically for labor, vehicles, supplies, medications, and fuel, while reimbursement rates across the board are largely stagnating.

Washko says there’s been an exponential rise in the expense of EMS services due to factors like labor shortages, COVID-19, and supply chain issues. “There’s no leveling mechanism in Medicare that’s appropriate to keep pace with expenses,” he says. “Say there’s a new drug that comes out that costs $1,000 per dose that’s going to save somebody’s life, there’s no additional reimbursement that comes with that. If there’s a new procedure or a new piece of medical equipment, there’s no additional reimbursement. We get paid our base rate plus every mile we transport and that’s about it.”

No Transport, No Dollars

Today most EMS agencies report that up to 33% of calls do not result in transport. Even when the patient is thoroughly assessed and receives medical treatment on-site, there are often zero reimbursements from most state Medicaid programs nor Medicare for these calls (and Medicare patients typically represent 40% to 50% of EMS calls).

Community paramedicine and mobile integrated healthcare (MIH) are smart, much-needed services in our country. These models are critical to a patient-centered healthcare system and will help serve the traditionally underserved. But we’ll never get them off the ground nationwide unless EMS can get fairly compensated for this type of care.

“The sad part is that in many cases, the best thing for the patient is not to go to the emergency department,” emphasizes Digitech’s D’Agostino. “But EMS agencies are only compensated for the transport, and ironically the transport is to the most expensive part of the health system–the hospital ER.”

What does it look like If agencies do not get fairly reimbursed? Eventually, if they’re privately owned, they may go out of business, and it’s happening at an alarming rate. Approximately 55 ambulance services have gone out of business since 2021, according to local and national media reports tracked by the American Ambulance Association (AAA) and the Academy of International Mobile Healthcare Integration (AIMHI).2 When an agency goes out of business, another entity is forced to step in and fill the gap. Or, worse, we end up with “ambulance deserts.”

“When COVID hit, EMS was decimated,” says Washko. “Even though we’ve been talking about the fragility of EMS for a long time, COVID brought more awareness to the funding gaps that exist. Today, many EMS systems across the country are literally failing and are having to shut their doors.”

This frequently leads to public EMS services needing tax subsidies, so taxpayers foot the bill to keep emergency medical services alive.

“From a safety net perspective, ultimately a private provider may still continue its mission,” explains Washko. “But it would have to be subsidized by the government.”

The system is undeniably broken, and we’re in dire need of a solution that protects patients and the ambulance services they depend on, as well as taxpayers. 

How Can We Shock the System?

We should start with collaboration across the healthcare space to get to commonsense solutions that benefit the patient and provide them with healthcare at the right clinically appropriate timeframe, in the right place, at the right quality, and at the right cost. This requires all parties to agree on solutions. We all need to rally behind an aligned strategy from those national organizations that represent EMS, like IAFC, NAEMT, AAA, and others.

An education effort is needed at the national, state, and local levels as to what financial resources are needed to run an EMS system, and we all need to be transparent about costs.

A major stumbling block is that EMS systems vary widely and so do their costs. Some communities opt to outsource emergency services to private ambulance organizations. Those agencies historically have low pay structures and employ more EMTs vs. paramedics. Other communities provide service through their municipal structure, such as fire-based or third-service EMS, which typically employs paramedics who are paid union-negotiated wages, benefits, and pensions. The cost structure of a municipal-based system is typically much higher than a private-based system, so it’s very difficult to define a fair cost structure across the entire industry. EMS providers would benefit from banding together to determine a baseline cost structure, and this collaboration would lead to more success in engaging with large payers.

Legislation on various levels will be a big part of any real, lasting solution. There is some hope on the horizon as several states are working to require commercial insurance companies to reimburse at locally approved or regulated rates. However, state legislation only covers state-regulated plans, and commercial insurance typically represents less than 20% of an agency’s billing. The challenges with underfunding by Medicare and Medicaid still need to be addressed. Simply put, Medicare and Medicaid need to pay a fair amount and pay for all services.

Finally, there needs to be a solution to serve patients without insurance–who pays for them? It can’t be a case of EMS agencies absorbing the cost (i.e., loss) unless other parties are willing to pay more to offset the uninsured.

In reflecting on the 50th anniversary of EMS Week, Washko first asserts that EMS is undeniably essential. “In places where it doesn’t exist, morbidity and mortality rates are higher because of the life-saving work that EMS does. 50 years is not a long time and EMS is still in its infancy. We have a lot of work to do,” he explains. “We’ve been focused on developing the delivery model, the framework, and the system. Not enough time, energy, or attention has been paid to how we get reimbursed,” adds Washko. “It’s going to take a lot of work on the federal level, on the state level, at the insurance level, and at the agency level in order to get EMS the funding it needs to last another 50 years. As of right now, I don’t know that we’d last another 50 years as an industry in its current form.”

With that in mind, let’s celebrate EMS Week with a reckoning in this country. Let’s agree that EMS is an essential part of our nation’s continuum of care, one that has a growing role in serving our communities. There’s tremendous value in having lifesaving services available 24 hours a day, seven days a week, but there’s also a real and rising cost of providing those services. Most EMS agencies are not looking to drive outrageous profits, they’re simply trying to not lose money, pay their staff a living wage and benefits, and be part of a community healthcare solution.

  1. https://www.axios.com/2024/03/27/surprise-medical-bills-ambulance-health-costs
  2. https://icma.org/articles/pm-magazine/ems-economic-and-staffing-crisis-creates-opportunity-improved-system-design

What Will It Take to Get Fair Medicaid Reimbursement?

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Almost all Medicaid programs reimburse EMS providers for ambulance transports of Medicaid patients at a level substantially below the cost of providing the service.

That is a fundamental issue in the EMS reimbursement environment that needs to receive more attention, as it impacts the entire financial structure of the industry.

EMS isn’t the only area of healthcare where Medicaid under-reimburses. For example, many doctors cap the number of Medicaid patients they will serve in their private practices because of the inability to subsidize service for those patients. In EMS, the payment levels for Medicaid patients transported by ambulance typically only cover a small fraction of the cost of providing emergency medical services.

Let’s look at the four most populous states and what their respective state Medicaid programs pay for an advanced life support (ALS) ambulance transport:

California:

  • Medicaid reimburses the provider $119.20 for the ambulance transport. (This is the published rate, but these are subject to a mandatory 10% reduction, so the actual payment is $106.38.)

Texas:

  • Medicaid reimburses the provider $285.28 for the ambulance transport.

Florida:

  • Medicaid reimburses the provider $493.00 – $523.62 for the ambulance transport, depending on location.

New York:

  • Medicaid reimburses the provider $296.00 for the ambulance transport.

For most providers in these states, the average charge for an ambulance transport is more than $1000. We will explore the true cost of providing a 911 ambulance transport in a future article, but anyone can confidently conclude that an EMS provider transporting a Medicaid patient in the aforementioned states is not able to cover their costs with the amount that Medicaid reimburses.

What are the impacts of Medicaid severely under-reimbursing providers for the costs of providing emergency ambulance transports?

First, states have had to pursue supplemental Medicaid payment programs to secure federal drawdowns to compensate for the shortfall in upfront payments. There are a wide variety of these supplemental payment programs. Some have not pursued these funds, so providers in those states will only receive the published Medicaid rate. Other states have taken a conservative approach on their supplemental Medicaid payment programs, resulting in modest additional payments. Still other states have taken aggressive approaches, resulting in more substantial supplemental funding.

This approach is analogous to rebate and special programs that pharmaceutical companies use to help patients pay for high-cost medications. Select, savvy consumers can obtain their medications for reasonable prices, but the average person ends up paying full price. This benefits fortunate providers that are in the right geography and able to take full advantage of supplemental reimbursement programs, versus providers unable to participate in a supplemental program or only in one that pays very little.

Ultimately, the result of these approaches is a hodgepodge of funding solutions which creates an unlevel playing field in the industry. Not to mention that in many cases, private EMS providers are excluded from state Medicaid supplemental payment programs. Consequently, we see private EMS services across the country struggling to staff their vehicles adequately or to deliver response times within mandated service level agreements. Some are closing up shop or pulling out of contracts that cannot support their workforce.

When prominent payers like Medicaid underpay, other payers have to subsidize the system. Within EMS, commercial insurance companies are covering a disproportionate amount compared to what government payers pay. The result: commercial insurance companies take advantage of this dynamic to argue that they should pay an amount less than the cost of providing the service, e.g., tying payments to a percentage of the Medicare reimbursement rate, or imposing a usual and customary amount.

In fairness, commercial insurance companies have a valid argument that they should not be picking up the tab that Medicaid and Medicare fail to cover. That said, EMS agencies are seldom charging more than the cost of providing the service; in some cases, they are not allowed to charge more than the cost of the service due to municipal statutes, meaning they always come up short.

The topic of fair reimbursement becomes more complicated when uninsured patients are part of the system. It is not unusual for 10-25% of an agency’s patients to have no insurance. There is zero funding source for these patients who, for various reasons, are not covered by Medicaid – perhaps their income is above the threshold for qualifying for Medicaid, but they still cannot afford insurance, or they do qualify for Medicaid but are unwilling or unable to enroll. Who should pay for these patients if they cannot afford to pay the bill? Currently, this payment burden falls to taxpayers.

Unfortunately, addressing the issue of inadequate Medicaid reimbursement requires legislative action in 40+ states to address severe underpayments for EMS. The current use of supplemental payment programs is a bandage, but it fails to stop the bleeding. A better approach would be to remove the bandage, assess the extent of the wound, and develop a fresh treatment plan with the goal of supporting a healthy and vibrant EMS transportation system. As an industry, we must start chipping away at the root causes that leave so many agencies struggling financially.

Resources

To Balance Bill or Not to Balance Bill: One Agency’s Decision to Change

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Amid the fervent chatter around the No Surprises Act and the final meeting of the federal advisory committee on Ground Ambulance and Patient Billing (GAPB), Digitech has completed an analysis on the impact on a municipal agency that voluntarily ceased balance billing practices in cases where insurance companies did not allow the full charges. Digitech found that the financial impact was modest, but would we advise ambulance providers to stop balance billing patients when commercial insurance plans disallow some of the charges? Read on.

The white paper will:

  • Analyze collections data from before and after this policy was in place
  • Provide some insight into how ceasing balance billing might impact a broader set of agencies in the EMS industry
  • …and more.

To download a complimentary PDF copy of this 10-page white paper, click here.

How Does EMS Get Truly Integrated Into Mobile Integrated Health?

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With the early end to the Emergency Triage, Treat, and Transport (ET3) pilot program by the Centers for Medicare and Medicaid Innovation, a new conversation has emerged about how EMS agencies can be reimbursed for the services they provide other than transporting patients to hospitals.

The general sentiment is that agencies should not give up on the search for systemic solutions and should seek one-off funding sources by negotiating with individual payers. The question, however, comes down to whether this is practical and results in any sort of reasonable reimbursement.

There is a more fundamental reset needed in healthcare related to the importance of the full range of services provided by EMS. Rather than being truly “integrated,” EMS is generally regarded as a mobility service – “you call, we haul.” This is far from the truth, as any basic EMT could tell you. Here are some factors that counter a “keep at it” approach.

1. Funding Mobile Integrated Health (MIH) Programs Overall

Running alternative programs (Mobile Integrated Health, Community Paramedicine, treatment in place, transport to alternative destinations such as urgent care or mental health facilities –collectively referred to as MIH) is expensive. These programs require additional training, protocols, medical oversight, and sometimes additional vehicles and personnel.

Digitech has numerous clients that have some form of MIH in place, some with extensive programs and others with narrowly focused programs. In all circumstances, funding is challenging. Typically grants are the core funding source, sometimes supplemented by direct arrangements with select private insurance companies, hospitals, or physicians’ groups. As noted by Dr. Allen Yee, medical director for Chesterfield County Fire and EMS’s award-winning MIH program, other agencies have employed a cost savings model to direct resources toward preventing future needs for service expansion, thus preserving the agencies’ finances.

2. Percentage of Medicaid/Medicare Patients Receiving MIH Services

At least two-thirds of patients receiving alternative services and treatments from EMS are covered by Medicare or Medicaid. Because Medicare has now withdrawn the ET3 program, there are no current avenues for reimbursement for the largest group of users of alternative EMS services.

Even when ET3 was in place, the requirements were so restrictive that very few EMS provider agencies were able to take advantage. For example, most municipal departments did not have the ability, in a cost-effective way, to ensure an advanced level practitioner was involved in every treatment in place. Dr. Yee also reminds us that medical necessity was still a required component of that program.

With rare exceptions, Medicaid programs do not cover alternative services by EMS. This is unlikely to change quickly or easily, especially when it is up to individual EMS agencies to band together to lobby their State Medicaid and State legislatures to expand Medicaid coverage. Medicaid programs are notoriously slow to make changes.

3. The Challenge of Engaging Commercial Payers

A piecemeal approach to engaging commercial payers creates uneven results and favors the savviest payers. EMS providers are not typically experienced in negotiating contracted rates for services, particularly services they have never provided before. Municipal providers are not equipped to navigate multiple payers to negotiate rates for alternative services. Municipal agencies are also disadvantaged in negotiations, as commercial payers can push providers to the lowest negotiated level since they have full transparency into their numerous contracts (e.g., if one agency agrees to be reimbursed for a particular service at $100 that really costs $200, other agencies are unlikely to get the payers to negotiate above $100).

What would be a preferred approach?

First, there needs to be an acknowledgement that MIH benefits all participants in the healthcare system – patients, payers, and downstream providers.

The benefits need to be quantified, and the downstream providers need to pass along a substantial portion of their savings. Some of those savings include:

  • Insurance companies save thousands of dollars per emergency encounter when a patient does not end up in the Emergency Room or the hospital.
  • Hospitals avoid overcrowding ERs with low-acuity patients. This allows hospitals to focus on high acuity patients, as well as avoiding long wait times and poor patient experiences – today, low acuity patients often end up with long waits as higher acuity patients are triaged ahead of them.
  • Other providers (urgent care, physicians, etc.) improve their utilization by seeing patients they can treat.
  • Patients get the right care at the right time and the right place, all of which saves substantial money for all parties and improves the overall quality of the healthcare experience.
the right care at the right time and the right place

Second, there needs to be a concerted effort to engage Medicare and Medicaid about the benefits of MIH to their programs and to patients. Judging by the setup of ET3, which required an advanced level practitioner to “see” the patient prior to allowing them to be released without a transport, there is a clear concern about patient safety; however, this overlooks the fact that EMS already operates under medical direction and oversight.

Stakeholder concerns need to be identified and addressed prior to setting up these reimbursement models. There needs to be true stakeholder buy-in that MIH programs can and will provide safe and effective clinical treatments to individuals. After that is achieved, reimbursement levels should be established that appropriately compensate EMS for their services. Downstream providers and patients’ payers should share a large portion of savings derived from delivering cost-effective treatment back to EMS, which will encourage agencies to enter the space.

Over time, as upfront investments are paid for and efficiencies are developed, there will be an opportunity to lower reimbursement levels. CMS and other payers should promote ways to optimize this space, not entrench the status quo. Additionally, downstream providers – hospitals, physicians’ groups, urgent care facilities, mental health treatment centers, skilled nursing facilities – need to invest real dollars into MIH reflective of the substantial savings and benefits that MIH services deliver. 

The EMS industry is experiencing a fundamental shift in how out-of-hospital care is delivered in our country. EMS providers play an important role in the health and safety of their communities and many EMS agencies have built innovative programs to better meet the needs of those they serve. Just as EMS has evolved, the reimbursement model must also evolve.

-Kevin Spratlin, Division Chief of EMS Administration at the Memphis Fire Department

A holistic approach that incorporates how timely and vital MIH services fit into the broader healthcare spectrum is needed, an approach that breaks the status quo and jump-starts investments. This is how we will provide superior patient care to our communities. This is how we get more than just the sum of Mobile + Healthcare and, instead, evolve toward true Mobile Integrated Healthcare (in its many forms) as a critical healthcare service.

Pros and Cons of Aligning Ambulance Fee Schedules to Costs

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Setting ambulance fee schedules can be challenging and complex.

On one hand, governing bodies and EMS providers do not want to place an undue burden on patients who require an ambulance for an emergency medical need. On the other hand, providers need to try to optimize revenues for their agency to maintain operations and provide the highest level of care.

Another complexity of ambulance fee rate setting is that transport fees are considered a healthcare service; because of this, the amount a provider charges for transports is completely disconnected from the amount payers will pay.

Governmental payers – Medicare and Medicaid primarily – pay based on a set fee schedule which is not connected to the actual cost of the individual entity providing the service. Medicare and Medicaid transports typically represent two-thirds to three-quarters of an EMS agency’s transport volume, which results in a substantial gap between the cost of providing the service and the reimbursement they receive.

Only with commercial payers – insurance carriers – do EMS providers get close to what they charge in payment.

So, especially for municipal providers with relatively high cost structures, there is no amount that could be charged that would result in full cost recovery. An agency would need to charge some astronomical amount, such as $10,000 per transport, and be able to recover 75% of those charges from the 10-20% of the patients that have commercial insurance coverage, to come close to recovering their costs. Of course, charging $10,000 per transport is unlikely to get either governing body approval or community support!

Here are some of the pros and cons of aligning ambulance transport fees to costs in 911 systems:

Pros

  • Accurately reflects the cost of providing the service
  • Can objectively be measured and adjusted periodically
  • Promotes awareness within the community of the cost of providing 24/7, immediate response services
  • Creates awareness for the various involved service providers (labor, management, governing bodies) of the contributors towards overall costs
  • Likely is the best-case scenario for maximizing revenue and offsetting a substantial portion of the cost of providing the service

Cons

  • Charging the cost of the service, especially for municipal providers, may result in a charge level that exceeds what the governing body and the community feel comfortable supporting
  • Places an undue burden on uninsured or underinsured patients
  • Creates a subsidization scenario in which commercial insurance providers are “subsidizing” the system since governmental payers do not adjust their payments based on costs or charges
  • Increases the patient responsibility for patients with commercial insurance because co-pays are often tied to a percentage of charges (e.g., 20% is typical)

There are substantial and significant cons. But from an industry perspective, agencies are doing a disservice to their fellow providers by not charging at least equal to costs.

Undercharging reinforces the insurance practice of paying at a usual and customary level that is completely detached from the cost. The case needs to continue to be made through available avenues to Medicare and Medicaid that providers deserve to recover their cost of providing the service. For patients, agencies can establish hardship policies to mitigate some of the excess burden put on uninsured and underinsured individuals. As for patients with commercial insurance who get hit with high co-pays, the burden can be lessened by making sure hardship policies provide relief for people who truly cannot afford the payments.

In the end, the EMS community cannot “fix” the growing burden on patients. Patients do have protection once they reach a total out-of-pocket amount, but there is no doubt the financial burden is heavy when a patient experiences a medical emergency – of which the costs related to ambulance services is only a small piece.

The Surprise Factor: Why EMS Deserves to be Reimbursed for Costs in the Midst of Balance Billing Regulations

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The recent federal budget proposed by the Biden Administration for FY 2024 had an unwelcome surprise in it for the EMS industry. The proposed budget extends the No Surprises Act (NSA) to cover ground ambulance services, a category that was previously left out, starting in 2025. Let’s look at where we are right now and how we got here.

No Surprises Act Overview & How Ambulance Services Fit In

The NSA was passed in 2021 with the stated goal to end surprise medical bills for patients. The Act applied regulations to emergency services in hospitals and air ambulance, but Congress kept ground ambulance services as an area that a separate committee (Ground Ambulance Patient Billing Advisory Committee) would review to determine how the NSA should be applied.

Specifically, the NSA prohibits providers from balance billing patients, which occurs when the payer (insurance companies) refuses to allow the charge from the provider (hospital, doctor, air ambulance). For patients, this usually occurs when there is no knowledge or choice of care options and the patient receives care from an out-of-network provider, leading to a surprise bill. The situation forces the provider to file a case with an arbitrator (federal independent dispute resolution process) if it feels the payment made by the payer is insufficient. The arbitration is “baseball style arbitration,” in which the arbitrator chooses one side or the other; there is no settlement in between. The idea behind this is that both provider and payer are more likely to submit a realistic number to avoid the other party being deemed to have provided a more reasonable amount. Additionally, the arbitrator is supposed to consider the good faith efforts each party has made to reach a fair reimbursement through a negotiation and contracting process as part of the determination. For example, if a provider shows multiple attempts to negotiate a reasonable reimbursement through contractual outreaches, only to have the payer reject all efforts, that would benefit the provider.

Unfortunately, the NSA is off to a bumpy start. When the legislation was passed, it was estimated that there would be 17,000 cases of arbitration in the nine-month period for which it was in effect during 2022. That period actually produced 275,000 cases. The U.S. Administration weighed into the arbitration process with guidance that when in doubt, the arbitrator would consider the amount of payment made by the payer as the presumed correct amount. Many feel this was tipping the scale too far in favor of payers.

In 2022, a judge ruled that the overweight consideration of the payer’s “qualifying payment amount” was unfair. The Biden Administration revised the rule in September, and it was immediately challenged again by the Texas Medical Association (TMA) as being overly partial to payers. In February, a judge agreed with the TMA that the guidelines around the arbitration were unfairly biased towards payers. The arbitration process is on hold.

Another awkward aspect of the proposed FY 2024 budget is that the Ground Ambulance Patient Billing Advisory Committee Congress formed to make recommendations on how to apply the NSA to ground ambulances had already been formed and is pending its first meeting. The proposed extension of the NSA to ground ambulance undermines the process that Congress established to provide thoughtful consideration of what is fair to all parties.

Putting aside the growing drama around this topic, what does this mean and where do ambulance providers go from here?

Where Ambulance Providers Go From Here

In addition, messaging to the public on this topic is an area where there is an uneven playing field. Insurance payers have the deep pockets and can influence the message. Payers have hammered on messaging that the issue is about greedy providers, and that the providers are solely driving up healthcare costs. Compared to the insurance industry, ambulance providers are numerous, less financially endowed, and relatively unorganized.

What do we need to push for? The EMS industry needs to continue to make the case that ambulance providers must be allowed to get reimbursement for the costs of providing the services. On the municipal side, cutting insurance payments just means that tax subsidies will need to increase to cover the cost of the services. For private providers, companies will have to charge their public constituents more – and typically that burden will fall back on the municipality that has contracted for the services – or exit the market. This is just a shell game of placing the burden elsewhere.

Where insurance companies do have a fair argument is that they are subsidizing an unfair payment system in which governmental payers are not paying their fair share of the costs. Medicare should be addressing this through the CMS cost reporting process that is underway via the Ground Ambulance Data Collection System. But we are still several years away from the results that consider potentially increasing what Medicare pays for an ambulance transport. In most states, what Medicaid pays for an ambulance transport is a small fraction of the cost. There really needs to be a coordinated effort across all payers. Forcing a change favoring the commercial insurance payers starting in 2025 is not the answer.

The more fact-based we can be, and the stronger we can appeal to the sensibility of the general public about the value of EMS, the better the outcome will be for the industry. We cannot let ourselves be placed in a situation that will force tremendous infusions of money from municipalities’ general funds that are already stretched thin. We cannot allow private providers to be forced out of the industry because the financial model is stacked against them.

The lifesaving EMS providers in our community deserve to receive reasonable reimbursement to sustain a vital part of the United States health system.