What Will It Take to Get Fair Medicaid Reimbursement?

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

• CMS – Comparing Reimbursement Rates
• Medicaid.gov – State Overviews
• Kaiser Family Foundation – Medicaid Financing: The Basics