Industry Trends Archive

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 ambulance industry has been abuzz about cost data collection requirements set forth by the Bipartisan Budget Act of 2018. As the system continues to develop, we will provide updates about the timeline, any modifications to the requirements that may arise, and how you can take action. Read on, or download this information as a PDF.

What is the purpose of H.R. 3729, the “Comprehensive Operations, Sustainability and Transport Act of 2017?”

• Medicare Ambulance Add-On Payments, an important supplemental reimbursement source from Medicare, expired on January 1, 2018.
• Congressional action was needed to restore the add-on payments and they were extended with some reductions by the Bipartisan Budget Act of 2018 until December 31, 2022).
• There is a current lack of cost reporting data among suppliers of ground ambulance services.
• This legislation would help CMS understand how much it costs to provide ground ambulance services to Medicare beneficiaries.
• This act would reauthorize the add-on payments for five years as well as create a cost-reporting system that will lead to improvements in the Medicare Ambulance Fee Schedule and adequate payment rates for Medicare transports.
• H.R. 3729 will authorize CMS to design and launch a cost reporting system.

What does the implementation look like?

• Pre-Rulemaking — CMS will engage stakeholders to solicit recommendations.
• Rulemaking — CMS will publish a proposal for collecting cost data then seek public comment.
• Final Rule — CMS will issue a final rule after reviewing public input.
• Launch — CMS will select ambulance services to submit data.
• Phase One — All ambulance service suppliers will provide data on the characteristics of their operation such as the type of supplier (e.g. volunteer rescue squad, private company, third service, etc.).
• Phase Two — A survey will collect cost data from a statistically significant number of each group of supplier and provider to obtain costs and other data.

What will this mean for ambulance service providers who are selected to provide data?

• This is not like Medicaid cost reporting, state reporting, or GEMT reporting.
• Costs for providing services vary greatly due to differing state, local, and agency protocols like bundling.
• Different providers have different fee structures and CMS needs the whole range.
• A representative sampling of providers will be selected to report cost, revenue, utilization, and other information as determined by CMS.
• Data will be collected each year from 2020 through 2024.
• Cost reporting will continue at least every three years from 2025 on.
• Future reimbursement will be dependent on the accuracy and completeness of the data compiled.

How can you take action?

• HR 3729 Bill Tracker
• IAFC Action Center
• Sign up for email updates @ AAA Cost Data Collection Information page
• Sign up for the AAA Webinar series
• Understand what will be required of you and be prepared to collect the required data if your agency is selected
• View the AAA’s report from the 2018 Annual Conference

How can Digitech help you?

If you are selected, Digitech will support you through the cost data collection process by providing relevant revenue data and other resources and tools. Our reporting and data mining systems will ease the delivery of required revenue data for our clients. If you have questions about what this all means and how it may affect you or your service, do not hesitate to reach out to us.