Introduction:
On February 23, 2003, the County Commission was provided with information that supported a recommendation to increase ambulance user fees. The recommendation was in response to the following:
Background Information:
Ambulance fees were last increased in June, 1994 with a joint County/City resolution (98-57)[4] resulting in an average increase of 9%. An area rate comparison (2003 rates) indicates that our current user fees are below the local market.
There are additional fees outlined in Resolution 98-57. In addition to actual ambulance user fees we also charge for:
“Emergency Unit Stand-by Service”. These are requests for ambulance standbys at various events including high school football games and other athletic events. We charge $13.00 per hour with a two (2) hour minimum and quarter hour increments, plus $4.25 per mile measured from the closest ambulance station to the standby location. Where an agreement has been properly executed for a different pricing structure the agreement shall apply (i.e. KU athletic events).
“Waiting Time” is based on time waiting at the destination site in excess of one (1) hour with a charge of $13.00 per quarter hour.
“Medical Supplies” are included in the base rate with the exception of pharmaceuticals and solutions which were charged at average costs plus 100%. (Effective April 1, 2005 we can no longer charge for these items and all disposable costs were to be included in the base rate.)
“Additional Attendant” fee was assessed when there was a need for an additional attendant to the normal two to three person crew. In those cases, an additional $50.00 was charged. (Effective April 1, 2001, we could no longer charge for additional attendants).
“Service originating outside of Douglas County” for a non-Douglas County resident is charged an additional $100.00.
Discussion:
Staff is seeking direction regarding the establishment of a fee increase for ambulance services. In an attempt to facilitate the discussion, the following questions need to be answered:
§ Should there be a charge for ambulance service at all?
§ How much can be charged?
§ How much should be charged?
§ Should we charge for ambulance service? There is no federal law related to reimbursement that requires or prevents a local government from charging for services. In many communities, the stance is that the tax dollars fund the services provided by the agency, therefore additional billing for services is not warranted since the taxpayers already support services with tax dollars. This perspective disallows other potential sources of revenue. The true beneficiaries of a policy with this perspective are the insurance companies and state and federal government. Oftentimes, patients have private insurance or are covered by Medicare or Medicaid. A philosophy that doesn’t include billing for ambulance services because of a total reliance on tax dollar revenue is benefiting the insurer more than the patient. In summary, most local governments end up answering this question depending on how badly they need the revenue provided by user fees.
§ How much can we charge for ambulance service? The short answer is, in many communities, just like any other business, we can charge what ever the market will bear. There is little connection between what we charge and what Medicare pays. Although we are still in the transition period, Medicare determines what they will pay for an ambulance transport by using an historical analysis to determine their payment levels. Medicare then applies an inflationary index to our “customary” charges from the previous year to determine our payment level for the current year.
Currently our user fees are below what Medicare will pay for allowable charges. For example, our $375 charge for emergency ALS garners $300 from Medicare ($375 x 80% = $300); if our charge were raised to the allowable Medicare index, we would receive more from Medicare ($440 x 80% = $356). In 2003, we lost $32,023 in Medicare allowable charges. In 2004, an additional $115,882.81 may be lost (estimate based on Medicare Fee Schedule – see attached 5-Year Incident Trend). For the period November 1, 2002 through October 31, 2003, around 50% of our transports were covered by either Medicare or Medicaid.
Additionally, our mileage loss from the allowable Medicare charge is significant. Out-of-town transports accounted for 554 transports or 13.98% of patient transports. We provided 63 standby services or 1.58% of our total ambulance service.
How much should we charge for ambulance service? Local governments that charge for ambulance service have arrived at the answer in a variety of ways. We currently utilize a system that charges current user rates that are below the Medicare and other third party payer allowable amounts. This system does not allow us to capitalize on available revenues that our citizens are actually paying for through their insurance premiums. If we increase user fees to the Medicare and third party payer allowable amounts, user fees will still be below the local market. Additionally, if user rates are increased, the amount of tax dollars needed to fund the ambulance operation decreases. Another option would be to set our rates at the regional average, per the aforementioned market survey.
Recommendations:
User fees are an efficient way for the County and City to enhance revenue and assess a greater portion of the operating costs of the ambulance service to the actual users of the service. In 2003, user fees comprised 12.18% of the department’s operating budget (44.76% of County contribution).
Staff recommends that we adjust user fees to include 100% of Medicare and third party allowable charges. We would recommend increasing user fees for all service levels by $75.00 except ALS2* and raise that fee by $125.00. Mileage would also be raised to $5.50 per loaded mile. We would also recommend deleting all additional costs associated with out of county responses, medical supplies, wait time and additional attendant. Further we recommend increasing the fees for stand-by requests to $150.00 hour with a two hour minimum to be calculated on quarter hour increments. The proposed changes are summarized below:
|
Type of Service |
Current fee |
Proposed fee |
|
Non-emergency No ALS* |
175.00 |
250.00 |
|
Non-emergency ALS* |
200.00 |
275.00 |
|
Emergency No ALS* |
300.00 |
375.00 |
|
Emergency ALS* |
375.00 |
450.00 |
|
ALS2* |
375.00 |
500.00 |
|
Mileage |
$4.25/loaded mile |
$5.50/loaded mile |
|
Stand-by service |
$13/hour |
$150/hour |
|
Waiting time |
$13/fifteen minutes |
Delete |
|
Medical Supplies |
Base rate |
Delete |
|
Additional Attendant |
50.00 |
Delete |
|
Out-of-county responses |
100.00 |
Delete |
*ALS = Advanced Life Support; ALS2 = Critical Conditions
Current projections based on 2003 patient transports indicate an additional $348,011.25 in revenue with the recommended changes to ambulance user fees.[5]
Summary:
We believe we have answered all the questions[6] that have been submitted to us including having a third party review the Medicare Fee Schedule impact on the City/County revenues. Mr. Scot Buxton, AAI of Charlton Manley, reviewed the material and found the Medicare information presented to the County Commission in February, 2003 to be factual and accurate.
Local governments across the country are adjusting their ambulance user fees to meet the challenge of increases in service requests with decreased revenue (tax dollars). We understand that our citizens expect and deserve the best level of service available. Establishing a philosophy for ambulance service that allows for a prudent increase in user fees will assist our department in meeting operational costs as well as provide for the ongoing demand for capital purchases such as adequate funding for our vehicle replacement program.