Ambulances, the safety net’s safety net, are hurting for cash

They’re the safety net of the medical care safety net. Like emergency room doctors, they treat everyone, regardless of that person’s ability to pay.

And that puts them in an ever-escalating Catch-22 say the state’s 715 public and private ambulance providers.

Especially when it comes to transporting patients under Medi-Cal, the state’s health care system for the poor.  

“We respond without consideration of a patient’s ability to pay unlike anyone else in the medical community except ER physicians who must also take all comers,” said Don Vonarx, general manager of Riggs Ambulance Services whose coverage area is Merced County. “Medi-Cal doesn’t consider the cost of providing those services.”

About 30 percent of the patients transported by Riggs are on Medi-Cal.

Of the 715 entities that provide ambulance services in California, 550 are fire departments. The remainder are non-profit or for-profit private companies like Riggs in Merced.

Over 8 percent of the state’s 37 million residents are transported in an ambulance each year. That’s over 3 million trips.

In the case of Medi-Cal patients, 90 percent of those trips were emergencies in 2009. And ambulance providers ended up eating $150 million in costs.

Ambulance services haven’t received an increase in their reimbursement rate for carrying Medi-Cal patients since 1999. Rates were reduced by 1 percent in March 2009 and, as part of this year’s budget, are slated to fall another 10 percent.

California’s reimbursement rate is already 41st lowest nationwide.

What the state pays for taking a Medi-Cal patient to a hospital – $118 plus $3 per mile – equals one quarter of an ambulance’s cost of transport.

In 2010, the average cost of an ambulance trip in the state ranged from $586 to $673, according to the California Ambulance Association.

But the Department of Health Care Services, which administers Medi-Cal, says absent more money being approved by lawmakers to increase rates there’s nothing that can be done.

“There has been no appropriation from the Legislature to increase reimbursement rates for ambulance transports since 1999,” said Tony Cava, a department spokesman. “Legislation to increase these rates has been introduced in the past couple of years but none were successful.”

In contrast to the state, Medicare, the federal health care program for persons aged 65 and over, pays about 75 percent of costs. Its base reimbursement rate is $420 and $6.80 per mile.

During the past 10 years – while California has lowered reimbursement rates – the consumer price index has risen 30 percent.

“We’re squeezed by several things,” said Pete Lawrence, battalion chief for the Oceanside Fire Department whose four ambulances transport 6,000 patients annually.

“There’s ongoing price increases. Fuel isn’t getting any cheaper. Wages may have stagnated but they’re still there. New medications come out that are really valuable in the pre-hospital environment. The public expects us to use these advances in technology but Medi-Cal and Medicare don’t pay for it.”

And the state and federal government don’t have to boost rates for ambulance providers because they know even if there is no rate increase 911 responders have a legal and moral responsibility to keep responding.

“Politically, the Department (of Health Care Services) knows we’ll keep providing the services and if we won’t someone else will,” said Vonarx. “There’s no sense of urgency or concern about our financial health.”

Because they are shorted by the state, ambulance providers shift their unreimbursed costs to private insurers.

So while the average cost of an ambulance trip in the state in 2010 was around $630, commercial insurance companies paid $1,214 per trip.

And most private health plans include a policyholder co-pay often of 20 percent.

“It’s ironic. The private insurers and their customers are subsidizing the state of California’s unwillingness to do its fair share,” said Vonarx.

Fire departments don’t have the luxury of shifting unreimbursed costs to private insurers.  Those decisions are made by city councils.

And in Oceanside, as Lawrence explains, raising rates on private insurers isn’t the council’s policy.

“We have a city council that’s very pro business and for us to ask that council to approve rates that are only going to be paid by commercial insurance companies is something they won’t do. We just have to forego the revenue,” said Lawrence. “As a result, other areas of the city ultimately suffer.”

Sometimes cash-strapped cities don’t cut elsewhere – they cut emergency medical services.

Two years ago, Escondido mothballed one of its five ambulances and laid off 10 emergency medical technicians to shave $445,000 off a $7 million shortfall.

In January, Vista took one of its four ambulances out of service to save $600,000 and help close a $9 million budget gap.

And the budget proposed this year by Los Angeles Mayor Antonio Villaraigosa called for cutting four fire department ambulances. Already, the city’s fire department temporarily closes 22 fire companies and six ambulance teams each day to cut costs.

In approving the budget in May, the city council OK’d a plan by the fire department that it says won’t sideline any ambulances.
Ambulance providers have tried various means to gain a rate increase.

For the past two years, the association has sponsored legislation to recalibrate the state’s Medi-Cal reimbursement rate by using the more generous federal standard.
Both years the measure, which has a price tag of roughly $150 million, has been held in the appropriations committee of each house.

Some ambulance providers, including Riggs, sued the department in state court. A trial court and appellate panel said the department acted properly.  

“The association and its members, collectively and individually, are pursuing every mechanism possible to create a situation where improved funding of the ambulance rates is a priority,” said Brenda Staffan, executive director of the association.

“We’ve sponsored legislation. We’ve met with the Department of Health Care Services. Some providers have sought relief through legal means.”

What’s unclear is how much the federal health care law, which goes into effect in 2014, will exacerbate the situation.

Some studies predict that 5 million of the more than 7 million Californians without health insurance will acquire it, starting in 2014.  

Under more generous eligibility rules for Medi-Cal, a large chunk of the previously insured will use the system, which means ambulance services would be required to handle more patients at the low reimbursement rate.

Conversely, some Californians and small businesses will select plans approved by the new state health care exchange designed to offer coverage at a lower cost.

But the higher number of Medi-Cal patients increases the unreimbursed costs of ambulance providers that would be shouldered by private insurers, boosting their expenses.

“There’s not enough information on health care reform yet. But it could be the day of reckoning,” said Vonarx.

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