Dangers facing EMS: Declining Reimbursement

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Dan Sullivan, founder of The Strategic Coach Inc. and creator of the Strategic Coach® Program, developed a methodology for assessment named D.O.S., which stands for Dangers, Opportunities, and Strengths.

Dangers refer to things we are afraid of losing, opportunities offer the possibility to gain something, and strengths encompass our unique skills and abilities. In the upcoming blog series, EMERGICON will utilize this methodology to assess the Emergency Medical Services industry and offer insight on how to mitigate dangers, capitalize on opportunities, and develop the strengths that are most impactful.

Danger: Declining Reimbursement

Declining reimbursement for EMS services has been studied and talked about for many years. In fact, an article published in 2022 on the Fire Fighters Support Alliance website speaks of a study from 2016 by the Journal of the American Medical Association (JAMA) that estimates that of the 14.6 million patients taken to the hospital in 2015, 33% of the transports were billed to Medicare and 20% to Medicaid. Roughly half of all ambulance transports were billed to “public insurance”. Both Medicare and Medicaid reimburse EMS agencies at fixed rates, but Medicaid payments are generally lower than Medicare. Neither of these government programs reimburse at rates that cover the cost to transport a patient in an emergency.

The same study found that 31% of ambulance runs were billed to private insurance. As we discussed in our blog “Why is surprise billing really a surprise?”, patients with insurance don’t expect to get big bills for medical care, especially when they are having an emergency. Private insurance companies tend to reimburse EMS agencies at out-of-network rates, well below what it costs to transport a patient. This lack of funding from major payers has forced some EMS agencies out of business.

These financial pressures have led to the need for a shift in the way society and payers think about the services and ambulance crew can provide.

Paths to better reimbursement

Another 2016 study, performed by the National EMS Advisory Council, summarized their findings by saying that to promote more cost-effective care and recognize the professional healthcare role EMS provides, there must be a fundamental shift in the funding paradigm to one based on performance and patient care services.

In 2019, an important step in that paradigm shift happened with the announcement of a new payment model by the Department of Health and Human Services. The Emergency, Triage, Treat and Transport (ET3) model would allow for Medicare reimbursement to be available for certain non-transport ambulance services and ambulance transports to alternate destinations. By expanding the possibilities of services EMS crews can offer, this plan gives paramedics more autonomy in treatment and transport decisions, decreases unnecessary healthcare costs and provides the patient with the right care at the right time. Texas Medicaid’s recent approval of reimbursement for ET3 responses in Texas is a strong first step toward the expansion of this model in Texas.

Another step toward strengthening reimbursement is Medicare’s historic announcement of the 2023 ambulance inflation factor of 8.7%. While other legislation could impact the net value of this inflation factor to EMS agencies, it is a step in the right direction.

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