Opportunities Facing EMS: Reimbursement for True Cost of Service

True Cost of EMS Service

Dan Sullivan, the 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.

Opportunities offer the possibility to gain something, strengths encompass our unique skills and abilities, while dangers refer to things we are afraid of losing. 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.

Opportunity: EMS Reimbursement for True Cost of Service

Higher ambulance costs, lower reimbursements, and a flawed payment model are a few of the contributing factors that make ambulance rides more and more expensive. It’s not uncommon for the trip to cost $1,000-$2,000 or even more for private service companies.

According to Health Care Insider, EMS industry leaders are not solely motivated by profit margins but are just looking to cover costs. And the costs can be staggering. Imagine stretchers that cost up to $40,000, ambulance vehicle price tags up to $225,000, and paying wages for two EMS personnel per vehicle for 24 hours a day, seven days a week.

As Medicare and Medicaid reimbursement rates for ambulance rides have stagnated or even decreased, EMS service costs continue to rise. And insurance companies try to follow suit regarding reimbursements, making ambulance services part of a patient’s deductible.

According to EMS World’s Value of EMS, federal health care policy reimburses ambulance service as a transportation benefit, meaning there is no payment if the patient is treated at the scene and not driven to a hospital. This is one historical challenge consistently facing the industry.

Changing the System

Fortunately, change is underway to compensate EMS agencies for the true cost of service, beyond transportation. The National EMS Advisory Council (NEMSAC) released a financial advisory in 2012, that was most recently updated in 2019: EMS System Performance-based Funding and Reimbursement Model. This 55-page document describes the problems, analysis, conclusions, and recommendations.

It also describes the staggering amount of uncompensated care actually absorbed by ambulance services: $2.8 billion a year. This includes undercompensated care and charity provided to patients that ambulance services don’t get paid for.

One recommendation is based on new performance metrics and payment models that consider EMS an integrated healthcare entity that bases reimbursement on the total cost of the EMS system. Communities and emergency service agencies will all benefit when a new model supports true cost of service.

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