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Running at a deficit

Lack of Medicaid reimbursements, high operating costs put EMS services at risk

Union photo by Ashley Duong

Jacob Dodds, the director of EMS services at Henry County Health Center, explained that by running an ambulance service, the center loses out on reimbursements from the federal government, a part of the reason why sustaining emergency medical services is so difficult, especially for rural health care centers.
Union photo by Ashley Duong Jacob Dodds, the director of EMS services at Henry County Health Center, explained that by running an ambulance service, the center loses out on reimbursements from the federal government, a part of the reason why sustaining emergency medical services is so difficult, especially for rural health care centers.
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Editor’s note: This story is the fourth of a six-part series on how the EMS crisis is affecting local communities in southeast Iowa.

Emergency medical service providers are dropping like flies. While there are a multitude of factors that contribute to the emergency medical service crisis the nation is currently facing, perhaps most prevalent is the cost it takes to run the services.

To completely stock an ambulance runs at a price tag of about $100,000. The cost of the ambulance itself is about $235,000. In general, emergency vehicles wear down faster than cars, and need to be serviced once every five years, which means another several thousand dollars tacked on for upkeep. Then there’s the payroll for qualified staff to run the ambulance and go on calls, on top of the cost of fuel to keep the cars running.

EMS is a costly and necessary resource, but is not tied to any specified amounts of funding on either the federal or state level. Particularly in states that do not recognize EMS as an essential service, providers are simply disappearing, leaving areas without emergency care. In southeast Iowa, both privately owned and hospital-run EMS are facing increasing costs without proportionate reimbursements.

Richard Young, the director of Washington County Ambulance Inc. explained that it cost $1,166,000 to run the ambulance service last year and that they were “just at break-even” when it came to revenue covering costs.

The service took a little over 2,000 calls last year with only 1,700 resulting in transports. If an ambulance does not transport a patient or an insurance company subsequently decides the services provided were not medically necessary, the service simply does not get paid.

“When people call 911, they expect an ambulance to come,” Jacob Dodds, the director for EMS services at Henry County Health Center said.

“No matter what the call is, we go out,” he continued.

About 25 percent of the calls his crews go on do not result in patient transports. In a recent calculation, Dodds explained that each call bills at a rate of about $724.

Dodds also provided similar figures when it came to the health center’s EMS service costs. Operating costs for HCHC ambulances were about $1.2 million, which covers equipment, supplies and payroll for the staff of 25 who man two ambulances for 24 hours every day. Last year, the service generated $78,000 of revenue over expenses.

Still the ambulance service comes at a cost to the health center.

“What’s really brought a lot of this to the forefront is the way the hospital is structured within the Medicare system and through the federal government as a critical access hospital. They lose out on about $480,000 in overall reimbursements per year because they operate an ambulance service,” Dodds explained.

“[The federal government] kind of looks at it like, the ambulance service is not something you are required to operate. If you have the luxury of being able to operate that, then we’re not going to pay you as much for your services,” the director continued.

Both services do have the benefit of support from their counties, which helps with costs but not at a level that would allow the services to continue on the support of taxpayers alone. In Henry County, residents pay 27 cents per thousand of their property taxes to help fund ambulance services, which amounted to $224,591 in the previous year, about a fifth of the operating expenses. Young explained that Washington County pays a $240,000 subsidy a year to help make up costs the service itself could not cover. In just the last several years, the county increased the subsidy to $490,000 to help with increasing costs.

Both Young and Dodds point to Medicare and Medicaid as sources of lost funding. Since the switch to managed care organizations (MCOs) that privatized Medicaid, both services have been getting reimbursed pennies on the dollar for services provided.

For Dodds, patients under Medicaid make up about 21 percent of his service’s base, which leads to an average collection rate of $17 on a bill for service that cost an average of $700.

On top of failing to get proper reimbursement from insurance companies, issues of reimbursement are compounded by the fact that Medicaid rates remain the same as those that were set in the 1980s.

“There’s not many businesses that would still be operating on what they got paid in the 1980s and cost them what it cost to operate today. Medicare does give us a cost of living raise each year, but it’s very minimal. There’s been years where it has been less than 1 percent … it doesn’t match with inflation or anything else,” Young explained.

Whereas Medicaid acts as a great equalizer for all services, Medicaid reimbursements are based on ZIP codes and geographical location, which still means less money for small services being run out of rural Iowa as compared to services based in states like California or New York.

“They just think that it doesn’t cost as much to operate in the Midwest as it does on the coast, which is not true because we all have to pay the same price on our ambulance, same price for our equipment … Last year, all the money that we billed, we collected about 49 cents on the dollar,” Young said.

The directors offered several solutions to the issue, including the state recognizing the service as essential with designated funding. Without funding specifically applied to EMS, most counties would remain in the same position they are currently in, but instead would be scrambling to pay for an unfunded mandate.

Other legislative changes that could benefit EMS providers include correcting Medicaid reimbursement rates to match the levels of current-day costs as well as finding a way to pay EMS providers even when their calls do not result in a transport.

For both services, the largest cost is payroll and paying qualified individuals to staff the ambulances. As fewer and fewer people become EMTs and paramedics (due to the rising cost of courses), it becomes ever more difficult for services to hire and fill open positions. Paying for a staff that works 24 hours every day is no small endeavor, on top of the fact that the job often has long and strange hours.

“It’s an insurance policy … we need people ready at any moment, 24 hours, so that when a call does come in, there’s someone ready to go out,” Young said.