Ambulance services hit insurance reimbursement obstacles [The Valley News-Dispatch, Tarentum, Pa.]

April 15--A health insurer's policy on paying for ambulance trips could leave some of those ambulances running on empty in the future.

Ambulance trips can cost from about $300 to more than $1,000, depending upon the type of care the crew must provide, such as basic life-support or advanced support for serious cases.

Highmark, one of the region's major health insurance companies, does not mail all reimbursement checks directly to the EMS companies unless they have a contract with Highmark.

"That has absolutely been a problem for us with Highmark not paying us directly," said Pete Frejkowski, chief of Lower Kiski Emergency Services in Leechburg. "The only two ways we bring in revenue is the insurance reimbursement that we do receive and the member subscriptions from residents."

While signing a contract with Highmark may not sound unreasonable, the ambulance companies say there is a catch: the reimbursement rate you agree to will be less than what they say the cost of the ambulance trip was.

"Once you contract with Highmark, you have to accept their rate," said Shannon McKruit, operations manager for Eureka Fire Rescue EMS of Tarentum.

Low reimbursement

Tim James, an EMS supervisor with Eureka Fire Rescue in Tarentum, said the contracted rate is based on the rate of reimbursement paid by Medicare, Medicaid or the state health care program, which has an even lower rate.

McKruit produced a sample of ambulance billings for Medicare and Medicaid patients that showed those reimbursements to be 25 percent to 33 percent of the total cost billed.

A 2007 report by the federal Government Accountability Office determined Medicare reimbursements in 2004 covered about 94 percent of the costs that stand-alone ambulance services incurred in making an ambulance run. The study didn't look at ambulance services that share costs with fire departments or other agencies.

A spokeswoman for the Centers for Medicare and Medicaid Services said federal law doesn't give the agency the authority to change the rates except for annual cost of living adjustments.

Congress would have to rewrite the law to authorize higher rates.

Medicare once paid what ambulance services billed for a run, but a decade ago it switched to a national rate with regional adjustments. According to J.R. Henry, director of the Moon Township-based Valley Ambulance Authority, who also works as a national financial consultant for ambulance services, the base rate ranges from about $200 for transporting someone who's conscious and has minimal health problems, to about $700 for someone who's unconscious and not breathing, he said. The actual cost for an ambulance run is between $400 and $500.

Playing hardball?

"The contracted rate they offer is about half of what the regional average is," Frejkowski said of Highmark. "Obviously, I can only speculate, but I wonder if it is just a tactic to get contracted providers."

"For years we have been urging all ambulance providers to have contracts with Highmark as virtually all other health care providers do," said Michael Weinstein, a spokesman for Highmark Blue Cross-Blue Shield. "For those ambulance providers who have contracts with Highmark, we pay them directly. For those who do not have contracts, they are not in our network, and therefore we pay the customer."

"You have to remember that we have to have a balance," he said. "We have to have a balance between paying the providers and the cost to our customers -- the people who pay for health insurance."

Weinstein would not address the reimbursement rates specifically.

He said a federal lawsuit filed by the Ambulance Association of Pennsylvania against Highmark on the issue of direct payment, which Highmark won last year, prevented the insurer from having talks with the ambulance services about reimbursements.

"We are always evaluating what we pay providers because market conditions change and play a role in that," Weinstein said. "We would welcome a discussion with ambulance providers. Let's have a discussion on this, on what is appropriate reimbursement."

Cashing in

In the meantime, there is little comfort for the ambulance providers whose reimbursements are going to the customers.

James said Highmark does notify the ambulance services when reimbursements are sent to Highmark subscribers, whom they also make aware of the reason for the check.

"It actually says on the statement that the check is not theirs, it's actually for us, for the ambulance trip," James said.

But that doesn't stop some of them from cashing those checks.

Eureka Chief Rich Heuser said another twist to the situation is that the checks are sent to whomever the policy holder is, even if the ambulance trip was for a relative covered under the policy, such as a wife.

He said that led to a situation for Eureka where a man had his wife covered under Highmark policy even though they were subsequently divorced. Heuser said the man lived out of the area but she lived in Eureka's service area and her health required her to use the ambulance service frequently. However, the checks were going to her former husband and he kept the money.

Heuser said the amount owne to Eureka for its services rose to around $15,000.

"He actually built an addition onto his house," Heuser said.

He said the company had to retain a lawyer and go after the wayward payments. The money eventually was repaid.

Gary Bittner, director of operations for Freeport EMS, said, "It's huge, man. People get the check and they cash it, and there is nothing you can do.

"I'd say from last year, I probably have about $20,000 outstanding.

"When you have a little ambulance service like us, that is a huge part of our budget."

Grim outlook

Knox Walk, the EMS director for Allegheny County, said the financial situation for ambulance companies is untenable.

"Out of the 46 (in the county), there are at least one or two that are seriously looking at their financial options and their financial futures," he said.

He declined to identify which companies are in financial trouble.

In general, the financial viability of an ambulance service is reflected by the affluence of the communities it serves.

In poorer neighborhoods, an increasing number of people either don't have insurance or rely on Medicaid, whose reimbursement rates are the lowest among all insurers, he said.

Companies such as Freeport, Lower Kiski and Eureka are non-profits, unlike private ambulance companies.

"We are using the proceeds to run the company," Eureka's Heuser said. "We have to have 1,000 calls per year per vehicle to make that vehicle work financially. That covers everything."

"Our objective is to make enough money to stay here and provide that service to the residents," said Frejkowski of Lower Kiski. "It's not profit-driven. It is medical care, it is patient-driven."

Henry said that while some of the funding problems are unique to Western Pennsylvania, many are found throughout the country because they're driven by Medicare's reimbursement rates, too.

"I can't say that the ambulance services are going to go out of business tomorrow," he said. "It's not that level of emergency."

But if the funding situation doesn't change, the long-term prognosis is not good, he said.

The issue isn't just the cost of making an ambulance run. To make that run, the ambulance service has to staff the ambulance 24 hours a day, seven days a week, regardless of whether it gets any calls.

"Our fuel bill here runs between $1,800 and $2,000 a month," Heuser said. "When we put tires on a vehicle, we're not spending $300 or $400, we're spending more like $1,200 or $1,300. And that's for the smaller vehicles."

Offsetting low rates

Many services also offer subscriptions, usually around $50 a year, in which they agree not to bill subscribers for the amount not paid by their insurers.

At best, about 20 percent to 30 percent of the households will pay a subscription, Henry said.

Still, the community subsidies and subscriptions only offset the real problem -- low reimbursements.

"Medicare is normally our No. 1 payer, because older people obviously need to use the ambulance service more than younger people," said Henry of Moon Township-based Valley Ambulance Authority.

But the ambulance providers said it would be a huge help if they could get the direct reimbursements they are entitled to from Highmark.

"Inevitably, our mission is to get you health care," Frejkowski said. "Imagine what the hospitals would do if Highmark said, 'If you admit a patient, that's fine, but if you are not one of our hospitals, we're going to send the check to the patient.'

"They have taken a position that they have a responsibility to their customer but not to us."

___

(c)2012 The Valley News-Dispatch (Tarentum, Pa.)

Visit The Valley News-Dispatch (Tarentum, Pa.) at www.pittsburghlive.com/x/valleynewsdispatch/

Distributed by MCT Information Services