EMS World

SEP 2018

EMS World Magazine is the most authoritative source in the world for clinical and educational material designed to improve the delivery of prehospital emergency medical care.

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10 SEPTEMBER 2018 | EMSWORLD.com I n our last column we considered cost analysis for traditional EMS delivery. This month we analyze the revenue side of EMS' traditional model before moving on to the concepts of cost and revenue for EMS innovation. This reflects the Promoting Innovation in EMS (P.I.E.) project's sugges- tion that EMS agencies should develop and grow their internal business acumen. Cost Review Let's use the scenario we built last month as the basis for a cost analysis. Recall that we calculated the cost of one ambulance 24/7 to be $650,000 annually, or $74.20 an hour. The EMS-related costs for a first-response engine were $50,000, or $5.71 per on-duty hour. Combining the ambulance and first- response unit, the annual cost for ambulance service was $700,000, or $79.91 per ambu- lance unit-hour. If the ambulance and engine responded to 1,000 EMS calls annually, the cost per response would be $700 ($700,000 ÷ 1,000). If they transported 700 patients to the hospital, the cost per transport would be $1,000 ($750,000 ÷ 700). Now say Anytown, USA, operates a fire- based EMS service that provides ambulance and first-response services to a population of 50,000. For this scenario we also need to add the cost of medical direction and over- sight, so say Anytown contracts with a local physician as its medical director for $50,000 annually. In 2017 Anytown responded to 3,000 EMS calls, sending an ambulance and first-response engine to every call. To meet demand, Anytown staffs three ambulances around the clock. It transported 2,250 people to the hospital, a transport ratio of 75%. Using this data, the overall cost analysis for Anytown to provide EMS services is: • Annual EMS costs: $2,150,000 ($700,000 x 3 units, plus $50,000 for the medical director); • Cost per response: $717 ($2,150,000 ÷ 3,000 calls); • Cost per transport: $956 ($2,150,000 ÷ 2,250 transports); • Cost per unit-hour: $81.81 ($2,150,000 ÷ 26,280 unit-hours [8,760 x 3 units]); • Cost per capita: $43 ($2,150,000 ÷ 50,000 residents). Sources of Revenue There are a few sources of revenue to finance the costs of EMS delivery: tax revenue, fees for services, subscription payments, fund- raising/donations, and grants. For our pur- poses let's focus on the most common sus- tainable revenue sources, tax support and fee-for-service revenue. In our scenario Anytown bills for EMS services. Its average bill for an ambulance transport is $1,000. This fee structure was approved by the city council based on a rec- ommendation from the EMS chief to cover the cost of ambulance transport. Anytown contracts its billing services to EMS Revenue Inc., which receives a 6% fee for each dollar collected. Ambulance fee-for-service (FFS) revenue can be broken down to these primary payer sources: • Medicare, including managed Medicare; • Medicaid, including managed Medicaid; • Commercial insurance; • Patients without insurance or parties responsible for paying the fee due to deductibles or coinsurance; • Facilities obligated or willing under con- tract to pay for interfacility calls. Medicare pays for medically necessary ambulance fees to covered destinations based on a national fee schedule, with adjustments based on geographic price indices. In most cases the ambulance sup- plier cannot "balance-bill" the patient for the difference between the ambulance bill and what Medicare pays, except for deductibles or coinsurance amounts. Medicaid also pays based on a state-approved fee schedule, with balance-billing not allowed. Commercial insurance is interesting. While some payers pay billed charges, the insurer usually pays an amount based on a percent- age of the "usual and customary" charge, with "usual and customary" determined by—you guessed it—the insurer. If the amount paid by the commercial insurer is less than the billed charge, the ambulance supplier PROMOTING INNOVATION IN EMS To sharpen your business acumen, know where the money's coming from By Matt Zavadsky, MS-HSA, EMT, and Kevin G. Munjal, MD, MPH The PIE Project: Revenue Analysis Over 2018 EMS World, in conjunction with the National Association of EMTs, will provide detailed implementation strategies for key recommendations of the Promoting Innovation in EMS (PIE) project. The PIE project utilized broad stakeholder involvement over four years to identify and develop guidance to overcome common barriers to innovation at the local and state levels and foster development of new, innovative models of healthcare delivery within EMS. Matt Zavadsky is a featured speaker at EMS World Expo, Oct. 29-Nov. 2, 2018 emsworldexpo.com The PIE Project: Revenue Analysis

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