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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PROMOTING INNOVATION IN EMS 12 SEPTEMBER 2018 | EMSWORLD.com can balance-bill the patient, unless the sup- plier has entered into a network agreement to accept a negotiated rate as payment in full. This often results in a conflict: The payer believes the ambulance supplier charges too much, and the ambulance supplier feels the payer is paying too little. Either way, the patient is caught in the middle. Patients without insurance can have a dif- ficult time paying ambulance bills, so those bills are hard to collect. There are companies that monitor patient deductibles and advise ambulance agencies when the patient has met their deductible and an ambulance bill has a higher chance of being covered. 1 Going back to our scenario, let's assume Anytown serves an urban/suburban popula- tion with a relatively common payer mix of Medicare, Medicaid, commercial insurance, and uninsured patients. Anytown does not do interfacility services, only 9-1-1. Based on a transport volume of 2,250, its payer source would typically look something like this: Now let's make the following assump- tions regarding the amount generally paid per trip for each payer: In essence, Anytown billed $2.25 million in potential revenue and collected $718,192. But EMS Revenue Inc. gets 6% of each dol- lar collected, totaling $43,092, so this brings the total cash in the door to $675,100. Recall that the annual cost of Anytown EMS is $2.15 million. Deducting the amount collected from the cost of service leaves a deficit of $1,474,900, which would generally be covered by the taxpayer in the form of a subsidy of $29.50 per capita. Balancing the Books If the city wanted to eliminate the taxpayer subsidy, it would need to collect $956 per transport. At the current payer mix and collection percentage, it would therefore need to charge approximately $3,600 per trip to generate a net collected amount per transport of $956. However, there are two confounding factors with this calculation. First, since Medicare and Medicaid pay a fixed amount, their reimbursement amounts would not change, regardless of what the service charges. Second, although some commercial insurers might pay billed charg- es, recall that most would only pay a per- centage of what's "usual and customary," and it is likely the insurer would not consider $3,600 either. So those dollar amounts col- lected from Medicare, Medicaid, and most commercial insurers would likely change very little. Lastly, we have the private-pay patient. As we mentioned earlier, it is diffi- cult to collect a $1,000 bill from private-pay patients—imagine trying to collect a $3,600 bill! It is also likely that a $3,600 ambulance bill would generate complaints. Because of this revenue conundrum, it is unlikely Anytown could price itself out of a tax subsidy. Its only option may be cost con- tainment. Let's assume a typical EMS call for Anytown consumes one hour of on-duty time ("task time"). Based on the response volume and number of staffed unit-hours, Anytown EMS is operating at a response unit-hour utilization (UHU) of 0.114 (3,000 ÷ 26,280). Essentially this means that 11.4% of the time units are staffed, they are com- mitted to a potentially revenue-generating response. If Anytown's typical task time is 90 minutes, then its UHU is 0.171 (3,000 calls x 1.5 hours = 4,500 hours ÷ 26,280), meaning 17.1% of its on-duty time is com- mitted to potentially revenue-generating activity. High-value EMS systems such as the public utility models in Fort Worth, Pinellas County (Fla.), and Oklahoma City operate at no taxpayer subsidy primarily due to the high efficiency of their systems: Some achieve a response UHU of 0.450, so 45% of the time units are on duty, they are on a potentially revenue-generating response. High efficiency generally stems from a combination of flexible deployment strat- egy (staffing more units when call volume is high and fewer when it's low), combined with strategically posting available units in areas based on anticipated call volume and geography. This works very effectively in urban and suburban areas but is more difficult in rural systems with low call vol- umes and long task times. A note of cau- tion here: The leaner you run the system, the less surge capacity the system will have to manage call volume spikes. In many high- performance/high-value EMS systems, a 0.450 UHU is considered optimal to balance competing priorities in a 9-1-1 environment. Systems that do a high volume of scheduled calls may be able to achieve a higher UHU. Anytown EMS could enhance the cost efficiency of its system by conducting a detailed analysis of historical call volume patterns and readjusting its deployment based on the data. Perhaps it should run one ambulance 24/7 with one or two others during peak call times. Anytown could also increase revenue generation by conducting interfacility nonemergency calls. The Bottom Line Knowing both your cost of service deliv- ery and the revenue mix for traditional EMS helps you understand your overall economic environment. Understanding the available capacity within your system could also help as you explore implement- ing innovative service delivery models. REFERENCE 1. Solutions Group, ht tps://w w w.solutionsgroup.net. ABOUT THE AUTHORS Matt Zavadsky, MS-HSA, NREMT, is chief strategic integration officer at MedStar Mobile Healthcare, the exclusive emergency and nonemergency EMS/MIH provider for Fort Worth and 14 other cities in North Texas. He is a member of the EMS World Editorial Advisory Board. Kevin G. Munjal, MD, MPH, is a board- certified emergency medicine physician who completed an EMS fellowship with the New York City Fire Department (FDNY). He is founder and chair of the New York Mobile Integrated Healthcare Association. He served as co-principal investigator for the PIE Project. Trips % of total Medicare 839 37.3% Insurance 293 13.0% Medicaid 368 16.3% Bill patient 751 33.4% Total transports 2,250 100.0% Avg. Payment Medicare $400 Insurance $800 Medicaid $200 Bill patient $100

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