Funding Shortfall Leaves Pennsylvania Ambulances Hurting

Insufficient insurance reimbursements cause many companies to run lean operations


 
 

TORY N. PARRISH, Pittsburgh Tribune Review | | Thursday, July 10, 2014


In 1987, there were 136 ambulance services in Allegheny County.

Today, there are 45, said Tim Butler, deputy administrator for the McCandless-Franklin Park Ambulance Authority.

"A large part of that has to do with funding," he said.

The McCandless-Franklin Park Ambulance Authority has started sending letters to people who haven't paid for its services, in addition to taking unpaid cases to the magistrate, but it is finding that others still are having to pick up the slack for non-payers.

Ambulance services are struggling with insufficient Medicare reimbursements, industry leaders said. Meanwhile, private insurance companies are shifting more of the costs for transport to patients.

"Now, the co-payments are often 50 to 70 percent of the total service fee. So then the ambulance service has to go bill the patient individually. The collection rates are very poor," said Dean Bollendorf, president of the Ambulance Association of Pennsylvania.

Founded in 1977 as a nonprofit, the McCandless-Franklin Park Ambulance Authority employs 38 people and serves residents in McCandless, Franklin Park, Bradford Woods, Marshall and Pine. It is funded by private insurance, Medicare, Medicaid and patients' out-of-pocket payments.

The cost is $531 "to put an ambulance out the door," said Steve McKinniss, administrator for the service.

It charges $785 for advance life support service and transport to a hospital, but Medicare reimburses only $400 for that, Butler said. About half of patients are on Medicare, he said.

About 30 percent of the people the service transported last year were uninsured and did not pay, McKinniss said.

The authority's fiscal 2014 operating budget was $2.4 million, but its revenue was $2.3 million, he said.

"We continue to look for additional revenue sources. We do both a subscription campaign and a donation campaign that helps supplement that," he said.

With the subscription campaign, residents pay a $25 or $50 fee to become members of the ambulance authority, and in return, the authority accepts whatever amount their insurance companies reimburse instead of billing them for the balance, McKinniss said.

Last year's subscription drive collected nearly $248,000, he said.

About a year and a half ago, the authority started taking cases of long-overdue bills to the magistrate for collection, but it doesn't pursue cases past filing with the magistrate because the legal fees, including filing liens, often exceed what is owed, he said.

The authority responded to 5,000 emergency calls last year, about 4,200 of which resulted in hospital visits.

In 2007, a Government Accountability Office study found that ambulance service providers were paid, on average, 6 percent below cost in urban and rural areas and 17 percent below cost in remote areas to serve Medicare patients, according to the Washington-based American Ambulance Association.

Recognizing the problem, Congress since 2003 has reauthorized a Medicare reimbursement increase of 2 percent a year in urban areas, 3 percent in rural areas and 22 percent in remote areas, but those increases are below the GAO's recommendation, said Kathy Lester, counsel to the American Ambulance Association, which is lobbying for permanent relief.

NorthWest EMS, a for-profit ambulance company in Stowe, started in 2002 with lower Medicare reimbursements than older services.

"We started out at the basement at the new rates from day one, while everyone was higher and working their way down," said owner George Dudash, whose business serves 11 towns, including Avalon, Ben Avon, Bellevue, McKees Rocks and North Fayette.

The company has responded by running a lean operation, buying less-expensive ambulances and keeping its offices basic, said Dudash, who said 33 percent of its patients rely on Medicare, 20 percent are on Medicaid, 17 percent are uninsured and the rest have private insurance.

"I've made a profit every year, but not much of one," he said.

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