Ambulance Reimbursement Methodology

Threats can turn into opportunities with strategic planning. A potential threat to your ambulance reimbursement rates needs your action now.

Recently, there has been much talk regarding the impact of the Patient Protection and Affordable Care Act (PPACA; P.L. 111-148) on pre-hospital care and EMS. Many have said there will be little impact. Others, of which I am one, believe the PPACA will have significant impact and will usher in a new era in EMS delivery, similar to the way paramedicine changed the fire service in the early 1970s.


Although EMS wasn’t included in the original language of the PPACA, there’s been considerable focus on the fact that EMS drives huge costs based on where we transport patients. Fire-based EMS providers must look to the Centers for Medicare and Medicaid Services (CMS) and federal government statements to understand the changes the PPACA will bring to pre-hospital care providers.


One major policy statement came recently from U.S. Department of Health and Human Services (HHS) Secretary Sylvia Burwell. Secretary Burwell announced that by 2018, 90% of all Medicare fees-for-service payments will be linked to quality or value. Furthermore, those payments will be tied to quality or value through alternative payment models. Those alternative models include Accountable Care Organizations (ACOs).


Quality programs mandated by HHS have traditionally been referred to as value-based purchasing. HHS ties reimbursement bonuses or penalties to a medical provider’s performance in areas such as key performance indicators (KPIs) and patient satisfaction scores.


Burwell’s statement that 90% of Medicare payments will be linked to such programs should catch the attention of every fire-based EMS provider, as it will most assuredly impact your ambulance transport revenue.


Burwell’s statement and the fact that the federal government, through the National Highway Traffic Safety Administration (NHTSA), awarded a grant to the National Association of State EMS Officials (NASEMSO) to develop KPIs for EMS should make us all pay attention. This project may look similar to NHTSA’s 2009 effort to develop KPIs, which ultimately stalled because the developing partners couldn’t agree on all the elements.


Burwell’s intent was highlighted in the recent passage of the Medicare Access and CHIP Reauthorization Act of 2015 (P.L. 114- 10). This bill was passed with strong bipartisan support and signed into law on April 16, 2015.


According to Kaiser Health News, P.L. 114-10 “transitions to a new system focused on quality, value and accountability. Existing payment incentive programs would be combined into a new Merit Based Incentive Payment System.” This concept is clearly describes the idea of value-based purchasing.


Burwell’s statement about the increasing use of ACOs should also cause our ears to perk. It implies that in years to come, most payers will be ACOs, not insurance companies.


ACOs will receive a capitated, or preset, amount of money for each of their patients. They will coordinate a patient’s care with all providers with the goal of avoiding duplication and improving quality of care.



If an ACO spends less per patient than they receive, they’ll be financially rewarded. If they spend more, they’ll be financially penalized.


Since ACOs will be paying the ambulance transport fees for their patients, will they be concerned if you continue transporting their patients in a very expensive ambulance to a very expensive emergency department? Or will the ACOs prefer treating their patients much less expensively in outpatient clinics, freestanding emergency centers or with alternate methods of transportation?


Kaiser Health News further describes P.L. 114-10 as “reward[ing] providers who receive a significant portion of their revenue from an alternative payment model or patient centered medical home with a 5 percent payment bonus.” This concept describes an ACO.

Call to Action

Secretary Burwell’s statements, the passage of P.L. 114-10 and other CMS actions show a clear need for three actions from fire-based EMS providers:

  • Review the 2009 NHTSA work on KPIs, begin measuring your system and make improvements where needed. This review should expose the mindset and direction of this newest effort. The first KPI to be released this year will address EMS care of patients with suspected strokes. Note that some KPIs in the 2009 effort measured organizational financial-efficiency indicators and ambulance vehicle crashes along with expected clinical measures.
  • Talk with the ACOs in your area and help them understand how you can help them solve their problems.
  • Regularly review the IAFC ACA webpage for our white papers and other information about the Affordable Care Act.

Remember, the future isn’t hard to predict when those molding it are standing on the mountain top and telling us what that future will look like.


Editor’s note: This article originally appeared in On Scene, the digital publication of the International Association of Fire Chiefs (IAFC), and is reprinted with permission.

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Mike Metro was Chief Deputy for the Los Angeles County Fire Department until he retired in January 2015. He has nearly 40 years of experience in America's fire service, including five years for the City of El Cajon, a four-station fire department in San Diego County. In his last role with LAFD, he provided executive oversight for the emergency operations of the department's 170 fire stations protecting 58 cities and 4.5 million citizens. He was Chief of Emergency Medical Services for L.A. County Fire for seven years as well as the president of the California Association of Fire Chiefs—EMS Section for four years. He currently serves on the Executive Board of the IAFC—EMS Section, as the vice chair as well as chair of the IAFC's Affordable Care Act Task Force.

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