Purpose

At the request of the City Council, the Emergency Medical Services (EMS) Division of the Fire Department will bring forth further analysis of fiscal and administrative issues related to paramedic transportation and billing procedures.  Additionally, Staff will once again discuss proposed changes to Article V of the Burbank Citywide Fee Schedule and the effects those modifications may have on Burbank residents and General Fund revenues.

Background

With the City�s budget constraints growing more difficult in recent years, City staff has explored a number of options to help reduce costs and increase revenues, in an attempt to preserve the high quality of services that Burbank residents and businesses have come to expect.  As the department with the second highest budget, totaling over twenty percent of General Fund appropriations, it is understood that the Fire Department will never take in enough revenue to offset the cost of its services.  However, staff does take seriously its responsibility to look towards maximizing revenues when possible.  The Fire Department provides Emergency Medical Services to the community that are second to none, but these services come at a cost.  Revenues from paramedic ambulance transportation were identified as a means of offsetting some of this expense and minimizing the amount of these services that is subsidized by taxpayers.

Periodically, the Fire Department has brought forth reports to the City Council requesting increases in fees for paramedic ambulance transportation services as allowed by the County of Los Angeles.  In recent years, the City of Burbank has been adopting fees at or near the maximum allowed by the County for both Advanced Life Support (ALS) and Basic Life Support (BLS) transport.  Typically these fee increases were under ten percent.  However, the most recent fee increases adopted by the County Board of Supervisors are considerably higher than average � 16.5 percent and 21.5 percent for ALS and BLS respectively.  Staff was instructed to provide further explanation of what caused this drastic change and how this change affects service payers in Burbank.

Analysis

COUNTY OF LOS ANGELES ALLOWABLE RATES:

The maximum rate chargeable to the general public for paramedic ambulance services is determined by the Emergency Medical Services Agency of the County of Los Angeles Department of Health Services (DHS).  The current rates, as well as the methodology by which those rates are determined, are published in the General Public Ambulance Rates section within the Los Angeles County Codes.  Both cities and private ambulance companies within Los Angeles County are allowed to charge up to this maximum rate and may only charge patients for the services listed in this schedule.

The County of Los Angeles has two procedures by which they adjust the General Public Ambulance Rates.  The first is the �Modification of Rates,� which takes place annually and goes into effect each July 1.  The rate change is calculated by averaging the percentage change in the transportation and medical portions of the Western Region Consumer Price Index (CPI) for the 12 month-period prior to the month of February.  This percentage, either an increase or decrease, is applied to the base rates and rounded to the nearest $0.25 to establish a new base rate. Agencies within Los Angeles County are notified in mid to late May of the adjustment amount.  Recent reports project the July 1, 2005 rate adjustment to be a 4.1 percent increase.

The �Periodic Base Rate Review� is the second procedure used to determine the maximum base rates for ALS and BLS services.  Every other year beginning July 1, the Director of the Department of Health Services performs a survey of all 56 other counties in California to determine the average rates for ALS and BLS ambulance rates statewide.  If the Los Angeles County rates are at or above the survey results, no change is made; however, if they are below survey, the LA County base rates will be brought up to the current statewide average.  The increase would take effect on the January 1 following the completion of the survey and will only occur in odd years, the most recent being 2005. 

During the course of the most recent survey, the Los Angeles County Board of Supervisors adopted a change in the methodology of the �Periodic Base Rate Review� performed by DHS.  Prior to the previous rate adjustment, the Los Angeles County base rates were established at 85 percent of the bi-annual survey results.  However, during the last survey period it was determined that the County of Los Angeles could no longer afford to charge ambulance rates at fifteen percent below the statewide average, especially given the current economic climate and the state of the County healthcare system.  The decision by the Board of Supervisors to bring the ambulance rates up to survey resulted in a larger than normal increase of 16.5 percent for ALS and 21.5 percent for BLS for the January 1, 2005 rate adjustment.  While rising medical costs always create the potential for double digit increases in ambulance rates, it is highly unlikely that another rate increase of this magnitude will take place under the County�s current methodology.

Currently, Burbank�s fees for ALS and BLS transport are the lowest in Los Angeles County, with all other comparison cities charging at least $100 more for the same service (see chart on next page).  While it is always beneficial to Burbank customers to charge the lowest fee possible, this discrepancy in fees creates some consistency issues with our Area C partners.  The Burbank Fire Department has mutual aid agreements with the other Verdugo cities which cover all types of emergency response, including EMS.  In the 2004 calendar year, Burbank sent rescue ambulances to other jurisdictions 86 times while other agencies sent ambulances into Burbank 79 times.  Each time this occurs, the agency providing the transport service charges their department�s approved ALS or BLS rate, regardless of the jurisdiction in which the emergency takes place.  Therefore if a Glendale rescue ambulance responds to an emergency in Burbank and provides transport to the hospital, that Burbank resident will be charged the Glendale rate.  Conversely, when Burbank RA�s transport a patient in Glendale, they will be charging that patient a transport fee of over $100 less than what they would have paid for Glendale to provide that same service. 

Many local cities, including Glendale and Pasadena, have language written within their Fee Schedules which automatically increases paramedic transportation fees when the County of Los Angeles adjusts their allowable rate.  This allows the cities to stay consistent with what other jurisdictions are charging and eliminates the loss in revenue due to the lag time between the County decision and their internal City processes to amend their Fee Schedules.  Both Santa Monica and Torrance have contracts with a private ambulance company to provide paramedic transport.  Under these agreements, the ambulance company charges the Los Angeles County maximum rates less $17, and these fees are also increased automatically each time County rates are adjusted.

BILLING AND COLLECTION PROCEDURES:

For the past four years, the City of Burbank has contracted with Wittman Enterprises, LLC to provide ambulance billing and collection services for the Fire Department.  For a small percentage of the total revenue collected, Wittman retrieves hospital reports for paramedic transport patients, processes all insurance claims and invoices, and provides monthly revenue reports to Fire Department and Finance Staff.  They also provide the EMS Division with regular updates on changes within the insurance industry and legislation affecting paramedic ambulance services at both the State and Federal level.  A billing service such as Wittman allows for electronic transmission to Medicare, Medicaid and all compatible private insurance companies, thereby speeding up returns and increasing revenue collection rates.  Their expertise in the pre-hospital care industry is an invaluable tool for the Fire Department, and as a result of this partnership, the City�s collection rate after write-offs is over 91 percent, one of the highest in the State of California. 

By law, the City is required to provide paramedic services to any and all patients in need of treatment and transport, regardless of their coverage and/or their ability to pay for the services.  In a previous report, Staff presented the above chart which profiles the types of coverage among paramedic patients in Burbank.  This chart reflects only the information that is collected from the patient at the time of the initial report to Wittman.  Frequently that information will change in the weeks following treatment, specifically with regards to the �Private Payment� category.  The following sections provide further description of how the billing and collection procedures are handled for each payment category.

MEDICARE:  As shown in the chart above, Medicare patients account for over half of Burbank�s paramedic transport patients, and that number is likely to grow as our resident population continues to age.  By transporting Medicare patients, the City of Burbank is basically entering into a contract with the Federal Government agreeing only to bill for the allowable amount established by Medicare.  Currently, this amount is $486.77 for ALS and $396.84 for BLS, of which 80 percent is paid by Medicare and 20 percent is billed to the patient directly.  The majority of Medicare patients treated in Burbank have some kind of supplemental coverage (either public or private) which helps offset the cost of the remaining 20 percent.

MEDI-CAL:  Medi-Cal is a program specifically for low income individuals and families within the State of California.  There are several different plans within this program based on the income qualifications of individual families.  Some Medi-Cal plans require the patients to pay a deductible for ambulance transportation and other related services.  In those cases, Wittman would bill the patient for the amount of the deductible and bill the balance to Medi-Cal.  If the patient is enrolled in a Medi-Cal plan which provides full coverage with no out-of-pocket expenses, then they would not be billed by Wittman.  In either case, Medi-Cal will only pay $118.20 plus $3.50 per mile for each transport billed by the City, regardless of the actual cost.  By law, the City cannot bill Medi-Cal patients for the remaining balance, so this amount is written off by the billing service.  For this reason, Medi-Cal patients consistently account for Burbank�s lowest rate of collection.

PRIVATE INSURANCE:  Under Federal Law, private insurance companies are required to pay the full amount billed by the City for ambulance transportation services, provided that amount is within the allowable ambulance fees established by the County of Los Angeles.  The only exception to this is the amount of the deductible or co-payment owed by and billed directly to the patient, depending on their individual plan.  Insurance companies have 45 days from the time of the claim to pay the bill in full or provide written notification to Wittman as to why they are disputing the claim.  While disputes by insurance companies can delay the payment to the City by weeks or months, they are usually unsuccessful and the full amount of the bill is eventually collected. 

PRIVATE PAYMENT:  Initially, the number of patients that fall into the private payment category seems high; however, there are a variety of reasons for why this happens.  Paramedics do not collect insurance information, but they do the best they can to collect pertinent information such as name, address, phone number, date of birth and social security number from the patients they transport.  The information collected is included in a report which is forwarded to Wittman, who will contact the hospital where the patient was admitted to collect the remaining information, including insurance coverage.  There are a variety of reasons for which the hospital may not yet have this information available.  A patient who is unconscious or in full arrest is obviously not able to communicate, and in those types of situations collecting the data is not a priority.  Other patients are reluctant to provide their information at all in an attempt to avoid receiving a bill, either because they do not have medical insurance or they want to avoid paying whatever co-payment or deductible they may owe as part of their insurance plans. 

In all of these instances the patients� bills will be characterized as �private payment.�  In the vast majority of cases, the Fire Department will be able to obtain the patient�s address from the hospital where he or she was treated and the bill will be sent directly to the patient.  In cases with homeless or itinerant patients, the bills are written off as part of a mandate by the County Los Angeles.  Of those who do receive a bill for paramedic transport, approximately 60 percent will contact the billing service and report their insurance information so that a claim can be filed.  Wittman will then adjust the bill to reflect only the co-payment or deductible for which the patient is responsible. 

Patients who do not respond to the billing agency with insurance information are responsible for the total amount of the ambulance bill.  Wittman will make every attempt to contact the patient to arrange payment.  If they are not successful in collecting the fee after three invoices are sent, the bill is then forwarded to the City�s collections division.  The collections staff will again attempt to contact the patient, and then eventually decide whether to write off the debt or forward it to a collections agency.  Typically any fee under $25 is automatically written off.

A number of options exist for those patients who contact the City�s billing service and indicate that they cannot afford to pay in full.  Wittman offers payment plans for as little as $5 per month, depending on the total amount of the bill.  Low income patients are directed to the Los Angeles County Department of Health Services, where they can receive assistance with applying for Medi-Cal.  Should the patient qualify for this program, Medi-Cal will retroactively cover the paramedic transportation services and the patient will be credited for any previous charges.  Those who do not meet the qualifications for Medi-Cal but still feel that they cannot afford to pay their bills can request to have their fee waived by filling out a hardship application form which is forwarded to the City�s Collections Division for processing. Applicants whose income is less than twice the Federal poverty level and whose debt to income ratio are 80 percent or greater will have their fee waived entirely.  Applicants whose income is two to three times the poverty level will have their bills discounted at a rate based on a calculation of the ratio of income to poverty level.  It is the responsibility of the person claiming the hardship to provide the necessary proof of income and debt to the Financial Services Department with their waiver forms.  In the 2003-04 Fiscal Year, fourteen EMS invoices were waived by the Collections Division, for a total of $6,397.

EMS MEMBERSHIP PROGRAM � A LOW COST ALTERNATIVE TO RISING FEES:

The Emergency Medical Services Membership Program offers Burbank residents an affordable means of paying for emergency paramedic and ambulance transport costs not covered by medical insurance.  Residents who join the program are guaranteed to pay nothing for any emergency medical services provided by Burbank Fire Department Paramedics within the City of Burbank, including ambulance transportation to local emergency receiving hospitals.  When emergency medical services are provided to members of the program, the City will bill their insurance for the service and any additional co-payment or deductible owed by the patient is covered by the program.  It is not necessary to have insurance to participate in the program; members with no insurance coverage will still be covered for 100 percent of their EMS costs and will never be billed for these services.  An enrollment fee of $4 per month covers an entire household and there is no limit to how often members can use this service.  Members may choose to have the monthly fee added to their Burbank Water and Power bill or they can pay by check and be billed $48 annually for their membership coverage.

The EMS Membership Program was established to provide protection from rising ambulance costs to Burbank residents and in turn help the City offset the high costs of providing paramedic services to citizens.  Fortunately the program has been successful on both fronts.  As mentioned above, member households receive unlimited emergency medical services at no cost.  At the same time, EMS program revenues have consistently exceeded costs for the past four years, with the current fiscal year-end revenues projected at over $188,000.  While this number may seem small compared the revenues obtained from ambulance transportation fees, the revenues from this program are crucial to minimizing the substantial gap between the costs of running the paramedic program and the overall revenues collected from ALS and BLS transportation. 

During the previous report, Council had proposed offering a discount to low income households, specifically those without any other form of medical coverage.  Based on a survey of other Area C cities (see chart above), Burbank�s current membership fee is in line with its neighboring cities, none of which offer a discount to low income members.  While it is possible that a low income discount may attract new members to the program, it may also create the potential for revenue loss depending on the number of existing members who qualify for the program.  For example, if ten percent of current EMS program members were designated low income and were given a fifty percent discount in their enrollment fee, the program would require 392 new low income households or 196 regular household memberships to offset the loss in revenue.  That means a five to ten percent increase in membership would be needed just to break even.  Additionally, the Fire Department has no current screening process in place to establish low income requirements.  Staff and supply costs for the first year of a program such as this are estimated at close to $30,000.  Overall, a savings of a dollar or two a month for a handful of households who choose to take advantage of such a discount could have a detrimental impact to a widely respected and fiscally solvent program that is already a very low cost option for Burbank residents.

Fiscal Impact

Ambulance transportation revenues for Fiscal Year 2004-05 are projected at $1.2 million after fees for billing services are deducted, approximately $50,000 less than the previous fiscal year.  Based on current trends in the rate of Medicare and Medi-Cal write-downs, these revenues are expected to decrease by another $35,000 in FY 2005-06.  Should the Council choose to adopt the proposed resolution and align the City�s paramedic ambulance fees to the maximum rate allowed by the Los Angeles County DHS, the anticipated revenue increase is $93,000.  After the write-down related losses, this would provide an additional $58,000 in revenue to the General Fund in FY 2005-06 to help offset the growing costs of providing EMS services to the public.

Recommendation

Staff recommends the Council adopt the resolution amending Article V of the Burbank Fee Schedule to align the fees for Advanced Life Support and Basic Life Support with the current rates allowed by the Los Angeles County Department of Health Services and incorporate language allowing automatic adjustments to the Paramedic Ambulance Services Fees in order to conform with the County of Los Angeles General Public Ambulance Rates. 

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