HomeMy WebLinkAbout2012_0524_ATS JEO AIS and Memo
JOINT ELECTED OFFICIALS
AGENDA ITEM SUMMARY
ACTION: AMBULANCE TRANSPORT SYSTEM SUSTAINABILITY
Meeting Date: May 24, 2012 Agenda Item Number: 1
Department: Eugene and Springfield Fire Departments Staff Contacts: Randall B. Groves, Chief
Lane Rural Fire/Rescue District Dale Borland, Chief
ISSUE STATEMENT
The Joint Elected Officials Ambulance Transport Task Force (ATTF) recognizes ambulance transport as
a core service that is accessible to the residents and visitors of central Lane County regardless of ability
to pay. Seen as a regional system, Eugene Fire & EMS Department, Springfield Fire & Life Safety
Department, and Lane Rural Fire/Rescue District provide ambulance transport for a majority of Lane
County citizens. Rural Metro Ambulance, a private ambulance service providing select non-emergency
transports, and LifeFlight, air ambulance transportation for the most critical patients, augment the
system. The three governmental providers continue to experience a financial crisis attributed largely to
the federal government’s decline in Medicare and Medicaid payments and the economic recession
resulting in an increase in utilization by those underinsured and uninsured. All three regional providers
are projecting annual financial deficits beginning in FY13.
BACKGROUND
Before the implementation of the Ambulance Fee Schedule on April 1, 2002, ambulance suppliers
received payment from Medicare on a “Reasonable Charge Basis.” Medicare would pay 80 percent of
the allowable amount and the remaining balance was the responsibility of the patient. This allowed
transport providers broad flexibility in setting rates and assured recovery of costs.
The Balanced Budget Act (BBA) of 1997 added a new section 1834(1) to the Social Security Act, which
mandated the implementation of a national fee schedule. This section also required ambulance providers
and suppliers to accept the Medicare allowed charge, including patient co-payments as payment in full
and eliminated the ability to bill the patient or another insurance provider for the balance of the
reasonable charge.
Put simply, the national fee schedule, which covers 60 to 70 percent of all transports, does not allow
most ambulance providers to recover the full cost of providing the service. Instead, where we once had
the ability to collect the full billable charge (which has risen over the years from $535 to $1,600 per
transport), we are now reimbursed between $200 and $400, depending on the type of call. Medicaid, the
State of Oregon’s health insurance program, reimburses at a similar range.
While Medicare and Medicaid reimbursement reductions are the primary reason that emergency medical
transport in our region has become a revenue-negative enterprise, two national trends are also
contributing to the problem. One is the growing percent of population eligible for Medicare. The other is
the economy. Regional providers do not refuse transport because of inability to pay and are being forced
to write-off more and more bills as uncollectible and the percent of under- and uninsured increases.
TASK FORCE PARTICIPANTS
In October of 2011, the Task Force began meeting on a bi-weekly basis. The Task Force consists of the
following elected officials:
Eugene City Councilor Andrea Ortiz
Eugene City Councilor Mike Clark
Springfield City Councilor Sean VanGordon
Springfield City Councilor Marilee Woodrow
Lane County Commissioner Jay Bozievich
Lane Rural Board Vice President Pete Holmes
Lane Rural Board Member Jim Drew
******
The attached report from the Task Force provides additional background and a series of options, which
are:
1. Do nothing. Jurisdictions would remain responsible for providing and funding ambulance
transport within its assigned Ambulance Service Areas (ASA). Under this option, jurisdictions
recognize stabilizing the fund could require additional fee increases, continued reduction in
expenditures, change in service levels, and/or on-going General Fund support for the continued
high-quality provision of this core service. The elected bodies could choose to make General
Fund support the permanent solution to the problem. However, the Task Force believes that, for
the sake of preserving other local government services to the greatest extent possible, General
Fund support should be viewed only as a short-term solution.
2. Privatize. The Cities of Eugene and Springfield currently contract with a private provider for
non-emergency transport. Under this contract, the Cities remain responsible for the service
provided within the ASA. Under full privatization, the public would not only relinquish quality
control, but also the emergency response versatility afforded by the firefighter/paramedics now
staffing local ambulances. The goal would be to find the equilibrium point between these two
ends of the public/private partnership spectrum.
3. Form Ambulance Transport District. A new limited special-purpose district could be formed
in the region, or the region could annex to an existing health district, to provide ambulance
service. Alternatively, a county service district could be established. In planning for formation
of, or annexation to, a special district, many further, more specific decisions will be needed
including boundary issues, revenue requirements, and the possibility of tax rate compression. An
election will be required.
****
RELATED CITY POLICIES
City of Eugene Value #1: Safe community.
City of Eugene Value #5: Fair, stable, and adequate financial resources.
Springfield City Council 5-Year Goal #1: Provide financially sound, stable city government.
Springfield City Council 5-Year Goal #2: Utilize resources efficiently and effectively to meet citizen
needs for core services.
Springfield City Council 5-Year Goal #5: Enhance public safety in Springfield.
Springfield City Council 5-Year Goal #7: Partner with citizens and other public agencies to leverage
resources.
ELECTED OFFICIAL OPTIONS
Elected officials are at liberty to adopt any or all of the options presented by the Ambulance Transport
System Joint Elected Officials Task Force. Adoption may be by the full JEO group or by the individual
governing bodies of affected jurisdictions, as appropriate.
CITY MANAGERS’ RECOMMENDATION
None; options of the Ambulance Transport System Joint Elected Officials Task Force are presented
herewith.
SUGGESTED MOTION
Motion to adopt selected (or all) options.
ATTACHMENT
2011 Task Team Memorandum and Options
FOR MORE INFORMATION
Staff Contact: Eugene and Springfield Fire Chief Randall B. Groves
Telephone: (541) 682-7115 or (541) 726-3737
Staff E-Mail: randall.b.groves@ci.eugene.or.us
Staff Contact: Lane Rural Fire/Rescue Chief Dale Borland
Telephone: (541) 688-1770
Staff E-mail: dborland@lrfr.org
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Page 2 of 7 May 24, 2012
Provider departments and their governing bodies have already expended substantial effort to
address this critical public concern by taking steps to reduce expenditures and increase revenues
including passing extraordinary increases in user fees, FireMed memberships fees, and
implementing initiatives recommended by the 2009 initial Joint Elected Officials ATTF. None of
these adjustments individually or in whole has created a sustainable revenue source during any 6-
year financial forecast period. The Task Force was re-established in 2011 to continue the
discussion of finding a permanent funding source offering stabilization for this vital service.
The 2011 ATTF has developed the following options:
1. Do nothing. Jurisdictions would remain responsible for providing and funding
ambulance transport within its assigned Ambulance Service Areas (ASA). Under this
option, jurisdictions recognize stabilizing the fund could require additional fee increases,
continued reduction in expenditures, change in service levels, and/or on-going General
Fund support for the continued high-quality provision of this core service. The elected
bodies could choose to make General Fund support the permanent solution to the
problem. However, the Task Force believes that, for the sake of preserving other local
government services to the greatest extent possible, General Fund support should be
viewed only as a short-term solution. Further, residents who do not live in the city limits
but reside within the ambulance service area will not be contributing to the support of the
service under this scenario.
2. Privatize. The Cities of Eugene and Springfield currently contract with a private provider
for non-emergency transport. Under this contract, the Cities remain responsible for the
service provided within the ASA. Under full privatization, the public would not only
relinquish quality control, but also the emergency response versatility afforded by the
firefighter/paramedics now staffing local ambulances. The goal would be to find the
equilibrium point between these two ends of the public/private partnership spectrum. For
this option, a feasibility study would be required including a review of costs to each
jurisdiction to maintain fire response for medical calls in the event the ambulance
transport system is contracted to a private provider in its entirety. For example,
jurisdictions would need to maintain contracts for a supervising physician, which are
currently funded by individual Ambulance Transport Funds. Additional considerations
include payment for first response by the private provider and the financial stability of a
private provided to ensure long-term, high quality service.
3. Form Ambulance Transport District. A new limited special-purpose district could be
formed in central Lane County, or the region could annex to an existing health district to
provide ambulance service. These options require governance by an elected board of
directors. Alternatively, a county service district could be established. This type of entity
would be governed by the Lane County Board of Commissioners. Forming a district
requires an affirmative vote of the electorate within the proposed district.
Attachment B is an overview of district-related options for ambulance service funding,
prepared in June 2011 by the Lane Council of Governments (LCOG). The Task Force
reviewed a full LCOG report regarding districts that was commissioned by the Lane
Page 3 of 7 May 24, 2012
County Fire Defense Board. The ATTF also reviewed a high-level presentation on
projected costs and estimated rate for the regional service.
In planning for formation of, or annexation to, a special district, a feasibility study
highlighting proposed district legal boundaries, changes to the Metro Plan, sustainable
tax revenue requirement, and taxing issues such as uncollectible percent and
compression, both a reduction to gross tax revenue would need to be completed. Because
implementation of district options will take a considerable period of time, we recommend
the immediate formation of an intergovernmental staff team to fast track the study of the
feasibility of implementing this solution.
BACKGROUND
Throughout our region, the majority of patients transported are covered by Medicare. Before the
implementation of the Ambulance Fee Schedule on April 1, 2002, ambulance suppliers received
payment from Medicare on a “Reasonable Charge Basis.” Medicare would pay 80 percent of the
allowable amount and the remaining balance was the responsibility of the patient. This allowed
transport providers broad flexibility in setting rates and assured recovery of costs.
The Balanced Budget Act (BBA) of 1997 added a new section 1834(1) to the Social Security
Act, which mandated the implementation of a national fee schedule. This section also required
ambulance providers and suppliers to accept the Medicare allowed charge, which includes the
patient’s co-payment, as payment in full and transport agencies were no longer able to bill the
patient or another insurance provider for the balance of the reasonable charge.
The new fee schedule took effect in 2002 and was phased in over a five-year period, with full
implementation on January 1, 2006. Year one (4/1/02-12/31/02) provided a blending of 20
percent fee schedule and 80 percent reasonable charge. The reasonable charge portion was then
reduced by 20 percent in each of the four subsequent years, so that as of 2006 only the fee
schedule amount was payable. Since 2006, jurisdictions have received small, incremental
increases in reimbursement. However, current reimbursement levels remain well below the cost
of the service.
Put simply, the national fee schedule, which covers 60 to 70 percent of all transports, does not
allow ambulance providers to recover the cost of providing the service. Instead, where we once
had the ability to collect the full reasonable charge (which has risen over the years from $535 to
$1,600 per transport), we are now reimbursed between $200 and $400, depending on the type of
call. Medicaid, the state of Oregon’s health insurance program, reimburses similarly.
While Medicare and Medicaid reimbursement reductions are the primary reason that emergency
medical transport in our region has become a revenue-negative enterprise, two national trends are
also contributing to the problem. One is the growing number of individuals eligible for Medicare.
The other is the economy. Ambulance transport providers in our region do not refuse transport
because of inability to pay and are being forced to write off more and more bills as uncollectible.
Page 4 of 7 May 24, 2012
The Eugene Fire & EMS Department has taken many steps to try to keep the ambulance service
self-sustaining including increasing the transport rates; reducing ambulance coverage during
non-peak times; and cutting costs for administrative staff, materials, and supplies. The
department has also worked closely with City Finance staff to identify the appropriate cost split
between the Ambulance Transport Fund (ATF) and General Fund (GF) to ensure the ATF is not
supplementing General Fund services as well as to identify needed GF support on a one-time
basis to balance the ATF in 2010 and 2011.
In addition, Eugene’s ambulance system capacity is very thin. With inadequate revenues to
increase the number of advanced life support ambulances on the street, the department elected to
privatize select non-emergency calls for service, which matches a more appropriate level of
resource with particular call types to a private provider as a cost avoidance strategy.
Springfield Fire & Life Safety staff has focused on maximizing existing revenue sources for all
three providers through the joint FireMed program by increasing the membership fee and by
increasing participation in the JobCare program. In FY12, the FireMed program managers
focused on decreasing administration and advertising costs of the program. However, it has been
noted that even with the recent adjustments go the program, FireMed, in itself, will not garner
enough revenues to balance the Ambulance Transport Funds.
Springfield Fire & Life Safety has taken several steps toward keeping the ambulance transport
system self-sustaining including increasing transport rates and reducing costs for administration.
Springfield Fire & Life Safety also contracts with a private provider for inter-facility, non-
emergency transports. In FY11, the Ambulance Transport Fund accumulated reserves totaling
$251,605. These reserves are forecasted to be depleted by the end of FY13.
The Lane Rural Fire/Rescue District was granted an Ambulance Service Area (ASA)
encompassing the northwest portion of Eugene’s ASA in 2001 and in 2002 began providing
emergency medical transport in addition to fire and rescue services to that area, resulting in a
reduction of ambulance transport revenue as well as FireMed membership revenue for Eugene.
As a pre-existing taxing authority, Lane Rural has been able to augment its overall revenue with
ambulance fees and FireMed revenue, but not to the extent that the ambulance service is fully
self-supported; instead, the district annually levies funds as necessary to provide all of its
services, in effect providing some support to the ambulance service with general tax monies.
Currently, this requirement is estimated to be at least $400,000 annually.
None of these adjustments individually or in whole has created a sustainable revenue source
during any 6-year financial forecast period. All three Ambulance Transport Funds continue to
see annual deficits and depleting reserves. Another unobtainable goal is to maintain a reserve
equal to two months’ operating expenditures. As projected in the current 6-year financial
forecasts, no jurisdiction will meet this goal. Additionally, all three jurisdictions have relied on
contributions from their general funds to balance in recent fiscal years.
In 2009, the initial Joint Elected Officials Ambulance Transport Task Force was formed because
a solution to this crisis was determined beyond the capacity and authority of any one provider
agency acting unilaterally. After studying this issues and the range of available options, having
Page 5 of 7 May 24, 2012
engaged the public at a series of community forums and online, and having worked in concert
with stakeholders including local fire and ambulance service professionals, hospitals, and
firefighters’ unions, the taskforce recommended the following:
1. That all three jurisdictions remain prepared to allocate a level of General Fund
support as necessary for the continued high-quality provision of this core service.
2. That the Eugene and Springfield City Councils authorize initial steps toward merger
of their fire departments.
3. That exploration begin immediately of more sustainable public funding options.
4. That marketing of FireMed subscriptions be enhanced and expanded in an effort to
generate additional revenues to lessen reliance on general fund tax support.
5. That the City of Eugene and Lane Rural Fire/Rescue analyze the possibility of
reconfiguring the boundaries of the county’s Ambulance Service Areas so as to
provide for an urban-rural split between Eugene and Lane Rural Fire/Rescue; and, if
conditions appear favorable, that the Lane County Board of Commissioners be asked
to enact such reconfiguration.
6. That work proceed as rapidly as possible regarding provision of a regional mobile
health care system, featuring tiered levels of response (and cost) available to patients
depending on the nature of the emergency with a report to elected officials by the end
of calendar year 2010.
7. That public ambulance service provider agencies continue to lobby the Oregon
legislature and U.S. Congress for larger-scale, long-term solutions.
Several of these recommendations have been implemented including continued General Fund
support as needed per jurisdiction to keep programs viable. All three providers recognize General
Fund support is considered one-time and, at this time, is not a sustainable solution. The merger
initiative continues to make positive steps toward a fire district, which could ultimately provide
needed funding for ambulance transport. However, it is projected that forming a district is a
long-term goal and will not address the immediate funding need of the ambulance transport
service. As previously stated, increased revenues for the enhanced FireMed program have been
determined that the program cannot in itself, garner enough funding to stabilize the system. The
City of Eugene has moved forward with recommendation #5 by contracting with Lane Rural
Fire/Rescue District to provide rural ambulance transport services west of the urban growth
boundary. This agreement has resulted in decreased response times for the constituents being
served. This recommendation has had minimal impact on the Eugene workload issue but does
not address the financial stability of either ambulance transport system. Finally, regional
providers continue to actively work with the United Front at the State and Federal levels for
developing larger-scale, long-term solutions.
CONCLUSION
With the political will already expressed to continue emergency medical transport as a core
public service, and with the existing revenue streams no longer adequate, there is little question
that additional tax support will be required. The only questions are as to the form and magnitude
of that additional tax support.
Page 6 of 7 May 24, 2012
As shown, some of the measures recommended provided a degree of financial relief and/or
service improvement. However, to address the larger and more critical central issue, General
Fund support will probably be required to bridge the gap over the short to mid-term, and we
conclude further that some new form of general tax support is the best solution for the long term,
both from a fiscal and service standpoint.
Please contact any member of the Task Force, or staff in the respective fire service agencies, if
you have questions or would like additional information.
ATTACHMENTS
A. ASA map
B. LCOG overview of district alternatives
C. Media clippings
P
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