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Financial Concerns for Ambulance Services

Health care providers in California are waiting for judicial rulings to see if they will be hit by a 10% cut in Medi-Cal reimbursement rates as a result of a law passed in 2011 and currently tied up in federal appeals court.

Ambulance service providers are among those who would be hit by the cut but they say they shouldn’t be included for one large and simple reason: Unlike physicians, ambulance providers are required by law to transport Medi-Cal beneficiaries. They’re not allowed to refuse them.

“We cant say ‘no’ like everyone else. We’re required by law to provide those services,” said Klark Staffan, vice president and chief operating officer for Sierra Medical Services Alliance  in Lassen County. “And so we’re stuck. We have to provide the service, but we lose money with every Medi-Cal transport. We’re the only type of medical provider who can’t say we wouldn’t accept [Medi-Cal] patients. We think we’re unfairly treated.”

Ambulance service providers pass that loss onto other transport users, such as private-pay health insurers. “Basically, they subsidize Medi-Cal payments,” Staffan said.

He said the average ambulance transport costs $589. Medi-Cal pays an average of $150 per transport, Staffan said. Health insurers are drawing the line on transport costs, so the subsidization strategy isn’t working well anymore, Staffan said. Another 10% cut in state reimbursement rates, he said, would be absorbed almost entirely by ambulance companies, and that might be enough to drive them to closure.

“It’s a frightening thought,” Staffan said. “That would mean some of the smaller ambulance companies would be challenged to stay in business.”

Ambulance service providers have their own legal challenge pending in District 2 federal appeals court. That is separate from other providers’ lawsuits that challenge legality of the 10% cut itself. The ambulance suit focuses on the access-to-care standard, which should not be applicable to emergency services, Staffan said, because of the requirement to provide them.

“What they’re saying is, as long as ambulances respond to calls, the access-to-care standard is met and the reimbursement must be high enough because ambulances are still responding. But we’re legally required to respond. So we think that’s unfair,” Staffan said.

Ambulance service providers also introduced legislation in previous sessions to increase reimbursement (similar to the Maddy Fund that benefits emergency departments) but that legislation failed, Staffan said. No legislation is pending this session, he said.

“We’re working with legislators across the board, but ambulance service is such a small part of Medi-Cal,” Staffan said, so it’s hard to get legislation that focuses on it, he said. “It’s unfortunate because it’s such an important part of the health care system,” he said.

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