The seedy underside of ambulance billing

Obama made a statement during his state of the union address that he wanted to raise the minimum wage to $9 an hour. This is going to hurt many, and specifically will hurt people employed by ambulance services. Let me illustrate:

Section 4531 of the Balanced Budget Act, passed in 1997, added a section 1834 to the Social Security Act which mandated a national fee schedule for all ambulance services furnished by Medicare. This fee schedule applies to all ambulance services, including volunteer, municipal, private, independent, and institutional providers, i.e., hospitals, critical access hospitals (except when it is the only ambulance service within 35 miles), and skilled nursing facilities.

Section 1834 (l) also requires mandatory assignment for all ambulance services. Ambulance providers and suppliers must accept the Medicare allowed charge as payment in full and not bill or collect from the beneficiary any amount other than any unmet Part B deductible and the Part B coinsurance amounts.

There are three types of Ambulance Fees: basic Life Support (BLS), Advanced Life Support (ALS), and Specialty Care. BLS are calls where the patient basically needs a ride that is not possible with other means of transport like wheelchair vans, but there are no medications needed other than oxygen, and the patient does not need cardiac monitoring or anything else.

These fees are broken down by ZIP code. In the State of Florida, the allowable fee for BLS transport is $216, plus about $7 per mile. That is all that the ambulance company is allowed to charge, and from this amount of money, the company has to buy the ambulance, pay for supplies like oxygen, BP cuffs, bandages, sheets, insurance, license fees, employee salary, employee benefits (Obamacare), fuel, vehicle repairs, etc.

Now step up to ALS: The allowable fee is now $258, plus about $7 per mile. An ALS truck requires at least one paramedic, a host of additional drugs, a Cardiac Monitor, and other supplies in addition to the ones required by a BLS truck. The drugs can be quite expensive, with Glucagon costing over $100 per dose. The drugs cost the provider thousands of dollars per truck, and most of them expire each year and have to be replaced. The Cardiac monitor costs over $10,000. It costs a lot more money to operate an ALS ambulance, but the fee for an average 10 mile transport is only 10% more. You get $40  more for an ALS call, but to run that call, you must pay the medic more, buy more expensive drugs, buy more expensive equipment, pay a more expensive ambulance fee, and on and on.

The vast majority of ambulance calls are routine BLS transfers. There is not as much profit in running ALS units, because they are so expensive, and roughly 80% of ambulance calls are BLS, meaning that expensive ALS trucks wind up running BLS calls.

These fees are capping what an employer can pay employees, so many companies are cutting back on ALS units and employees, because there is much more profit in running a patient to a dialysis appointment from his home than there is in transporting a heart attack victim to where he can get appropriate care for his problem.

What does this have to do with minimum wage? Well, what this means is that an EMT, with less than 200 hours of training, is earning $9 an hour. A paramedic, with over 1200 hours of training, is earning somewhere in the neighborhood of $13 an hour. What is happening is that it is not profitable to run ALS calls.

Sure, all 911 calls are ALS, but the nationwide average is that only 40% of them pay. Now Obamacare will ensure that we get payment percentages that are much higher, but as long as those payments remain with the Medicare caps, 911 will not be sufficiently profitable to carry out. All of this means that private ambulances are going to go the way of the Dodo: the only way to perform ALS profitably is to be taxpayer subsidized, or commit fraud. More on that later.