Orange County’s ambulance operators are bracing for a new round of Medicare reimbursement cuts that some predict will lead to consolidation.
On Jan. 1, the Centers for Medicare and Medicaid Services will begin phasing out payments for disposable medical supplies and oxygen that ambulances routinely use while transporting patients.
Ambulance operators also face cuts in mileage reimbursement rates at a time when fuel prices are high. And there’s a looming reduction in payments for transporting Medicare patients, who make up about half of the ambulance industry’s revenue.
“It will cause us to rethink our business plan and our growth level,how far we want to grow and in what areas we want to go, especially with the impact on the mileage,” said Kay Kearney, director of administration for Laguna Hills-based Doctor’s Ambulance Service Inc.
The company, which has 150 workers and 25 ambulances, receives about 40% of its revenue from Medicare.
Also worried is Chad Druten, director of government affairs at Brea-based Emergency Ambu-lance Service Inc.
“Phasing out payments for the disposable supplies we use every day during a time when we’re facing increased costs is certainly not going to help us,” Druten said. “Lower Medicare reimbursements and increased costs will force companies to become more efficient.”
The cuts could cost California’s 280 ambulance operators $110 million next year, said David Nevins, president of the Sacramento-based California Ambulance Association, which wants ambulance reimbursement rates frozen at current levels.
Previous rate cuts led to a $29 million loss on Medicare patients for the state’s ambulance industry this year, Nevins said. The association warned that up to 10 ambulance companies in the state could go out of business or be bought next year.
Emergency Ambulance, a family-owned business that’s been operating since 1977, isn’t likely to fold.
“Our company and others in the county pretty much provide the critical 911 emergency ambulance services that comprise the backbone of the safety net,” Druten said.
Emergency Ambulance’s primary territory is northeast OC, including Brea. It operates 33 ambulances and has 100 workers.
The Orange County Health Care Agency, which regulates the 16 licensed private ambulance providers in OC, said there were about 196,400 emergency ambulance calls in OC last year, up 9% from 2003.
The county’s minimum ambulance transport rate, which is set by the Board of Supervisors, was $531.75 last year. The rate is $581.50 this year.
The basic Medicare reimbursement rate for OC is $512.38 for an ambulance call involving a paramedic assessment, and $697.12 for calls including a paramedic assessment plus three drugs or lifesaving measures. Medicare reimbursement rates for disposable supplies used on calls, oxygen and mileage are $1.32, $9.80 and $7.28 per mile, respectively. Rates for 2006 haven’t been set.
“We’ll have to wait and see if there’s any adverse effect, but certainly ambulance companies are very concerned,” said Dr. Bruce Haynes, medical director of Orange County Emergency Medical Services, part of the OC Health Care Agency.
The industry has tried to make its case to Congress.
“I would say (Congress) has been responsive in that they understand the situation,” Nevins said.
But he said lawmakers’ preoccupation with the budget, Iraq and other issues has prevented any movement on reimbursement rates.
Decade-Old Battle
Ambulance fee battles can be traced back to the late 1990s, when Congress passed the Balanced Budget Act. The battle intensified in 2002 when regulators changed Medicare ground ambulance fee schedules to rates that critics, such as the American Ambulance Association, charged were well below the national average cost of providing ambulance service.
