COUNTY OF ALBEMARLE

 

EXECUTIVE SUMMARY

 

 

AGENDA TITLE:

EMS Revenue Recovery

 

 

SUBJECT/PROPOSAL/REQUEST:

Request Board Approval to Begin Process for an EMS Recovery Program for the FY07/08 period.

 

 

STAFF CONTACT(S):

Tucker, Foley, Davis, Eggleston

 

 

LEGAL REVIEW:   Yes

 

 

AGENDA DATE:

October 4, 2006

 

ACTION:     X                         INFORMATION:   

 

CONSENT AGENDA:

  ACTION:                              INFORMATION:   

 

 

ATTACHMENTS:      No

 

 

REVIEWED BY:

 

 

 

BACKGROUND:

During the FY06/07 budget work session, staff outlined the projected increase in operational expenses associated with staffing the Northern, Pantops, and East Ivy fire rescue stations that are planned for construction over the next five years. Staff briefly discussed with the Board the idea of billing for ambulance transport as a means to recover revenue. In turn, the Board requested that staff research the idea of an EMS Recovery program and present the Board with an executive summary sometime during the fall 2006 time frame.

 

Staff’s research includes a summary of the issues, obstacles, and benefits related to an EMS Revenue Recovery program for Albemarle County. Staff’s purpose in addressing the Board is to seek approval to develop an implementation plan for further review during the upcoming strategic planning session or next fiscal year’s budget sessions for possible implementation during FY07/08.

 

STRATEGIC PLAN:

Goal 5. Fund the County’s future needs.

 

DISCUSSION:

Like Albemarle, many Virginia localities are experiencing an increase in cost to provide emergency medical services. Career supplemental staffing along with Federal and State Government mandates contribute to the majority of the cost to provide EMS transport service.

 

Because of increasing costs, a number of localities have chosen to implement an EMS Revenue Recovery program to help offset expenses (see attachment A for the current list of Virginia localities with an EMS Revenue Recovery Program). The Code of Virginia (§32.1-111.14) authorizes localities to charge for the provision of emergency medical services.

 

Most health insurance policies include coverage for EMS transportation, and according to the U.S. Census Bureau, 87 percent of Virginians are covered by health insurance. Localities traditionally pay for EMS from tax revenues. For localities that do not bill for EMS services, the citizen that has already paid for EMS coverage through their health insurance has in effect paid twice for EMS when they use the service.

 

Staff has researched other localities that have implemented an EMS Revenue Recovery program and have determined that there are two main areas of concern prior to implementation:

 

  1. Citizen’s concerns
    1. Reasons behind the decision to begin an EMS Recovery Program
    2. Impact on health insurance ratings
    3. Ability to pay for those without health insurance

 

  1. Impact on the Volunteer Fire Rescue System
    1. Concern that community donations to the volunteer departments will dwindle because of an EMS Recovery program
    2. Concern that additional reporting requirements will add further demands on a volunteer’s time

 

Citizen’s Concerns

Staff found that most localities have utilized extensive public education campaigns to explain why an EMS Revenue Recovery program is necessary, the benefits that would be gained from recovering EMS revenue, and expectations of patients. For example, Chesterfield County held a number of “town hall” style meetings to address citizen concerns. In addition, Amherst County developed newspaper ads and a seven-minute video emphasizing that EMS revenue recovery would work like billing for other health care services and that no one would be denied services based on ability to pay. Hanover County developed a frequently asked question (FAQ) brochure that was published in newspapers and displayed at public facilities (see Attachment B – Hanover County Fire and EMS – EMS Revenue Recovery FAQ).  Most localities have reported that the majority of their citizenry support an EMS Recovery program once they understand the options available to help offset EMS expenses (i.e. – increase tax rate vs. a user fee).

 

Citizens in localities that have planned for an EMS Revenue Recovery program have expressed concerns that their insurance premium will increase. The fact is that there is no evidence that an EMS Revenue Recovery increases health insurance premiums. Health insurance premiums continue to rise regardless of whether or not a community decides to bill for EMS transports. In addition, ambulance transport costs represent less than 1% of health care expenditures.

 

Finally, citizens have expressed concerns about the ability to pay for those citizens that are uninsured. Hanover, Spotsylvania, Franklin, Caroline, Stafford, and Roanoke to name a few have implemented a compassionate billing policy (see Attachment B – Spotsylvania’s Compassionate Billing Policy). A compassionate billing policy is where a locality makes a limited effort to collect outstanding payments, and that typically they would not seek to collect payments through court-ordered or other debt collection efforts. Generally, the practice is to send several notices seeking payment, and then write off the debt. In either case, no one is denied emergency medical care based on the ability to pay for services.

 

Impact on the Volunteer Fire Rescue System

Volunteer agencies have generally resisted implementation of an EMS Revenue Recovery program because they believe that billing for services will negatively impact their community donations. However, most localities have not experienced a downturn in community donations to the local fire or rescue squad. Some localities have set aside some of the funds generated by the program, and if the volunteer agencies demonstrate there has been a reduction of donations, the locality will make up the difference.  Two of the localities surveyed (Chesterfield and Roanoke) have advised that the volunteer agencies have not demonstrated any reduction in donations. An EMS Recovery program has not been discussed at a regular meeting of Albemarle County Fire Rescue Advisory Board (ACFRAB), but staff believes that the county volunteers will have similar concerns.

 

Some volunteer agencies have expressed concerns about increased paperwork and administrative overhead due to an EMS Revenue Recovery program. A solution adopted by many localities has been to contract with a third-party vendor to handle billing and collections. Third-party vendors manage the reimbursement process and simplify the administrative burden on EMS agencies. Third-party vendors also generally seek to maximize reimbursements from health insurers, Medicare and Medicaid.

 

BUDGET IMPACT:

It is projected that an EMS Revenue Recovery Program in Albemarle County would generate 1.5 million dollars of net annual revenue (based on a 50% to 60% collection rate) once the program is fully implemented (based on a vendor analysis of Hanover County, which is of similar size and makeup of Albemarle)

 

RECOMMENDATIONS:

Staff recommends that the Board direct staff to develop an implementation plan for further review during the upcoming strategic planning session or next fiscal year’s budget sessions for possible implementation during FY07/08 to offset long term capital and operational needs.

 

ATTACHMENTS

A - Localities that have implemented EMS Revenue Recovery Programs

B – Hanover County Fire and EMS – EMS Revenue Recovery FAQ

C - Spotsylvania’s Compassionate Billing Policy

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