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Hitting where it hurts

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When you're having a heart attack, you don't care if the paramedic works for a private company or the local fire department. You just need help.

But when the bill comes, you might care a lot.

Colorado Springs Mayor Steve Bach is considering changing how patients are transported, and both options he's said to be mulling could increase ambulance charges.

Since the mid-1990s, the Emergency Services Agency, a regional agency with 27 members (including El Paso County and the city) has overseen a regional emergency ambulance contract. It competitively bids the contract at certain intervals; the current one with American Medical Response will expire on Dec. 31, 2013. The city has refused to approve an extension.

County Commissioner Sallie Clark met with Bach on Dec. 19 and reports he's looking at the Colorado Springs Fire Department taking over ambulance transport. City Councilor Merv Bennett says, however, that Bach considers that "only an option"; another would be for the city to charge its service provider, whether AMR or someone else, a franchise fee of up to $2.4 million a year. That's more than 10 times the $200,000 AMR currently pays the ESA for contract oversight.

Details are scarce, largely because the city refuses at this point to release information. In response to the Independent's questions about operational costs, collection rates, start-up expenses, legal liability and staffing, its communications staff issued this response: "The City is in the process of evaluating all of its options and will share our findings with the community once the analysis is complete."

The unknowns

Springs firefighters responded to only 802 fires in 2011, the most recent data available. That's 29 percent fewer than the 1,127 fire calls in 2002. But during that same decade, medical calls jumped by 14 percent, to 34,995.

Firefighters respond to those calls along with AMR and provide initial assessment and treatment, but don't transport except in certain circumstances. They clearly occupy a support role, so much so that if they use any medical supplies on a call, AMR restocks those supplies.

The last time the city studied a Fire Department takeover was 2005. It was a different world then, as evidenced by the study's allusions to a "promising" economy and a "robust" home construction industry. In fact, AMR general manager Ted Sayer says the study is simply "no longer relevant," what with declining government reimbursements and rising expenses, including an 83 percent fuel-price hike since 2005.

But with no new figures coming yet from the city, the '05 numbers provide perhaps the best ballpark figures for what it would take to start this kind of operation. Besides $5 million to buy ambulances and equipment and modify fire stations, the '05 plan called for 70 new hires — most of them civilians, to dodge paying higher firefighter salaries.

The city would break even each year, the study predicted, once it collected more than 42 percent of its billed charges. That's hardly a given; Sayer says AMR's collection rate sits at 33 percent to 40 percent.

Then there's liability. The city could be sued if something went wrong during a transport. And billing can lead to issues: The city of Dallas paid a $2.47 million fine in 2011 because its collection agency overbilled Medicare and Medicaid. Dallas then switched to a different company, whose collections were $8 million below projections.

Manuel Navarro, who was the Colorado Springs fire chief in 2005, in an interview recently labeled the takeover idea "marginal at best."

"If revenue fell short, we would still have the employees," notes Navarro, who worked for AMR as an executive between his tenure in the Springs and his current job as an assistant chief in California's Bay Area.

Covering the shortfall would likely mean raising rates on the public.

Given such problems, it's no wonder that Steve Williamson, who runs the Emergency Medical Services Authority in Oklahoma City and Tulsa, Okla., says fire departments are moving away from providing ambulance service.

"People who think this is a revenue source for cities to get into the business are crazy," says Williamson, an American Ambulance Association board member. Referring to the decline in Medicare and Medicaid reimbursements, he adds, "There isn't revenue there to make it smart for cities to take it over, because it's just going to get more restrained in the future."

Not that it's impossible to make it work. The Phoenix Fire Department, which handles emergency transport, is doing fine, says spokesman Tim Kovacs. Rates are set by the state — currently it's an $850 base rate for advanced life support, and $750 for basic life support. (AMR's charges are $709 and $529, respectively.)

"Our rates cover all of our costs, and we have one of the highest collection rates in the state, and we don't aggressively beat people's doors down," Kovacs says.

A hidden tax?

Bach's other idea is to have AMR pay the city for firefighters' time spent responding to medical calls, estimated at $2 million to $2.5 million a year, as a franchise fee.

The fee seems to adhere to a 2004 federal Inspector General's advisory opinion that cities won't violate an anti-kickback law if their franchise fees reimburse for a service — in this case, firefighter first responses. Still, EMS attorney and consultant Doug Wolfberg of Harrisburg, Pa., considers franchise fees a "pay to play" arrangement and a hidden tax or cost shift, because they drive up rates for insurers and private-pay patients.

Wolfberg says most franchise fees hover around $500,000; he calls the city's figure "outside the norm." Ambulance companies run on a tight margin, he says; without a significant rate increase, they might not make money.

"The fees ambulance services get from Medicare and insurance companies are simply not sufficient for them to subsidize municipalities that have holes in their budget," Wolfberg says, citing two federal studies that found that government reimbursements provide "barely a break-even proposition" for contractors. Franchise fees, he says, drive up rates.

Most emergency ambulance companies supplement their income by handling non-emergency transports, such as between nursing homes and hospitals. Fire departments don't usually handle those calls.

Bach and Fire Chief Brown are due to report on the matter to Council in late February, Bennett says.

zubeck@csindy.com

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