A Comprehensive Assessment of the Financial Feasibility of ...64.166.146.245/docs/2014/CCCFPD/20140909_477/19221_Ludwig R… · 09/09/2014 · By determining the financial feasibility,

A Comprehensive Assessment of theFinancial Feasibility

of the Contra Costa County Fire Protection District

Providing EMS Transport

Prepared by:

The Ludwig Group9525 E. Vista Drive, Suite 200

Hillsboro, MO 63050

(636) 789-5660

August 2014

Dr

Acknowledgements

The Ludwig Group greatly appreciates the excellent cooperation received from all levels,

departments, and organizations within the Contra Costa County Fire Protection District.

We thank the many employees of the Contra Costa County Fire Protection District, and

other who cooperated, provided information, or were interviewed.

While there are too many to mention individually, we wish to especially thank the

following individuals for helping to launch, coordinate, and advise the project.

Jeff Carman Fire Chief

Benjamin Smith Battalion Chief

Jackie Lorrekovich Chief of Administrative Services

The Ludwig Group Staff and Consultants

Gary Ludwig, Project Manager

Richard Hamilton, Subject Matter Expert

Contra Costa CountyFire Protection District

An EMS Transport FinancialFeasibility Study

Prepared by:

The Ludwig Group, LLC9525 E. Vista Drive, Suite 200

Hillsboro, MO(636) 789-5660

August 2014

Table of Contents

Chapter Page

Chapter I – Executive Summary 1

Conclusion 2

Chapter II – Project Approach 3

Data Study and Review of the Literature 3

Methodology 3

Implementing EMS Transport for the Right Reason 4

Key Criteria Points 5

Chapter III – Background 6

The CCCFPD 6

EMS Delivery in Contra Costa County 7

Chapter IV – Proposed Fire-based EMS Transport Model 11

Models 11

An EMS System 12

Proposed CCCFPD EMS System 14

Chapter V – Proposed Expenditures 26

Costing Out an EMS System 26Personnel Costs 27Other Costs 28Startup Costs 28

Chapter VI – Anticipated Revenue 32

Revenue Projection Findings & Recommendations 34

Revenue Project Methodology 38

Example of EMS Billing and Collections Programs 41

GEMT Explained 42

Chapter VII – Conclusion 44

Financial Feasibility of EMS TransportContra Costa County Fire Protection District

August 2014 Page 1

Chapter I

Executive Summary

This report explores the financial feasibility of the Contra Costa County Fire Protection

District (CCCFPD) in California providing 9-1-1 EMS transport in the community where

they serve and other areas currently serviced under contract by a private ambulance

provider. Being good fiscal stewards, there is interest in competitively bidding on the

EMS transport contract when the current contract expires on December 31, 2015. This

study will provide guidance whether it is financial feasibility to move forward and

participate in the competitive bidding process. If an EMS system cannot be created that

would be revenue-neutral or provide funding in excess of expenditures, the CCCFPD

would not participate in the competitive bidding process for EMS transport.

Current EMS transport is provided by a private for-profit ambulance company called

American Medical Response (AMR). AMR is a part of a larger corporation called

Envision Healthcare, a publically traded company on the New York State Exchange

under the symbol EVHC. It is anticipated they would also be engaged in a future

competitive bidding process.

For purposes of this study, the scope of the project is designed to evaluate:

A hypothetical model of what a future CCCFPD operated EMS transport system

may look like.

An examination of the financial numbers regarding expenses and revenues if a

fire-based EMS transport model were to be operated by the CCCFPD.

Recommendations that could enhance revenue or reduce expenditures if EMS

transported services are provided by the CCCFPD.

This comprehensive assessment is intended to provide direction to elected and

appointed officials, citizens, and other governmental entities. The purpose of this

assessment is to provide a roadmap for the current and future EMS service delivery in

the CCCFPD.


August 2014 Page 2

By determining the financial feasibility, the CCCFPD is exploring the possibility of

designing a new business model for the fire department. A business case analysis of

alternative business options is an activity undertaken when complex alternatives need to

be compared on a common cost basis. This analysis requires an understanding both of

business and financial principles as well as EMS transport operating requirements. In

this case the analysis also requires an understanding of the reimbursement revenue in

order to make a sound business decision whether to participate in the competitive

bidding process.

Based on the recommendations and statements contained in this document, the

document is a compilation of principles and policies that should guide decision makers

on matters that affect the future of the District and the community.

Conclusion

Our financial evaluation demonstrates that it is cost-efficient for CCCFPD to operate

their own EMS transport system. Based upon projected revenue of $31,635,744 and

budget expenditures of $29,356,812.16, the approximate revenue in excess of

expenditures is projected to be $2,278,931.84. Adding to the advantage of being a fire-

based EMS model that can seek reimbursement for GEMT, there is a potential of an

additional $7,529,124 in revenue after the first year of operation. Based on the first year

revenue and the GEMT, the potential for second year revenue is $9,808,055.84.


August 2014 Page 3

Chapter II

Project Approach

The Ludwig Group approach to the CCCFPD project EMS service delivery assessment

was multi-faceted. A careful balance of academic principles and realistic understandings

of the challenges that California fire districts face today were prioritized and deliberated

in order to form a consensus represented in this document.

Data Study and Review of the Literature

One aspect of this project was to review literature and data from various sources

including the CCCFPD, the California Ambulance Association, Medicare, Medi-Cal,

private insurance providers, and the Fitch & Associates Consultant report in March 2014

titled “EMS Modernization Project Report.”

Methodology

The delivery of emergency medical services (EMS) is essential to the public safety and

health of the general public. In order to provide implementable strategies for the

CCCFPD a detailed scope of work was established for this project resulting in specific

recommendations. The methodology of the study includes the following items:

Analysis of the existing potential revenue and expenditures for a fire-based EMS

transport model for the CCCFPD with a comprehensive description of the

sources of revenue and expenditures.

The preparation of specific recommendations to improve and enhance

reimbursement strategies for efficiency, effectiveness, quality, and long-term

stability as it relates to fire-based EMS transport in the CCCFPD. The provided

recommendations are structured to support evolutionary improvements to the

system with continuous strengthening of the system’s stability.

An analysis whether the CCCFPD was attempting to implement an EMS

transport program for the right reasons.


August 2014 Page 4

Implementing EMS Transport for the Right Reasons

All too often there is discussion of a fire department wanting to enter into EMS transport

without giving thought as to why. Usually there is thinking that “this is something we can

do” or “we can make money.” Fire departments that have this philosophy do not have

justification for entering into the EMS transport arena.

Fire departments need to ask specific questions when determining their interest when

entering into the question of whether to provide EMS transport. Some of those

questions include:

Does the Department feel they can increase the EMS service level to the

community?

Are there slow ambulance response times to calls for service?

Is there unsatisfactory quality of personnel or services? (Clinical care and

complaints)

Is there frequent rotation of different EMS personnel in and out of the current

service?

Is there an opportunity to coordinate first response and EMS transport and create

continuity of EMS delivery?

Are there unacceptable operations for providing EMS?

Is there dissatisfaction with increasing costs of services?

Does local government want more control over EMS operations?

Does local government and the community want more services?

Does local government and the community want unique services (EMS bike patrols

for mass gathering; community health outreach programs, etc.)

Local government and community want more personalized services

Is there growth in the community that creates a need to increase service levels?

The forthcoming report was established with specific goals in mind. The goals are:

Determine if it is financially feasible for the CCCFPD to provide EMS transport

services.

Improve financial stability of the system by maximizing the use of resources while

improving efficiency and economy.

Determine if CCCFPD is wishing to enter into EMS transport for the right reasons.


August 2014 Page 5

Key Criteria Points

In developing this study, The Ludwig Group made a series of factual observations based

on data, interviews, history and tradition, stakeholder input, available resources, future

planning, growth predictions, changing demographics, risk profile, system demands,

community expectations, and perceived value of stakeholders.

The key criteria points for the CCCFPD are as follows:

CCCFPD has long standing respect among the citizens in the community.

CCCFPD has an experienced work force in place for supervision, coordination, and

management.

CCCFPD has been a longstanding EMS provider in Contra Costa County as a first

responder.

CCCFPD has the geographical distribution of resources and facilities along with

single point dispatch that can improve pathway management of events.

CCCFPD has an established Advanced Life Support program.

CCCFPD is a public safety net in the community. If they lose money they will not

abandon the operation.

Service to the citizen is paramount.

There will be increased performance accountability and scrutinizing of this report by

outside entities with financial interest in the County EMS operation.

System operation changes should be data driven.

CCFPD has the responsibility for and will exert authority for strategic planning and

implementation if the decision is made to move forward.

EMS service delivery should be predicated on performance measures.

EMS transport in the CCCFPD will continue at predicted growth rates for the

foreseeable future as outlined in the Fitch report.


August 2014 Page 6

Chapter III

Background

The concept of performing an assessment of the feasibility of EMS transport by the

CCCFPD was initiated when The Ludwig Group, LLC was contacted and asked to

submit a proposal with a fee cost.

Through a series of telephone calls and emails in May and June 2014 with fire district

officials, the scope of the study, its goals and objectives, and the obtaining relevant data

was done.

A great deal of data and many reports were requested of, and provided by the CCCFPD,

including, but not limited to, budgets, capital equipment, frequency of runs, standard

operating procedures, and memorandums. Some data was available from the start, and

some data was produced at the request of the principal consultant as the study

progressed.

In performing the requested analysis, The Ludwig Group also compared EMS service

delivery within the CCCFPD to other communities in the region that do EMS transport

such as the San Ramon Fire Protection District and the Moraga-Orinda Fire Protection

District

The CCCFPD

The CCCFPD is a dependent special district of Contra Costa County, California and was

created in 1964 when two fire districts merged together. Since then, ten more fire

districts merged into the CCCFPD with one of those districts reforming as an

independent fire district in 1999. The District is administered by the County Board of

Supervisors who also serve as the Board of Director for the District.


August 2014 Page 7

The CCCFPD serves the following cities in the County: Antioch, Clayton, Concord,

Lafayette, Martinez, Pittsburg, Pleasant Hill, San Pablo, and Walnut Creek. They also

serve these unincorporated communities: Bay Point, Clyde, El Sobrante, Pacheco, and

Port Chicago.

The fire protection district is located in Contra Costa

County. Contra Costa County itself is located in

central and the western part of California near San

Francisco. Contra Costa County had a 2010 census

population of 1,049,025 and a land mass of 804

square miles.

The CCCFPD is an all-hazards fire agency that

operates from 23 fire stations with 24 pieces of fire

apparatus that are ALS-capable with a

firefighter/paramedic. Those also operate specialty

units such rescues, wild land units, trench rescue unit, a boat, and an air support

services vehicle. There are also two fire stations that are regularly staffed by reserve

firefighters.

EMS Delivery in Contra Costa County

EMS in Contra Costa County is administratively overseen by Contra Costa Health

Services. Contra Costa Health Services is a county government operated agency that

deals with all public health matters in the County including EMS. This agency

coordinates all EMS administrative issues, licensing of personnel and ambulances,

outreach programs, prevention programs, etc.

Contra Costa Health Services enters into and monitors ambulance service agreements

with ambulance providers to provide emergency service within the County when

requested through the communication center(s). The County is divided into response

areas and the three agreements/contracts currently are in place specify the response

areas with the emergency service ambulance providers.


August 2014 Page 8

There are a total of three emergency response providers operating in the County who

when requested by the communication center(s) respond to 911 emergency calls. They

are:

American Medical Response

Moraga-Orinda Fire Protection District

San Ramon Valley Fire Protection District

There are a total of eleven other ambulance providers in the County who provide non-

911 inter-facility transports between medical facilities or discharges from a medical

facility. These providers transport patient between medical facilities or discharges from

medical facilities for such scheduled care events as kidney dialysis, chemotherapy, and

radiation treatments. According to the 2014 Fitch Report, there is estimated to be more

than 50,000 such transports each year in Contra Costa County. They are:

American Medical Response

Bay Medic Ambulance

Arcadia Ambulance

California Ambulance

Falck Northern California

Falcon Critical Care Transport

Knight Star Ambulance

NorCal Ambulance

ProTransport-1

Royal Ambulance

Rural/Metro of Northern California, Inc.

Westmed Ambulance

As emergency service providers, American Medical Response, San Ramon Valley Fire

Protection District and the Moraga-Orinda Fire Protection District all have Ambulance

Service Agreements and/or Contracts” with the County to respond ambulances when

requested by the County’s designated public safety dispatch center(s) to designated

response areas.


August 2014 Page 9

Figure 1 reflects the four-year call volume of EMS 911 calls in Contra Costa County.

Figure 1 – County-Wide EMS Response1

Traditionally, there will always be a certain percentage of patients who are not

transported by ambulance after a response has been made by emergency service

providers. In most of these cases the patient is refusing care and/or transports. In other

cases, the patient is deceased, it is a false call, or no one can be found. With the

exception of a few episodic events such as deceased patients were unsuccessful

resuscitation has been attempted, government and private insurance payers will not

reimbursement ambulance services for no transport. Some ambulance services do

charge for no transports if some treatment was rendered but the collection on these from

commercial insurance providers is very low. Medicare or Medi-Cal will not pay for such

services.

_________________________

1Source – 2014 Fitch Report

2009 2010 2011 2012

Calls 77,872 78,850 79,833 86,134

Transports 58,292 59,538 61,390 64,530

0

20,000

40,000

60,000

80,000

100,000

County-wide EMS Response


August 2014 Page 10

In an attempt to obtain a true picture of the number of EMS calls and transports in the

Emergency Response Area (ERA) that the CCCFPD would be interested in submitting a

response to the RFP when issued if this study determines the financial feasibility, the

total number of calls responded to and transported by the San Ramon Valley Fire

Protection District and the Moraga-Orinda Fire Protection District were subtracted from

the overall figures found in Figure 1 for County-wide EMS response and transport. The

numbers in Figure 2 are representative of the historical number of EMS responses and

transports in what is now ERA 1, 2, 5 with the exception of portions of ERA 1 that are

contained with the Moraga-Orinda Fire Protection District. This graph is found on the

following page.

Figure 2 – EMS Response in ERA 1, 2, and 52

2009 2010 2011 2012 2013

Calls 67,695 69,761 70,927 74,863 74,380

Transports 53,932 55,337 56,853 59,984 58,911

010,00020,00030,00040,00050,00060,00070,00080,000

EMS Response in ERA 1,2 and 5

____________

2With the exception of portions of ERA 1 that are contained with the Moraga-Orinda Fire Protection

District.


August 2014 Page 11

Chapter IV

Proposed Fire-based EMS Transport Model

This section of the report will deal with the proposed fire-based EMS transport model

that the CCCFPD would have to operate if they were to determine financial feasibility

with pursuing the agreement/contract with the County to provide emergency ambulance

service to ERAs 1, 2, 5 and starting January 1, 2016.

There are various fire-based EMS models that are available to fire departments to

operate. The determination should be made upon the service levels needed to fully

operate the system efficiently, while maintain response times, quality of care, and

financial solvency.

Models

There are various models that fire agencies can operate. They are:

Cross trained/multi-role firefighter/paramedic: This model allows for all

paramedics to be also be cross-trained as firefighters, and certified in various other

hazard mitigation including hazardous materials. In this role, the

firefighter/paramedic can either be assigned to a piece of fire apparatus and/or an

ambulance. This employee is exempt from the Fair Labor Standards Act and

allows the firefighter to work up to 56 hours in a work week without being paid

overtime for any hours worked after 40 hours.

Single Role Paramedic: This model limits the function of the employee to the

paramedic role. The paramedic is not engaged in any firefighting or mitigation of

hazardous events and can only be assigned to the ambulance. This employee

must be paid overtime for any hours worked greater than 40 in one week.

Contract Paramedic: This model is used very seldom in the United States and is

mostly found in the upper mid-West. This model is such that a private company

provides the paramedic who works on the fire department ambulance. This

paramedic wears the fire department uniform and patch. Although they appear to

be a fire department employee, they are actually a contracted employee from a

private company.


August 2014 Page 12

In consultation with officials from CCCFPD regarding the three potential system models,

the decision was made to use the single role model as a foundation for determining

costs associated with all three models.

An EMS System

The modern model for delivery of emergency medical services (EMS) has been evolving

since the mid-1960s. Throughout the country, during this 40+ year evolutionary process,

EMS systems have developed to the point that there are commonly accepted

components that can be used to describe EMS systems. These industry components

originate in a variety of sources. Some of these sources are; the original “15 Essential

Components of an EMS System” that were identified in the federal Emergency Medical

Services Act of 1973, and in the “10 EMS System Standards” once used by the U.S.

Department of Transportation to evaluate state EMS systems. In addition, these

components can also be found in the standards of the Commission on Accreditation of

Ambulance Services and in the EMS accreditation standards developed by the

International Association of Fire Chiefs, the contracting guidelines developed by the

American Ambulance Association and the National Fire Protection Association’s NFPA

450 – Guide for Emergency Medical Services and Systems. The NFPA is clear to

identify that this document is a guide and not a standard.


August 2014 Page 13

If you were to review each of these documents, clear common denominators would

emerge that define the components of an EMS system. They are:

System Analysis and Planning

Finance

Medical Direction

Quality Management

PIER Programs

Communications

Equipment and Facilities

Human Resources

Operations

All of these components will be examined when helping define what the CCCFPD

system may look like and what the costs would be associated with these different

components.

Emergency medical services should reflect the entire continuum of patient care,

treatment, and transportation for patients outside of the hospital environment. In order to

succeed, an EMS system may include multiple providers and agency(s) required to

ensure prompt response, effective treatment, and appropriate medical transportation for

patients.

The participants in an effective emergency medical service system include members of

the communities, patients, first responders, other public safety agencies such as law

enforcement and fire services, ambulance services, and their Emergency Medical

Technicians (EMTs) and paramedics, physicians overseeing patient care and protocols,

dispatch centers, and medical personnel at hospital emergency departments. The

patient’s needs in emergency events can only be met through the effective cooperation

of multiple individuals and agencies.

How well an EMS system meets each of these components determines the quality of the

overall system.


August 2014 Page 14

Providing quality EMS involves the sophisticated integration of a variety of public safety

resources into a system. Any one of these components, segregated from the rest will

result in less than satisfactory outcomes. It is only through the combination of these

components that true system effectiveness can be achieved.

An EMS or medical transportation system is comprised of multiple components. Its

functioning is based upon the coordination and cooperation of, sometimes, multiple

agencies and individuals working together with a common plan to achieve the desired

outcome.

EMS systems have as their primary goal, to deliver the most appropriate emergency

care to someone in need, in a timely manner. The two key operative phrases are “time”

and “level of care.”

Time is the issue that most significantly effects survival for patients experiencing life

threatening emergencies. The most sophisticated, well-trained EMTs and paramedics

do not do a patient any good if they do not arrive in time. In order to best serve the

public, any EMS system must get help to people within clearly established time limits.

Getting the right level of care to people is almost as important as the time issue. The

most important services that can be provided to a patient are the basic-level skills or

basic life support. Sophisticated, advanced life support paramedics in ambulances is the

second level of care that is required in order to achieve excellent patient outcomes.

Proposed CCCFPD EMS System

This section of the report will detail the various components of a potential EMS system in

CCCFPD and any costs associated with that component.

System Analysis and Planning

System analysis and planning provides for a foundation of how the EMS system will be

designed and how structural components will interface to bring about quality within the

system and provide for the proper resources within the acceptable period of a response

time.


August 2014 Page 15

Ambulance Staffing: The staffing will consist of one paramedic and one EMT on

each ambulance – an increase over the current levels that allows less than one

paramedic and one EMT on each ambulance.

Response Time Standard: This plan calls for sufficient resources within the system

to meet the current County contract with AMR to have a:

Priority 1s – Life-Threatening Responses

o Ten minutes and zero seconds (10:00) to calls originating in ERZ A,

except for rural designated areas as set forth in Exhibit C of the current

contract.

o Eleven minutes and 45 seconds (11:45) to calls originating ERZ’s B,C,D,

and E except for rural designated areas as set forth in Exhibit C of the

current contract.

o Sixteen minute and 45 seconds (16:45) to calls in rural-designated areas

in Bethel Island and Discovery Bay.

o Twenty minutes and zero seconds (20:00) to calls within other rural-

designated areas as set forth in Exhibit C of the current contract.

o All QRV response requirements can be handled with fire ambulances.

Priority 2s – Non-Life Threatening Emergency Response

o All responses in designated urban/suburban areas will be fifteen minutes

and zero seconds (15:00) and thirty minutes and zero seconds (30:00 in

designated rural areas.

Priority 3s – Non-Emergency Response

o All non-emergency response requests with a maximum response times of

thirty minutes and zero seconds (30:00) in designated urban/suburban

areas and a maximum response time of forty-five minutes and zero

seconds (45:00) in designated rural areas.


August 2014 Page 16

Communities Served: This proposal examines providing services to the followingcommunities:

Antioch Bay Point Bethel Island Byron Clayton Concord Crockett Discovery Bay Brentwood El Cerrito El Sobrante Hercules

Kensington Lafayette Martinez Oakley Pinole Pacheco Pittsburg Pleasant Hill Richmond Rodeo San Pablo Walnut Creek

Finance

The goal of any EMS system is to make maximum use of potential revenue streams.

The goal of any system is a careful balance between the community quality care,

response-time standards and operational efficiency. While it would be wonderful to park

a paramedic-staffed ambulance on every street corner, it is extraordinarily expensive.

Alternatively, it would be inappropriate to have unacceptable levels of mortality and

morbidity in the system. A balance that is “right” for the community is what needs to be

sought out and achieved.

Aggressive analysis and management of both system expense and system revenue will

achieve this balance.

This proposal examines revenue and expenditures in Finance and Budget chapter..

Medical Direction

All EMS systems and providers should have the benefit of qualified medical direction.

This statement is true regardless of the level of service provided and helps ensure that

EMS is delivering appropriate and quality health services that meet the needs of

individual patients and the entire population. Generally, the role of medical direction is to

establish, implement, and authorize system-wide medical protocols, policies and


August 2014 Page 17

procedures for all patient care activities inclusive of criteria-based dispatching and pre-

arrival instructions, first responders, and EMS transport providers.

Effective EMS systems provide a role for the physician EMS medical director. The

physician is involved in many aspects of the operation from establishing the clinical

standards of care to the performance improvement process and continuing education.

The role of the EMS medical director should be defined in writing, and any agreement for

services clearly defines mutual responsibilities and expectations.

Currently CCCFPD does have a part-time medical director but the hours committed to

this position will have to increase. Table 1 on page 28 reflects that increase.

Quality Management

A comprehensive Quality Management program is required to effectively maintain an

EMS system. There are two distinct components to such a system: Operation

Performance Improvement and Clinical Performance Improvement.

An effective Quality Management program identifies standards and puts in place the

necessary data gathering, analysis, and feedback processes to ensure that the system

is constantly improving. Quality Management, clinical quality, and data reliability is a

mind-set. The concept is that the system is constantly examining itself and constantly

changing for the better.

Currently CCCFPDD has one quality improvement nurse who does random and focused

audits of patient care reports. CCCFPD reviews all STEMI calls, cardiac arrests, all

trauma, and all pediatric calls. If a paramedic falls below the acceptable standard, they

are remediated and if a crew falls below the acceptable standard, they receive focus

training. Additionally, positive reinforcement is provided for crews who perform

exceptionally.

Table 1 on page 28 reflects an increase in quality improvement, training and supervision

personnel who would all be engaged in quality improvement.


August 2014 Page 18

PIER Programs

Public Information, Education, and Relations provides for essential information to be

conveyed to the public at large: the business community, schools, citizens, and even

visitors. An effective public information, education, and relations (PIER) program is a

critical activity actively integrated into the functions of an EMS system. Through analysis

of information and about public health threats and physical risks in the community, the

PIER programs are selected or developed where they do not exist and deployed in the

most effective and efficient manner possible. New technologies and techniques proven

in other jurisdictions are explored and utilized when advantageous. A collaborative

approach, utilizing materials, expertise, and guidance from other agencies can enhance

the message and its retention by citizens, all of whom are potential consumers of

emergency medical service care and disaster response services in CCCFPD. The focus

of PIER programs is more diverse than prevention; their messages can be targeted to

special populations, such as children during Halloween for safe trick or treating or fall

injuries for senior citizens.

Currently, CCCFPD has started a program with Rite Aid where they will be doing blue

immunizations for the public as well as medication reconciliation for the elderly. Other

programs CCCFPD does provide includes an aggressive pool safety program that

includes a pool safety fair. Future plans also include a hands-only CPR campaign.

Communications

A communications system and/or center are essential to the successful operation of any

fire/EMS agency. Without an effective communications center and radio

communications, the ability to evaluate a 9-1-1 call, transmit the alarm, transfer

information between the communications center and the scene, or engage in on-scene

communications would be non-existent.

The communications center in a 911 system is also essential when evaluating 911

medical calls to make the determination to send the right resource to the right call. This

is accomplished using a criteria-based dispatching system to assess the nature and

severity of the medical emergency.


August 2014 Page 19

Currently, CCCFPD does operate and dispatch all 9-1-1 calls in the current contract

area. After evaluation of the call, if it requires an ambulance dispatch, the call is routed

to the AMR communications center in Sacramento. If the call warrants a first responder

company, CCCFPD handles the dispatching and management of the first responder

company for the medical emergency.

Based on approximately 74,000 medical calls per year, it will be necessary to place one

more additional dispatcher per shift in the communications center to manage the

increase workload. The budget item for this will be included in another chapter.

In checking with the current CAD software, upgrades have been on-going and if

CCCFPD were to enter into a contract to provide EMS transport, there would be no cost

to the CAD software attributed to the implementation of an EMS transport program.

Resource Management

Resource management in any EMS system includes the capital items needed to achieve

a balance of expected response/performance standards with human resources to meet

those standards. The critical pieces of pieces in resource management include fire

stations, ambulances, and critical pieces of more expensive equipment in an EMS

system such as monitor/defibrillators. Resource management also includes logistical

support such disposable medical supplies, uniforms, maintenance of the ambulances,

maintenance of critical equipment, etc.

The CCCFPD does have existing structures (fire stations) within their District and other

communities they would service under a performance contract also have fire stations

that CCCFPD could operate from when ambulances are not on calls. Additionally, also

available to CCCFPD is a model used by the private ambulance industry called System

Status Management (SSM). SSM is a computer-based system where historical call data

are used to deploy the ambulance fleet for optimal response times and to predict where

the next cluster of calls is likely to occur. Typically this requires “posting” ambulances a

intersections where they can locate on a parking lot. Many private ambulance

companies utilize intersections where a gas station/convenience store is located so that

their personnel can use restrooms and availability to hydration and food.


August 2014 Page 20

CCFPD does have access to 40 fire stations throughout what would be a future

response area if awarded the contract. Figure 3 is geographical visual description of

those fire stations.

Figure 3: Fire Stations Locations Available to CCCFPD

CCCFPD does have the necessary vendors, specifications and contracts in place that

would be necessary to acquire ambulances, monitor/defibrillators, jump bags, portable

oxygen devices, and other equipment necessary to start-up and operate an EMS system

if awarded the contract.

The start-up costs for CCCFPD will be addressed in the Finance & Budget Chapter.


August 2014 Page 21

Human Resources

The personnel standards of a fire department EMS system should be designed to

establish and maintain a competent and well-trained force by recruiting highly qualified

individuals, retaining them, training them, and providing them an interesting and useful

application of their skills and training in the fire service.

Private industry uses labor, material, and capital to produce goods or services that it

sells in order to make a profit. Likewise, federal, state, and municipal governments use

labor, material, and capital to provide services to the public. In either scenario, the key

resource is people, and the administration of this resource is a basic responsibility of

management if the goals of the organization are to be accomplished.

Essentially, human resource management is concerned with maintaining effective

human relations within an organization. As such, personnel administration is an integral

part of the job of all people in the supervisory capacity and is as much a part of their job

as the work that has to be done.

A key source in any fire department is the human resource--the people who actually

make the EMS system work. Fire departments have a number of choices as they

develop. The demographic aspect of the system catchment area often dictates

workforce decisions.

The goal is to recruit, educate, and retain fire department personnel in sufficient

numbers to provide service throughout the system that meets the performance

standards agreed upon by the community and the department.

A significant number of human resources will be needed in order to operate an EMS

transport system. This does not only include those who would be assigned to the

ambulance, administrative, supervisory, and support personnel.

Future explanation and breakdown of positions will be explained in a later chapter.


August 2014 Page 22

Operations

Safe and reliable response and transportation is a hallmark of effective EMS systems.

The system should make effective use of resources and provide for the smooth

integration of ground and air transportation systems. If CCCFPD enters into the EMS

transport business, the primary mission should be to provide emergency medical

services to the citizens and visitors of the response area. Any fire department that

delivers these services understands the importance of reliable and consistent levels of

service. When a citizen places a call to the Communications Center, a whole series of

events begins. Each of these events must work cohesively and as a group in order to

allow for a quick and efficient response to the scene of any emergency. Delivering this

service results from the teamwork of dispatchers and responding units.

The goal of any system is to reduce the amount of time that it takes from the time the

emergency is identified until the fire and EMS units are on the scene. At that point, the

level of training and the expertise of the personnel become the deciding factor for the

outcome of the medical emergency. The key to this attribute is the balance of a well-

trained, fast-response system with the budgetary requirements to fund the necessary

equipment, training, and personnel.

Key to the success of the operations piece of any EMS system is the response time, the

staffing levels, and the quality of the care. Response times are quantitatively measured

in several different methods but it is not effective or cost-wise to the have the same

number of ambulances on duty 24 hours of a day. Generally, EMS activity is predictable

based on the numbers of population and the activity of that population. Given the same

numbers of people, traditionally EMS systems will have lesser call volume when the

majority of the population is sleeping versus when they are awake. Therefore, the

practicality of having the same number of ambulances available at four o’clock in the

morning is not the same as four o’clock in the afternoon.

An analysis of the EMS runs in the Priority 3 and 2 categories were examined for

calendar 2013. CCCFPD dispatches first response companies not only for their District

but for other fire agencies within the current response. The only areas were EMS run

data was not available from the CCCFPD Communications Center was for Richmond


August 2014 Page 23

and El Cerrito. However, through other sources we were able to ascertain that the total

amount of EMS calls in those two communities during 2013 was 15,146. This averages

approximately 2 calls during every 24 hour period.

Figure 4 reflects by the hour and the run volume per hour and Figure 5 reflects the

average calls per hour. This is important in determining the number of ambulances that

would be potentially needed in order to operate an EMS system while taking into

consider the financial effectiveness.

Figure 4


August 2014 Page 24

Figure 5

Based upon the data in Figures 4 and 5, the average number of EMS calls per hour at its

highest peak is approximately 11 and and its lowest is 5. Since there are flucations in the

days of the week and the seasons of the year with summer months being traditionally

slightly busier and other untoward events related to weather, the exact science of how

many ambulances are needed to operate the system can be challenging but error should

always benefit the patient. Other factors that impact the number of ambulances

available for call include the assumption that an EMS call can take greater than one hour

to complete. Therefore, for purposes of this report,CCCFPD could effectively and

efficiently operate 23 advanced life support ambulances on a 24-hour schedule.

The value also of an EMS system operated by the CCCFPD allows for mobilization of

additional ambulances during surge periods. During periods of surge if no ambulances

are available, spare ambulances can be parked at fire stations and firefighters can

transition from the engine or ladder company to an ambulance. In effect, if five spare

ambulances were parked at fire stations, a maximum of five ambulances during the peak

hours could be mobilized, bringing the total of ambulances during peak periods to 28.

Effective field supervision is also necessary for an effective and quality-proven EMS

system. Therefore, for purposes of determining expenditures, it is recommended that


August 2014 Page 25

there be one field supervisor in the three different areas of CCCFPD, east, and west on

twelve hour shifts.

Since the scope of this report deals mainly with the financial feasibility of CCCFPD

implementing an EMS transport model, this section will not go in detail of where

ambulances would be housed or deployed.


August 2014 Page 26

Chapter V

Proposed Expenditures

In order to determine the projected cost for the CCCFPD to operate an EMS transport

system, it is important to determine the total number of ambulances, the staffing of those

ambulances, the support for such an operation, and other costs associated with

operating an EMS system.

Costing Out an EMS System

How do you determine the cost to operate an EMS system?

Unfortunately, there is no national consensus on the true cost of running and operating

an EMS system. Attempts have been made to determine how to cost an EMS system.

An effort by the National Association of EMS State Officials and the Medical College of

Wisconsin called EMS Cost Analysis Project (EMSCAP) was designed to create a

framework that would determine the cost of providing EMS care from a societal

perspective. The framework includes a 12-step tool in the form of a workbook for

determining the cost of an EMS system. Some contend that the framework is not

complete and still needs to be revised.

However, there are three generally accepted methodologies for costing out an EMS

system.

The first deals with taking the total EMS budget and dividing it by the number of EMS

calls. As an example, if the EMS budget is $1,000,000 and there were 2,000 calls in the

system, you will divide $1,000,000 by 2,000 calls and the average cost to run a call

would be $500.

The second method is somewhat more complicated and provides a cost per hour to run

an EMS system versus the first method which is the cost to run each EMS call.


August 2014 Page 27

In the second method, you determine the number of unit hours and divide into the overall

EMS budget. As an example, if you have two ambulances on duty for 24 hours, the total

unit hours available are 48. You would then multiple 48 by the number days in the year,

which is 365. The product of 365 times 48 equals 17,520. If the EMS budget is

$1,000,000, you will divide $1,000,000 by 17,520 and the cost to operate each

ambulance per hour in the system is $57.06 per hour.

A third method is to take the amount of EMS revenue collected and divide it by the

number of calls to determine the cost generated by call. As an example, if an EMS

system collected $500,000 on 2,000 EMS calls, the total amount of revenue generated

per call would $250.

Personnel Costs

In Chapter IV, it has been already been determined that a base of 23 ambulances will be

required 24 hours a day. Using 12 hour shifts and a factor of one employee for every

four to account for vacations, sick leave, injuries, etc, the base number of employees

needed to operate the ambulances would be 230. This number was determined using a

four platoon system, operating 12 hour shifts.

A base of 23 ambulances 24 hours a day over four platoons = 184 employees.

Using a factor of one extra employee for every four employees = 46 employees

A total of 230 EMTs and paramedics would be required.

Over all this equates to 200,928 unit hours in a year or 3,864 unit hours per week.

Additionally personnel such as supervisory personnel will also be required. Using a

concept of three field supervisors for each of the three zones on all four platoons, a total

of 12 field supervisors will also be required.


August 2014 Page 28

Additional personnel to support the operation are necessary including a medical director,

quality improvement personnel, training personnel, mechanics, dispatchers and support

personnel will also be necessary. Salaries were determined by examining the current

salaries and benefits associated with AMR personnel who are assigned to a twelve hour

shift, working a 48-hour work week. Table 1 reflects the anticipated costs for personnel.

Table 1 – Human Resource Costs

EmployeesProposed Salary w/

Benefits Extended Price

115 EMTs $76,876.80 $8,840,832.00 *

115 Paramedics $90,854.40 $10,448,256.00 **

12 Field Supervisors $110,000.00 $1,320,000.00

2 RN QI Coordinator $168,426.00 $336,852.00

3 Dispatchers $170,462.00 $511,386.00

2 Mechanics $124,698.00 $249,396.00

3 Training Personnel $120,000.00 $360,000.00

1 Medical Director $100,000.00 $100,000.00

2 Support Personnel $120,000.00 $240,000.00

$22,406,722.00

* EMT salary is based on prevailing wage of $22 per hour and a 40% benefits package totaling $30.80 per

hour, on a 48 hour work week. This equates to $76,876.80 pay and benefits package.

** Paramedic salary is based on a prevailing wage of $26 per hour and a 40% benefits package totaling

$36.40 per hour, on a 48 hour work week. This equates to $90,854.40 pay and benefits package.

Other Costs

There will be other costs associated with the operation of the EMS system. One of the

largest costs would be the commission paid to a billing company for the billing and

collection of EMS reimbursement payments. Based upon anticipated revenue of

$31,635,744.00 (found in the next chapter) and a normal and customary fee within the

profession of nine (9) percent, (could be higher or lower) the commission paid to a billing

company would be $2,847,216.96.


August 2014 Page 29

Startup Costs

Whenever an EMS transport starts operation, there is generally startup costs associated

with the operation. These startup costs generally is a tremendous outlay of capital

money to purchase ambulances, monitor/defibrillators, stretchers, airway equipment,

suction equipment, jump bags, oxygen distribution systems, etc. The preferred method

for such as a purchase is to purchase ambulances with the equipment supplied by the

manufacturer of the ambulance. Thus, all ambulances would be delivered fully

equipped. Since it has already been determined that 20 ambulances would be required

at peak operations with five ambulances sitting in reserve at fire stations for surge

periods, it is recommended that a total of 35 fully-stocked and loaded ambulances be

purchased to staff the fleet and provide sufficient reserves for times when ambulances

are being serviced for maintenance.

Research on pricing for Sprinter van ambulances fully-loaded to the advanced life

support level indicates an approximate pricing of $150,000 per ambulance or a total of

$5,250,000. Using good business practices, this amount can amortized over a five

year period at 5.25 percent interest for a monthly payment of $100,281.10 or a yearly

budget amount of $1,203,373.20 through financing typically available through the

ambulance manufacturer. This amount is reflected Table 2 on the following page as a

budget line item.

Other costs associated with running and operating an EMS system, salaries,

professional fees for ambulance reimbursement, and capital acquisition through leasing

are found in Table 2 on the following page.


August 2014 Page 30

Table 2 – EMS Budget

Account Number Description Amount

1101 Salaries & Benefits $22,406,722.00

2100 Office Expense $35,000.00

Overtime $500,000

2102 Books-Periodicals-Subscriptions $5,000.00

2130 Small Tools and Instruments $2,000.00

2131 Minor Furniture & Equipment $300,000.00

2132 Minor Computer Equipment $50,000.00

2140 Medical & Lab Supplies $500,000.00

2150 Food $5,000.00

2160 Clothing & Personal Supplies $50,000.00

2190 Publications & Legal Notices $1,000.00

2200 Memberships $3,000.00

2251 Computer Software Cost $30,000.00

2270 Maintenance - Equipment $75,000.00

2271 Vehicle Repairs $800,000.00

2272 Vehicle Fuel/Oil $350,000.00

2273 Tires $75,000.00

2301 Auto Mileage Employees $3,000.00

2303 Other Travel Employees $25,000.00

2310 Non-County Professional Services $2,847,216.96

2477 Training Supplies & Courses $35,000.00

2479 Other Special Departmental Expenses $10,000.00

2490 Miscellaneous Services & Supplies $10,000.00

3616 IT Data Processing Supplies $500.00

3617 IT Maintenance Radio Equipment $15,000.00

3618 IT Other Telecommunications Charges $20,000.00

Capital Lease (Ambulances with Equipment) $1,203,373.20

Total $29,356,812.16


August 2014 Page 31

The following series of equations provides a general application of costing out the EMS

system.

Performance Indicator

Unit hours produced (weekly): (note: 168 hours in a week)

168 x 23 units available each day for 24 hours = 3,864 hours per week

58,911 transports for year 2013 or 1,133 transports per week

1,133 transports per week divided by 3,864 (unit hours per week) = .29 unit hour

utilization (UHU) ratio. This unit hour is well within acceptable industry standards.

Based upon projected revenue of $31,635,744 and budget expenditures of

$29,356,812.16 the approximate revenue in excess of expenditures is projected to be

$2,278,931.84.


August 2014 Page 32

Chapter VI

Anticipated Revenue

Patient charges for ambulance services are determined in a number of ways. Many of

the decisions are not made through logical business rationale, but are determined,

limited, or impacted by local political decisions. Many ambulance services base their

charges on the amount that they expect to be reimbursed by Medicare, and others have

simply followed their price structure of other services within the community.

However, while all of these factors may affect the ultimate charge structure, the first step

in establishing a rate schedule is to clearly establish the cost of providing the service.

Any business offering a product or service to consumers will base its prices on the cost

of delivering those goods or services, and EMS should be no different. Only after the

actual costs have been established should the positive impact of subsidization on

charges be determined.

The fiscal stability of a medical transportation service is largely determined by the

system structure in which it functions, its design and its characteristics. Certain key

areas must be examined fully in order to evaluate the financial aspects of a system.

The unique characteristics of a system include its call volume, geography, population,

demographics, and density. A large population generating a high volume of patient

transports allows the fixed costs of providing the services to be distributed over a larger

patient base. Similarly, a given population in a small geographic area requires fewer

medical transportation resources than an equal population dispersed over a large

geographic area. In addition to impacting service usage, population demographics affect

the ability of the service to recover revenue.

For example, revenue for a service with a high percentage of consumers more than 65

years of age will be significantly impacted by the local Medicare reimbursement policies.

Additionally, lower income areas historically have a higher utilization rate for EMS than


August 2014 Page 33

more affluent areas, while revenue from these lower income areas is significantly

impaired. This directly affects utilization as well as revenue recovery potential.

Even though equitable comparison of one system to another is difficult, each system

does have similar associated costs that can be determined. The costs of the EMS

system are summarized as operating, capital, bad debt, and reserve costs.

The question of financial efficiency is directly related to the program’s information

gathering and analysis capability.

It cannot be stressed enough - Proper documentation by field providers is

essential to maximizing ambulance reimbursement for the EMS transport

program.

EMS administration should ensure that all paramedics who transport a patient to the

hospital are being as detailed and accurate as possible when completing a patient

report. Many reimbursement agencies, whether it is a Medicare agency, the State, or a

private insurance company will refuse payment based upon “medical necessity.” Many

claims are rejected because of the lack of documentation supporting the “medical

necessity” of the transport

Additionally, the EMS administration of the chosen system needs to develop a method in

order to reconcile that all transports are actually being billed for reimbursement. Failure

to bill a patient that has been transported will result in lost revenue.

Collection rates will vary from place-to-place based upon the expertise of the collection

company and how the collection rate is measured. The base rate does NOT reflect what

will be collected on each call.


August 2014 Page 34

Revenue Projection Findings & Recommendations

The Ludwig Group has projected that if CCCFPD implements an EMS transport

component, approximately $31.63 million will be collected. We have based this

estimated projection on a detailed analysis of the following data points and /or use of

certain tools:

1.) Total annual transport volumes within these categories; Basic Life Support –

Emergency (BLS), Advanced Life Support -1 (ALS1), and Advanced Life Support

– 2 (ALS2),

2.) A proprietary “EMS Revenue” calculation spread sheet,

3.) Existing fee schedule amounts (for AMR units in place),

4.) Estimated “payor mix” within Contra Costa County (independent research and

those gleamed from many of the source documents provided by County

personnel),

5.) A list of the current Third Party reimbursement amounts for the local area.

In the table 3 below, we have inserted the transport call types and the annual volumes

within each of these types. These volumes were based on Computer Aided Dispatch

(CAD) run report numbers and other documents received from the CCCFPD. We

calculated an average “revenue-per-run” number utilizing a “proprietary” EMS revenue

calculation spread sheet associated with this effort.

This spread sheet calculates calls based on type and at a set percentage above the

National Medicare rates. It also includes mileage and any other associated changes

within the final “revenue-per-run” number. This is based on an average of five (5) miles

per trip. In the County’s case, mileage results could be higher, but it will only account for

a few additional “thousands” in terms of the final revenue collected.

We have also only utilized the existing fee schedule numbers currently in place to

perform our calculations; 1.) BLS e - $813.00, 2.) ALS1 e - $1822.00, 3.) ALS2 e -

$1,822.00, and 4.) $25.00 per loaded mile transported. Although we have made one

small addition—a $100.00 charge for Oxygen usage on transport. This is due to the fact


August 2014 Page 35

that both private insurance companies (approximately 90% of applicable charges) and

Medi-Cal ($11.86) provide a source of reimbursement for this type of charge, even

though Medicare does not.

Table 3 - Estimated Revenue Projections

Transport Call Types Annual Volumes Revenue Per RunRevenue

Totals

ALS 1 35,347 $537 $18,981,339.00

BLS Emergency 22,386 $537 $12,021,282.00

ALS 2 1,179 $537 $633,123.00

Totals— 58,911 $31,635,744.00

It is also important to note that the revenue numbers listed above are predicated on the

County adopting the “recommended level” of EMS billing and collection efforts within the

overall program. We are recommending that the County adopt an “aggressive” billing

and collections approach. This is the same approach that AMR utilizes as the current

vendor. This would mean that a series of notices / invoices would go out at regular

intervals, requesting payment of any remaining co-pays or deductibles from patients. It

would also mean that anyone without a form of healthcare insurance (the “Self-Pay”

category) would receive a bill for the total amount due, based on level of services /

treatment provided at the time of transport and payment would be required.

A minimum of at least three notices / invoices would be mailed out, but it they were

ignored, then a series of collection efforts would occur. This also means here would be

dunning letters, phone calls, or the reporting of the “uncollected” or “unpaid” balances /

amounts to a credit bureau.

The specific details on the recommended EMS billing and collections program and / or

other types of programs can be found later in this section. We also provide details of the

potential “negative” or “positive” effects on revenue generated from each program

detailed.


August 2014 Page 36

The table 4 below reflects the current “payer mix” within Contra Costa County. This data

was obtained based on our independent research of the California EMS transport market

place and through numerous source documents provided by CCCFPD.

Additionally, this data was compared against payer mix results that were received from

other municipal fire departments, which were surveyed as part of this study. This effort

was undertaken to reassure ourselves that even though, the Contra Costa County payer

mix data was from collative sources, it could be used to reflect an accurate and relevant

set of estimates—overall. We believe that it is reflective of the final results that will be

experienced by the County; if this program is implemented and underway.

Table 4 - Payer Mix Projections

Payer TypesPercentages within Contra Costa

County

Medicare 33%

Medicaid 15%

Third-Party Insurance 25%

Self-Pay / Patient 27%

We also believe that with the continued implementation of the Patient Protection and

Affordable Care Act (PPACA) or commonly referred to as the Affordable Care Act, these

numbers (in terms of the percentages of “insured”), could improve collection rates.

However, there is much uncertainty regarding how this legislation will be implemented;

for example, it could mean an improvement in the total, overall number of insured

population, but it also might mean that benefits could be removed from plans or the

amounts reimbursed for existing benefits could be reduced. No one can say for sure—at

this point—exactly what will happen regarding final application of the legislation and

implementation of it.

In the table 3 listed on the following page, concerning the data contained within the

“Third-Party Reimbursement Data” for Contra Costa County, CA, there are some specific

things of note:

1.) Due to Medicare and Medi-Cal being “fixed” fee schedules, in terms of

reimbursement rate, the allowable reimburses the same amount on each

transport, regardless of how high the fees are set at by the County. The only


August 2014 Page 37

variance in reimbursement amount is related to the level of services / treatment

provided to each patient during transport. Medi-Cal does allow for the

reimbursement of oxygen and an additional (second) attendant, in certain

circumstances. Medicare does not. Medicare patients are always responsible for

the remaining 20 percent “co-pay” and any beginning of the new year

deductibles; Medi-Cal patients are not (in most cases).

2.) And, because most of the County’s revenue will come from the “Third-Party

Insurance” category, this overall fee structure should be higher. Insurance

companies will pay approximately 80 to 100 percent (with an average of 89

percent) of “customary and reason” charges, minus any co-pays and / or

deductibles the plan enrollee might be responsible for under their plan(s).

Table 5 -Third-Party Reimbursement Data

BLS Emergency(A0429)

Medicare / Medi-Cal / Insurance

Reimbursements

ALS 1Emergency

(A0427)Medicare / Medi-Cal / Insurance

Reimbursements

ALS 2 Emergency(A0433) Medicare

/ Medi-Cal /Insurance

Reimbursements

MileageMedicare / Medi-Cal / Insurance

Reimbursements

AncillaryCharges; i.e.

OxygenMedicare / Medi-Cal / Insurance

Reimbursements

MedicareAllowable:$420.45

MedicareAllowable:$499.29

MedicareAllowable: $722.66

MedicareAllowable: $7.16

MedicareAllowable: $0

Medi-CalPayment: $118.00


Medi-Cal Payment:$118.00



InsurancePayment: 80% to100% of“customary andreasonable”






August 2014 Page 38

Revenue Project Methodology

The following is a demonstration of the methodology by which the total amount of gross

revenue was derived. In Step 1, we determine the primary payer units.

Step 1 - Determine Primary PayerUnits

Enter TotalTrips: 58,911

Trips by Level of Service

Provided by ABC Agency

ALS EALS 2

E BLS E SCT E Total

Payer Mix 60% 2% 38% 0% 100%

Medicare 33% 11,664 389 7,387 - 19,441PrivateInsurance 25% 8,837 295 5,596 - 14,728

Private Pay 27% 9,544 318 6,044 - 15,906

Medicaid 15% 5,302 177 3,358 - 8,837

100% 35,347 1,179 22,386 - 58,911

In Step 2 on the following page, the number of transports, the payer mix, the base rates,

the collection rates are calculated to produce the financial results of gross and net

charges. Our projections call for a total of $31.6 million in net revenue. Our more

conservative figure of costs per trip of $537 is much less than what is found in the Fitch

report of $575. This equates to an increase of approximately $2.2 million. If CCCFPD

were to collect what the Fitch report predicts, the total revenue collected in one year

would be $33,873,825.


August 2014 Page 39

Projected

Annual Transports

ALS Emergency (60%) 38,718

BLS Emergency (38%) 24,521

ALS2 (2%) 1,291

64,530

Treat No Transport

64,530

Private Rates

BLS Emergency (assumed Medicare approved urban rate of $341.19 times 150%) 813.00$

ALS Emergency (assumes Medicare approved urban rate of $405.17 times 150%) 1,822.00$

ALS 2 1,822.00$

Rate per loaded mile (assumes Medicare approved urban rate of $7.03 times 150%) 25.00$

Average miles per trip 5.00

Average supply charge -$

Private ins. contr. allow 0%

Treat No Transport -$

Payer Mix

(Primary payer gross charge % of total gross charge)

Medicare 33%

Medicaid 15%

Insurance 25%

Patient 27%

100%

Effective Collection Rates

(Cash collected % of net charge )

Medicare 99%

Medicaid 99%

Insurance 89%

Patient 5%

Gross Charges

Annual Dollars 95,057,980$

Per Trip 1,473$

Net Charges

Annual Dollars 60,127,806$

Per Trip 932$

Collections

Annual Collections 31,653,203$

Per Trip 537$

Financial Results

Summary of Significant Assumptions

Contra Costa County, CA

Projection of Annual EMS Collections


August 2014 Page 40

Revenue Projection Prepared for Contra Costa County, CA

Step 1 - Determine Primary Payer UnitsYear Dispatches Transports

Enter Total Trips: 58,911

2009 67,695 53,932

2010 69,761 55,337

ALS E ALS 2 E BLS E SCT E Total 2011 70,927 56,853

60% 2% 38% 0% 100% 2012 74,863 59,984

Medicare 33% 11,664 389 7,387 - 19,441 2013 74,380 58,911

Private Insurance 25% 8,837 295 5,596 - 14,728

Private Pay 27% 9,544 318 6,044 - 15,906

Medicaid 15% 5,302 177 3,358 - 8,837

100% 35,347 1,179 #NAME? - 58,911

Step 2 - Determine Gross Charges, Net Charges & Collections

Medicare/ Medicare/ Medicare/ (100%)

Average Medicaid Medicaid Medicaid Medicare/ (80%)

Private Private Average Supply Gross Allowed Medicaid Medicare Projected Projected

Level of Base Mileage Miles Charge Charge Gross Allowed Mileage Allowed Allowed Approved Collection Cash Net

Service Trips Rate Rate Per Trip Per Trip Per Trip Charges Base Rate Rate Supplies Charge Amount Percentage Receipts Charges

Medicare Trips

ALS E 11,664 1,822.00 25.00$ 5.0 50$ 1,997$ 23,293,763$ 405.17$ 7.16$ -$ 5,143,641$ 4,114,913$ 99% 4,073,763$ 4,114,913$

ALS 2 E 389 1,822.00 25.00 5.0 50 1,997 776,699 722.66 7.16 - 294,990 235,992 99% 233,632 235,992

BLS E 7,387 813.00 25.00 5.0 50 988 7,298,671 499.29 7.16 - 3,952,880 3,162,304 99% 3,130,681 3,162,304

SCT E

19,441 31,369,133$ 9,391,511 7,513,209 7,438,077 7,513,209

Private Insurance Trips

ALS E 8,837 1,822.00 25.00 5.0 50 1,997 17,646,790 89% 15,705,643 17,646,790

ALS 2 E 295 1,822.00 25.00 5.0 50 1,997 588,409 89% 523,684 588,409

BLS E 5,596 813.00 25.00 5.0 50 988 5,529,296 89% 4,921,074 5,529,296

SCT E

14,728 23,764,495 21,150,401 23,764,495

Uninsured/Self Pay Trips

ALS E 9,544 1,822.00 25.00 5.0 50 1,997 19,058,533 5% 952,927 19,058,533

ALS 2 E 318 1,822.00 25.00 5.0 50 1,997 635,481 5% 31,774 635,481

BLS E 6,044 813.00 25.00 5.0 50 988 5,971,640 5% 298,582 5,971,640

SCT E

15,906 25,665,655 1,283,283 25,665,655

Private Pay/Crossover (75%)

ALS E 771,546 5% 38,577 771,546

ALS 2 E 44,249 5% 2,212 44,249

BLS E 592,932 5% 29,647 592,932

SCT E

- 1,408,727 70,436 1,408,727

Insurance/Crossover (25%)

ALS E 257,182 89% 228,892 257,182

ALS 2 E 14,750 89% 13,127 14,750

BLS E 197,644 89% 175,903 197,644

SCT E

- 469,576 417,922 469,576

Medicaid Trips

ALS E 5,302 1,822.00 25.00$ 5.0 50$ 1,997 10,588,074 118.20 3.55 12 783,687$ 99% 775,850 783,687

ALS 2 E 177 1,822.00 25.00 5.0 50 1,997 353,045 118.20 3.55 12 26,131 99% 25,870 26,131

BLS E 3,358 813.00 25.00 5.0 50 988 3,317,578 118.20 3.55 12 496,327 99% 491,364 496,327

SCT E

8,837 14,258,697 1,306,145 1,293,084 1,306,145

Treat No Transport

TNT - - - - 150 - 5% - -

58,911 96,936,282 31,653,203$ 60,127,806$

Xover P (1,408,727) Per Trip 537$

Xover I (469,576)

Gross Chgs 95,057,980$ Aggregate Gross Col. % 33%

Aggregate Effective Col.% 53%

Collections by Payer

Payer Dollars % of Total

Medicare 7,438,077 23%

Medicaid 1,293,084 4%

Insurance 21,568,323 68%

Patient 1,353,719 4%

31,653,203 100%

Trips by Level of Service

Provided by ABC Agency

Payer Mix


August 2014 Page 41

Example of EMS Billing and Collections Programs

Here is the list of four “standard” EMS billing and collection models that are currently

deployed by many different agencies—across the United States:

1.) Insurance Reimbursement (only)

Only invoices sent to insurance carriers

Hardship waivers available for “self-pay” patients

No billing or collection efforts for Medicare’s 20% co-pay or other

insurance co-pays

2.) EMS Billing & Collections (Passive billing efforts)

Co-pays are pursued

Three notices / invoices sent out to patients; 30, 60, & 90 days

3.) EMS Billing & Collections (medium efforts)

Accounts receive same treatment from billing vendor (as listed

above)

However, at the 180 day mark, instead of being written-off, they

are sent to treasurer for collection efforts, as with other County

debts

4.) EMS Billing & Collections (Aggressive billing and collections efforts)

Patients will receive three notices / invoices

At the 180 day mark, will receive a series of “dunning letters”

asking for payment

If no payment received at the 270 day mark, the account will be

reported to credit bureau as a “bad debt”

The Ludwig Group is recommending that Contra Costa County, CA deploy #4 from the

list above. Of the four listed, it will generate the most revenue. It may generate more

controversy than a “softer” path like #1 and #2—as it relates to #3 or #4 with a “harder”


August 2014 Page 42

collections path. Those efforts both deploy more aggressive billing and collections

techniques and can result in an increased level of citizen complaints. The “trade-off” for

more “possible” complaints, is an increase in overall revenues from these additional

efforts. It is also important to note that AMR already deploys this type of program within

the County and this would not be a substantial change from existing policy or procedure.

The variance in revenues generated will range roughly—from 15 to 20 percent, for each

additional level and the more aggressive billing & collection efforts that is associated with

it. And, conversely, there will be a loss of 20 percent for less effort—with the “insurance

reimbursement only” plan. For example; with EMS billing and collection efforts listed in

#2, and we use a hypothetical number of $1 million collected per year with that program;

if #1 was deployed, we would expect them to be 20 percent less—or $800K in total

collections; and if #3 was used, we would expect it to be approximately 15 percent more,

or $1.15 million in total collections. If #4 was implemented, we would expect it to be

approximately 30 percent more than #2, or $1.30 million in total collections.

The process of collecting EMS funding through a reimbursement process is not an exact

science. However, close proximities are possible based upon the best tools and

historical data from calculations done in other communities.

Additional revenue sources are available for CCCFPD including the provision of

providing inter-facility transports and reimbursement through the Ground Emergency

Medical Transport (GMET) program for public agencies. However, for purposes of this

study, the focus was mainly on anticipated revenue through EMS transport

reimbursement.

GEMT Explained

In the simplest terms GEMT is a federally backed program where the unfunded cost of

doing business is reimbursed to an agency by way of federal certified public

expenditures (CPEs). For example, the current rate of reimbursement from Medi-cal for

an ambulance transport is $125.00. The cost of providing that transport is $1,325.00.

$1,325.00 - $125.00 is $1,200.00. Therefore, $1,200.00 is your unfunded liability. 50%

of 1,200.00 is $600.00. $600.00 + $125.00 is $725.00. $725.00 is what a Medi-Cal


August 2014 Page 43

transport will pay to a government agency. This is revenue that will be put back into the

system and it is revenue that the private providers are not entitled to. The California

Ambulance Association publicly acknowledges that private ambulance companies will

not be able to compete for local contracts because of this.

After review of the current legislation and how GEMT would impact CCCFPD, it is

determined based on 8,836 Medi-Cal transports, there is a potential of $7,529,124 in

payments after the first year of operation.


August 2014 Page 44

Chapter VII

Conclusion

This financial feasibility study for CCCFPD has looked at all the costs of running and

operating an EMS system, while also generating revenue to sustain the costs. The

study does reflect an opportunity for CCCFPD to implement an EMS transport system

that would generate revenue in excess of expenditures to sustain the operation and

provide value to the existing system.

CCCFPD has also demonstrated their intent to enter into an EMS transport program for

the “right reasons.”

Having worked with officials from CCCFPD, as well as others, the principal consultant is

confident that the desire to take the tough steps needed to look further at the prospect of

operating an EMS transport system by the CCCFPD is present. The challenge will be

with the decision-makers on which path they wish to follow.

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A Comprehensive Assessment of the Financial Feasibility of ...64.166.146.245/docs/2014/CCCFPD/20140909_477/19221_Ludwig R… · 09/09/2014 · By determining the financial feasibility,