Published in the December 28, 2016 edition

By MAUREEN DOHERTY

LYNNFIELD — A change in the method used to set the town’s ambulance rates and its collection practices on past-due bills proposed by Fire Chief Mark Tetreault was unanimously approved by the selectmen Dec. 19.

Tetreault’s proposal to abandon the current “a la carte” pricing system in favor of a “bundled” pricing system was taken under advisement by the board Nov. 7. The chief invited Bill Mergendahl, the president and CEO of Pro EMS Solutions of Cambridge, the town’s EMS billing provider, to the selectmen’s meeting last week to explain his proposal in more detail.

Tetreault said after posing some of the questions to Mergendahl that the selectmen had raised at the previous meeting he “thought they deserved more of a technical answer than what I could give so I invited Mr. Mergendahl here tonight to answer any questions you may have.”

Selectmen Chairman Phil Crawford said among the questions he had were the town’s average current bill today as well as which a la carte services are being paid now on a regular basis and how does it “compare to what we are being asked to do?”

Mergendahl said Pro EMS Solutions has been the town’s billing provider just since July 1, therefore “the best data we have would be the first quarter, July 1 to Sept. 30. With EMS billing you need a 90-day lag because transports on Sept. 30 may not be paid for yet.”

Based on that one quarter billing sample, Mergendahl said the charge to the average patient with insurance was $2,297 under the a la carte system, “so it is very comparable to what you are charging now.”

Under the bundle rates, as proposed by the chief and eventually approved by the board, the basic life support (BLS) transport rate would be $1,650 while the advanced life support-1 (ALS1) rate would be $2,150 and the advanced life support-2 (ALS2) rate would be $3,150. The a la carte service fees would be eliminated and the mileage rate was proposed to remain unchanged at $50 per loaded mile (mileage accrued while the patient is being transported by ambulance).

The existing a la carte ambulance billing rates are: $1,000 for BLS, $1,500 for ALS1 and $2,000 for ALS2 plus a mileage fee of $50 per loaded mile. A la carte fees range from $250 for oxygen administration; $300 each for IVs, medications and an extra EMT; $350 each for C-spine, defibrillation and cardiac monitoring, and $400 for an airway intervention.

The reimbursement rates for patients covered by Medicare would remain unchanged if a bundled rate was adopted, Tetreault said, because those reimbursement rates are fixed by the government as follows: BLS: $401.35; ALS1: $476.61; ALS2: $689.82 plus a mileage rate of $7.24.

The town does not balance bill for Medicare patients, so costs not covered by the government reimbursement rate are written off the books.

Mergendahl explained that the town’s existing a la carte pricing system is only applicable to those patients with private payer insurance. “For Medicare and Medicaid, your a la carte charges are not applicable. For bill (uninsured) patients, frankly, they’re applicable but they are relatively meaningless because your bill patient collection will be virtually zero. Maybe five percent, at best, (of) patients without insurance have the ability to pay your ambulance bill.”

“Frankly, this a la carte rate really doesn’t function well anymore. It actually leads to claims rejections. It leads to confusion. The codes that you use to bill these a la carte charges were eliminated and outdated by Medicare in 2002, so what you have is a legacy situation of outdated codes that really aren’t tied into your cost of providing service and are also not tied into the current methodology of doing ambulance billing,” Mergendahl told the selectmen.

Crawford asked if the data provided on rates charged by surrounding communities are “communities that you work with?”

Mergendahl said, “They’re some of the communities that we work with. Those first two sets of rates – CMERA consist of nine towns and we actually provide the ambulance service for (CMERA) and we do all the billing, because we are also an ambulance service. The second line – the Comstar average – that’s not one service, that’s a combination of 50 services and the average of the rates.”

“When we’re looking at ambulance rates, the first prong of the analysis would be ‘What are your costs? How do we tie your user fees with your cost of providing the service?'” Mergendahl said.

“The second prong is: ‘We’ve set the rates to cover the cost of providing the service as best we can. Are those rates reasonable compared to the other people around you?’ I don’t know that we could recover all of your cost of providing the service given your call volume, but we’ll set the rates up for you where we are covering a substantial amount of your cost of providing the service or what we project the revenue to be against your cost,” he said.

The final prong, Mergendahl said is whether “those rates reasonable. And when we look at the surrounding communities, I think it is pretty clear that they are (reasonable).”

Crawford said, “Obviously, we are concerned about having our residents pay more out of pocket. But that doesn’t seem to be the case,” and he added that the town also has a waiver process in place.

Selectman Chris Barrett asked, “If the insurance provider does challenge or deny that coverage who incurs the cost under the current system?”

“The patient,” Mergendahl said.

“So in a lot of ways it’s protection for the patient to take all those costs and put it into that bundled rate?” Barrett asked.

Mergendahl said yes because “sometimes patients end up with bills because the insurance companies no longer recognize those outdated charges.”

Barrett asked, “If you were to add up some of those (a la carte) charges, you could go above the bundled rate we have?”

Mergendahl said, “Very much so. For the sickest patients you could get an ambulance charge with these a la carte services north of $4,000.”

Barrett said that means under the a la carte system the insurer might only pay “that base rate and they’d leave it to the patient to pay the rest?”

“Correct,” Mergendahl said. “Usually what would happen is (insurers) do all recognize base rates and mileage. Usually, emergency service has better coverage than non-emergency service. Some insurances don’t actually pay for non-emergency (ambulance transport) services.”

In spite of the large discrepancies in reimbursement costs for Medicare, Medicaid and private payer insurance, Mergendahl said Lynnfield has a better demographic cost shift than most communities based on the high rate of insured residents.

Referencing the data he provided to the board, Mergendahl said, “I got enough data here to make your hair hurt. But if you look at sheet number one you see the dramatic cost shift that has to take place. Medicare is 53 percent of your transports, but it only accounts for $200,000 of your revenue, so 53 percent of your transports accounts for about 30 percent of your revenue.”

“Medicaid, which is must worse,” he explained. “It’s 11 percent of your transports and it’s accounting for about three to four percent of the cash that’s coming in. So this dramatic cost shift in the insurances is what happens because you have patients with no insurance. In your demographic, in your community, you are very fortunate. You have a very low rate of folks who are on Medicaid – which is the lowest reimbursement –and you have a very low rate of folks with no insurance that we’ve seen in the first few months of billing.”