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Vermont's Cash-Strapped Ambulance Providers Face New Federal Cuts in 2011

Local Matters


Published December 15, 2010 at 8:37 a.m.


On October 14, the phones and radios at LeFevre EMS in Bellows Falls went silent. No calls came in from 911 operators to dispatch LeFevre’s paramedics to car accidents on nearby Interstate 91 or Route 5. There were no requests to transfer critically ill patients from Springfield Hospital to Dartmouth-Hitchcock Medical Center. Not a single ambulance rolled out of the garage to assist an elderly resident at the nearby McGirr Nursing Home.

After 25 years, the for-profit ambulance company founded by Gerry LeFevre shut its doors for good. According to LeFevre’s daughter, Mary Hoyt, who took over the business in January, the challenges of getting reimbursed by Medicare, Medicaid and private insurance companies became insurmountable, and the company could no longer stay afloat. Another ambulance company is now covering for LeFevre, which once employed more than 30 people and served eight communities in the Bellows Falls area.

“With one insurance company, if you used the wrong color ink … or if your claim didn’t line up right on the page, they’d send it back,” Hoyt says. “I’m not the only one who’s had this issue. I just couldn’t take it anymore.”

Operating in the red is nothing new in the world of emergency services, even among not-for-profit rescue squads, which outnumber for-profit ones in Vermont. But this is the first time in recent memory that an ambulance company has closed for financial reasons, according to Jim Finger, president of the Vermont Ambulance Association, which represents two-thirds of the state’s 92 EMS providers.

While no one is describing the LeFevre closure as a trend just yet, directors of some of the state’s largest ambulance providers say they wouldn’t be surprised if more operations close, reduce their coverage area or limit hours of operation. As Bill Hathaway, executive director of Bennington Rescue Squad, put it: Many small, rural EMS squads are having trouble “just getting their truck out the door.”

“It’s starting to get very, very tough with everything that’s being cut ... whether you’re municipal, nonprofit, for-profit or volunteer,” says Finger, who’s also chief executive administrator of the nonprofit Regional Ambulance Service of Rutland, the state’s largest EMS provider. “There are services that are hurting right now and struggling to make ends meet.”

More pain is coming: Starting January 1, all ambulance companies that receive Medicare and Medicaid reimbursements will be required to log their mileage to the 10th of a mile; under current rules, EMS providers can round up to the nearest mile. This new belt-tightening measure is expected to save the federal government between $40 and $80 million a year.

“This is a giant pain,” says Finger, who’s also outgoing president of the American Ambulance Association. “Is the government going to start counting how many Q-tips are left in the box, too?”

Medicare patients represent the bulk of the business for Vermont’s EMS agencies — up to 70 percent of their patient billing, according to Dan Manz, EMS director at the Vermont Department of Health. The problem, he explains, is basic math: What it costs to provide ambulance coverage is more than what Medicare reimburses. Those rates, which were set by the Centers for Medicare & Medicaid Services, haven’t changed in nearly a decade. Essentially, agencies lose money every time their ambulances roll out the door — about 17 percent annually, according to one report by the U.S. Government Accountability Office.

Furthermore, the expenses of operating a rescue squad — trucks, equipment, staff, insurance, etc.— are largely fixed, regardless of whether the agency handles 500 or 5000 calls a year. They need a defibrillator, for example, no matter how many times it is used. And, since most of the state’s EMS providers operate in rural communities with low call volumes, the economies of scale make it hard for them to generate additional revenue to cover those costs.

Manz predicts that most EMS providers won’t suffer insurmountable losses due to the new 10th-of-a-mile mandate — between several hundred and several thousand dollars per agency, depending on its patient load. Nevertheless, he calls it “one more aggravating drop in the bucket” for companies that already operate on shoestring budgets.

“It’s relatively nickel-and-dime at the agency level,” Manz adds, “but it’s nickel-and-dime in a business where nobody’s making much money.”

Larger EMS providers, too, seem troubled by the new reg, which was announced just last month. Mark Considine is chief of operations at Rescue Inc., a not-for-profit EMS provider that serves 15 communities in the Brattleboro area. Rescue Inc. receives about 5000 calls each year, half of which are from Medicare and Medicaid patients; Windham County has one of the state’s largest populations of elderly and low-income residents, he notes.

“Mileage is a big thing,” he says. “So, if that’s pushed back a little, it’s another possible loss of income.”

Many older ambulances don’t even measure fractions of a mile, Considine points out. He thinks it’s unreasonable to expect EMTs and paramedics to remember to push the trip odometer when they arrive at the scene of an emergency.

Considine says his agency absorbs more than $700,000 a year in unreimbursed expenses. To close that gap, his company runs fundraisers, offers subscription services to regular users and applies for municipal subsidies. “We try about 20 different things to balance the bottom line,” he adds.

Hathaway of Bennington Rescue Squad is in a similar boat. His agency’s “community benefits” — Medicare write-offs, charity care, ambulance calls for which no patient is transported or billed — totaled $878,000 last year.

Despite its greatly expanded service area and a call volume that’s more than doubled since 2002, Hathaway predicts Bennington Rescue will lose money next year. As he puts it, “Medicaid doesn’t even begin to pay the bills.”

That won’t stop Vermont ambulances from coming to the rescue, regardless of patients’ ability — or their insurance company’s willingness — to pay the entire bill. “Through thick and thin, we’re like the Postal Service,” says Considine. “We’re committed to doing this.”