In a legal filing made last week New York Governor Andrew Cuomo and New York State Department of Health Commissioner Howard Zucker MD are being sued by the Downstate New York Ambulance Association for reimbursement rates as low as $155 per ambulance trip, only 63% of the average $247 cost per trip.
You can download a copy of the filing here.
Key Points In The Lawsuit
Here are key points of the lawsuit that I address in greater length:
- Health of the state’s inhabitants is an obligation in New York State that extends to all citizens of the state as per the state’s constitution
- The Governor and Commissioner knowingly continue the state’s Medicaid Program under-reimbursement for transportation services
- This is an unsustainable economic model that has, among other things, contributed to the demise of at least one major ambulance provider
- The Governor’s proposal to increase the minimum wage to $15 per hour would cause further economic hardship on ambulance operators, who are already forced to pay poverty-line wages due to the Governor and Commissioner’s failure to reimburse equitably
- In conclusion, although it is doubtful this lawsuit will affect any true change…
The New York State Constitution
The lawsuit cites the following from the New York State Constitution as the reason why the state is responsible for the health of its citizens:
1. The New York State Constitution provides that the “protection and promotion of the health of the inhabitants of the state are matters of public concern and provision thereof shall be made by the state and by such of its subdivisions and in such manner, and by such means as the legislature shall from time to time determine.” N.Y. Const. art. XVII, § 3.
2. This obligation extends to all citizens of the state: “The aid, care and support of the needy are public concerns and shall be provided by the state and by such of its subdivisions and in such manner, and by such means as the legislature shall from time to time determine.” N.Y. Const. art. XVII, § 1.
Having a healthy population is important to any state or nation for a variety of reasons but probably has the most effect on the economy. A healthy population will be able to work, produce for the industry, earn wages, and then spend those wages on more often than not local products. It’s an elementary cycle that, admittedly, has been disrupted by the loss of jobs, online shopping, and the stagnation of wages. An unhealthy population only makes creating a vibrant economy more challenging, and I honestly think this was the reasoning behind these lines of the New York State Constitution.
A growing part of the economy is in fact healthcare and it’s rising costs have dominated headlines for at least a decade, if not longer. One of the reasons for these rising costs is the under-reimbursement by government programs for services rendered. In order to offset the losses healthcare providers need to charge more for their services, so private insurances and patients subsidize those on the State Medicaid program. The New York State Department of Health is not just the regulatory agency for healthcare in New York State, but also is the administrator of the state’s Medicaid program. Despite this apparent conflict of interest, they are the ones who ultimately will set reimbursement rates for services.
When the Medicaid population is small this isn’t that big of a deal. As employment has changed from a manufacturing base to a service base, wages have stagnated, and benefits for employment have decreased in value the state aided population has grown and will continue to do so. This increases the costs of healthcare further and there is a tipping point where providers will no longer be able to operate at the losses the state demands.
Medicaid Ambulance Rate Adequacy Review Report
In 2016 the New York State Department of Health undertook a Medicaid Ambulance Rate Adequacy Review Report. Their findings released earlier this year, while not surprising, indicate that a rate adjustment is long over due. One of the lawsuit tenets is that the inaction of Governor Andrew Cuomo and Commissioner Howard Zucker to rectify this situation is criminal in nature.
The report, attached in the Appendix of the lawsuit, had a number of interesting statistics. Among those were:
- 72% of Medicaid transports were Basic Life Support (BLS), 28% of them were Advanced Life Support (ALS)
- The statewide mean cost of ambulance transport is $275.50, the upstate mean cost being $304 and downstate mean cost being $247
- The NYS DOH recommended an adjusted rate increase to 75% of the mean cost, still NOT making Medicaid trips break-even much less be profitable. The change would increase rates in New York City and 47 other counties, but even this hasn’t been done
I find the recommendation by the New York State Department of Health as troublesome. To only recommend reimbursement of 75% of cost raises some serious questions, especially since their regulations are some of the driving forces to increased cost.
If something costs $5.00, is it okay to just pay $3.75 for it and take it? Chances are that if you did that, the police would be called and you would be charged with theft or if it were something along the lines of a cab ride it would be theft of service.
With this recommendation the New York State Department of Health has endorsed and condoned theft of service for ambulance providers.
The Loss of Providers Due to Underfunding
New York State has seen a number of ambulance operator transitions over the years. Aside from the national acquisition of Rural Metro by American Medical Response and the absorption of Capital Ambulance by Mohawk Ambulance, by far the most headline grabbing was the implosion of private equity funded TransCare that resulted in an estimated job loss of 1,900 with former employees still waiting to be paid for 2+ weeks of work.
This is a trend that will continue as Medicaid calls increase, private insurance and Medicare calls decrease, resulting in fewer ambulances and longer wait times.
Many people will dismiss this as not an urgent issue because the work load is primarily “non-emergency”. What they fail to recognize is that hospitals depend on this type of transportation in order to free up beds within the hospital. In New York City hospitals will occasionally go on “diversion”, meaning that they are unable to accept ambulance patients. Because in NYC “diversion” is a courtesy, there are times when ambulances will still bring patients to those hospitals. In those cases, the ambulance crews often end up “holding the wall” which will result in longer turn around times, delaying 9-1-1 system resources from returning to the system and extending response times from the resources that are available. The lack of beds has a domino effect.
Non-emergency ambulance transportation is vital to the current healthcare system, and the lack of adequate reimbursement for a sizable portion of the population will lower both service availability and standards.
Poverty Line Wages Due To Government Under-Reimbursement
Inadequate reimbursement is one of the factors that contribute to the poverty-line wages that plague the EMS industry. Agencies struggle with the rising costs of equipment and its maintenance, pharmaceuticals that expire, “soft” stock that also has an expiration date, and insurance that wages take a back seat and have not kept pace with inflation.
To illustrate this, in 1995 I started work as an Emergency Medical Technician with no experience at $9.00 an hour and after 3 months I was raised to $10.00 an hour. According to the CPI Inflation Calculator, that has the same buying power as $14.67 and $16.13 in June of 2017. The vast majority of private ambulance services in New York City will start new EMTs today between $11.00-$13.00, far less buying power on entry than 23 years ago.
Governor Andrew Cuomo and Commissioner Howard Zucker have directly contributed to the poverty line wages EMS providers are paid with their continued failure to address the under-reimbursement of ambulance providers on Medicaid trips. The Governor’s proposal to increase the minimum wage would increase the vast majority of providers who are performing the non-emergency transportation services, but that is devaluing the time and money spent in EMT school. In order to recognize that effort and attract new providers, EMS agencies would need to start paying EMTs at $18-$20 an hour, and Paramedics at $28-$30 an hour.
In conclusion, although it is doubtful this lawsuit will affect any true change it does expose the hypocrisy and criminality of the government when it claims that healthcare is a “free market”.
In a “free market” the cost of something is negotiated and agreed upon by the provider and the consumer. In this case, the state government is telling ambulance providers they must accept these calls at a financial loss. It would be similar to if you walked into a store and told the store owner how much the item you wanted was going to cost and they had no choice but to give you the item and take what you were willing to give.
If an ambulance provider refused to accept these rates or tried to pull out of the Medicaid program as a provider, then they are disqualified from participating in Medicare reimbursement as well, which does reimburse at both higher base and mileage rates. The thinking behind this governmental extortion is that the more properly reimbursed Medicare calls will offset the financially inadequate Medicaid reimbursement, but over the years Medicaid calls have increased while Medicare calls and private insurance have decreased making the margins of profitability razor thin leading to a financial loss. This is essentially a pay to play scenario disguised by state officials as the “healthcare market”.
The part that has always infuriated me about this is the fact that, as a New York City and New York State resident, I pay in my taxes to help support Medicaid. So yes, I am paying to be underpaid by this obviously broken system of reimbursement.
Regardless of the outcome of the lawsuit, reimbursement for EMS needs to change.
You can download a copy of the filing here.
As always, feel free to let me know your thoughts in the comments…