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NY Gov Cuomo Sued For Under-Cost Medicaid Reimbursement Rates By Ambulance Alliance

August 1, 2017 by Dave Konig

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.

NYS DOH Commissioner Zucker
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.

[TOP]

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.

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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.

[TOP]

Poverty Line Wages Due To Government Under-Reimbursement

NY Governor Andrew Cuomo
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.

[TOP]

In Conclusion

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…

[TOP]

Filed Under: News Tagged With: Emergency Medical Services, Medicaid, New York State, TransCare

Remaining “Legacy & Heart” Of TransCare Shuttered By Tilton

February 27, 2016 by Dave Konig

This past Wednesday TransCare, controlled by Lynn Tilton‘s Patriarch Partners, declared Chapter 7 bankruptcy but not before spinning off ambulance operations in Hudson Valley New York and Pittsburgh Pennsylvania along with their New York City Para-Transit operation into two different companies labelled as Transcendence Transit and Transcendence Transit II.

Friday night, after the New York City MTA supposedly ended their contract with the new spin-off (Transcendence Transit II), all three surviving operations were ordered to cease and desist operations immediately and were shuttered.

Lynn_Tilton_on_Twitter___The_legacy___heart_of_Transcare_will_live_on_in_the_business_units___700_jobs_we_saved__Very_sad_certain_businesses_will_wind_down__

TransCare Corporate Management representative Glen Youngblood (TransCare Director of Performance Excellence) had highlighted the preservation of 700 jobs through the spin offs in company communications announcing the New York City, Westchester County, and Maryland operation liquidation. It was a claim Tilton herself reiterated on Twitter Thursday.

Job loss is estimated at approximately 1,900 jobs.

In addition to no longer being employed, a number of now ex-employees have reported issues regarding getting their paychecks for labor performed last week. This is the third time that TransCare will have failed to pay their staff on time within a year’s time frame.

Previously I had estimated the lifespan of Transcendence Transit and Transcendence Transit II to be approximately 3 years due to the ineptitude of TransCare Corporate Management moving to oversee those two operations. I was wrong. The two new companies lasted only approximately 36 hours.

Further Reading:

  • Rapid Response: EMS providers bear burden when leadership fails – EMS1.com
  • TransCare Ambulance Co. Shuts Down Entirely, Despite Tilton’s Promises – Maggie Shnayerson
  • Ambulance company controlled by “Wonder Woman of Wall Street” declares bankruptcy – Crain’s New York

FULL DISCLOSURE: I resigned from TransCare in October of 2015

Filed Under: Emergency Medical Services, News Tagged With: EMS Agency Closure, New York City Emergency Medical Services, TransCare

TransCare Ambulance Ordered To Cease Operations Immediately

February 25, 2016 by Dave Konig

TransCare Ambulance, which entered into Chapter 7 Liquidation yesterday, has been ordered to cease all operations immediately.

2016-02-25 22.25.38

Divisional Directors had been lead to believe that there would be a “wind-down” period that would be decided upon at some point today from the court appointed trustee. It appears the court appointed trustee has decided to simply shut the operations down with no regard to the people who continued to provide service there despite the poor communication and treatment they had received from TransCare Corporate Management and Lynn Tilton‘s Patriarch Partners.

TransCare Corporate Management is anticipated to move on to Transcendence Transit and Transcendence Transit II, the spun off divisions of TransCare. I think we can anticipate a similar story of tragic job loss for devoted providers, an acute lack of transparency and poor communication, and those agencies collapse in a few years.

FULL DISCLOSURE: I resigned from TransCare in October of 2015. Although I am not there, this does negatively affect many people who I respect and care for deeply, and that does hurt as much as if I was still there.

Filed Under: Emergency Medical Services, News Tagged With: EMS Agency Closure, New York City Emergency Medical Services, TransCare

TransCare Declares Liquidation To New York City And Maryland Assets

February 24, 2016 by Dave Konig

FULL DISCLOSURE: I resigned from TransCare in October of 2015

Transcare_–_Contact_–_Contact_Info

UPDATE 2/25/16 00:15

TransCare in New York City issued the following statement to it’s employees this afternoon:

Dear Colleagues,

As you are likely aware, TransCare has been in the process of restructuring the company to return it to sustainable profitability. While we have addressed many of the underlying issues, some challenges still remain.

As part of the restructuring process, we have analyzed each division of the company —Maryland, Pittsburgh, Hudson Valley, Westchester, MTA Pararansit and the NYC 911 and Core businesses.

During this restructuring evaluation, the MTA required that we set up a separate entity to segregate the paratransit business from TransCare’s ambulance businesses, including separate bank accounts and financial records. We are pleased to say we have accomplished setting up and capitalizing the separated paratransit entity which will now be called Transcendence Transit II, Inc. It is our hope that this change and new capitalization will encourage the MTA to rapidly return routes to us that were recently curtailed.

Simultaneously, we have formed a new company, Transcendence Transit, Inc., that will acquire our stronger performing ambulance business divisions in Pittsburgh and the Hudson Valley. Aside from the name of the new legal entity, nothing changes operationally for the businesses in Pittsburgh and the Hudson Valley. We believe that through these restructuring efforts we have been able to save 700 jobs.

Sadly, as a result of a decision by our senior lender to cease providing additional funding, the remaining operations (NYC 911, Core, Westchester and Maryland), which have continued to face significant challenges throughout the restructuring process, are being forced into liquidation under Chapter 7 of the Bankruptcy Code. The operations associated with these businesses will discontinue starting today and responsibility for their remaining assets will be transferred to the custody of a court-appointed trustee.

For those at work currently or scheduled to work today, please continue your usual good service until such time as you hear from the court appointed Trustee. We expect the appointed trustee to be able to provide you with further direction and answers to your questions in the days ahead.

Please know that we have worked hard for months now to restructure the entire business. Unfortunately, today’s events made that impossible, and we are deeply sorry for the job losses and any service interruptions for the communities we have served.

TransCare was the provider to a number of facilities for their discharges and inter-facility transfers, supplied over 20 ambulances to the New York City 9-1-1 system in conjunction with it’s voluntary hospital partners, and was the 9-1-1 provider for the cities of Mt. Vernon and White Plains.

The sudden cessation of New York City and Westchester County operations, although not entirely unanticipated, was done abruptly and with little to no warning or guidance. While the message cites that 700 jobs were “saved”, it fails to mention the estimated 1,200 jobs lost in the New York City and Maryland operations.

TransCare was owned by the private equity firm Patriarch Partners, led by Lynn Tilton who has a very prolific Twitter presence. The private equity firm specializes in a porfolio of distressed companies, primarily in the manufacturing industries.

There is a lot more I can say on this subject (see the disclosure above) but honestly it would be to no one’s benefit. Right now there are A LOT of people who did everything they were told to and everything they could but still lost how they were able to feed, clothe, and support their families in one of the most expensive places in the world to live in. This is nothing less than tragic and nothing should distract from that FACT.

20:00 UPDATE: FDNY has issued a statement regarding their contingency plans to cover the 81 tours left vacant by TransCare. The 81 tours equate to 972 648 unit hours daily, since TransCare units operated on 12-hour tours.

02/25/16 00:15 UPDATE: Another message was sent out late last night from TransCare Management that says the following:

Dear Colleagues,

We are writing to be certain that the information people are receiving about the TransCare restructuring is accurate. As we noted in our earlier communication, we have been working for months to try to restructure the business and save the jobs of our valued employees.

Unfortunately, one of our senior lenders decided to cease funding, and we have been forced to file certain of our business units — the NYC 911, NYC Core, Westchester and Maryland businesses — for Chapter 7 bankruptcy.

These businesses have NOT been immediately shut down.

Tomorrow certain assets of TransCare will be in the hands of a court appointed trustee who we expect will have the needed runway to effect an orderly wind down.

As stated previously, TransCare’s existing ambulance divisions in Pittsburgh and the Hudson Valley will be acquired by Transcendence Transit, Inc. Aside from the name of the new legal entity, nothing will change operationally for these businesses or their respective employees.

In addition, TransCare’s paratransit business will be acquired by Transcendence Transit II, Inc. No positions in this business will be eliminated as a result, and all employees of the paratransit business will be employed by this new legal entity.

We believe that through these restructuring efforts we have been able to save 700 jobs. While we are disappointed that we could not save all the business units and jobs, we are grateful that much of TransCare’s history can live on.

The TransCare Management Team

It has been confirmed that as of this update, TransCare ambulances are STILL OPERATING. Apparently for how much longer will be left at the decision of a court appointed trustee later today.

OPINION: This second message, that had to be sent in order to clarify the first, demonstrates the type of vagueness that has plagued TransCare communications for the last few years. For the last 11 hours there have been numerous Facebook posts, news articles, and of course Tweets regarding the situation.

Lynn_Tilton_on_Twitter___The_legacy___heart_of_Transcare_will_live_on_in_the_business_units___700_jobs_we_saved__Very_sad_certain_businesses_will_wind_down__

Still, it took 11 hours to clarify what should have been made clear from the beginning. This does not make the situation any better, but only illustrated one of the reasons that it has occurred.

Filed Under: Emergency Medical Services, News Tagged With: EMS Agency Closure, New York City Emergency Medical Services, TransCare

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