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Cornerstone Adminisystems

Cornerstone Adminisystems

The Decision to Begin a Cost Recovery Solution

EST. READING TIME: 5 mins

In certain parts of the country, EMS agencies still don’t bill for their services. Bolstered over the generations by dedicated volunteers, donations, and, in some cases, tax subsidies, there was never a need to bill in an attempt to recover the costs associated with the work.

Yet, over the years, volunteerism has dwindled and costs have skyrocketed. Donations remain healthy, but they no longer cover a growing gap. Buildings have fallen into varying stages of disrepair, equipment has aged beyond its recommended lifespan, training demands are more stringent than ever, and ambulances bear the scars of too many miles.

For these EMS agencies, the question is simple: Do they continue down a path of uncertain survival, or find a way to adapt, grow, and thrive?

Whether or not cost recovery, or soft billing as it’s more commonly known, is the answer to this question depends on the specific circumstances of each EMS agency. No two are the same, and no two programs will yield the same result.

But there are some common focal points that agency chiefs will want to consider, which frame the discussion and create the foundation upon which an informed decision can be made.

  • Revenue Forecast
  • Internal Perception & Reality
  • External Perception & Reality
  • Public Outreach
  • Billing Partner

Revenue Forecast

Without historical billing data it is impossible to accurately forecast cash flow. However, the same factors influence every cost recovery program: billable volume, call type distribution, documentation quality, service rates, average loaded mileage, charge mix, participating provider status, and effectiveness of the billing partner.

For agencies that aren’t sure how to approach this topic, we recommend the following:

  • Assume 70-75% of total volume is billable.
  • Mine the ePCR data to identify BLS vs ALS dispatches and average mileage from point of pickup to destination (the “loaded” miles).
  • Consult with a reputable billing company to evaluate documentation.
  • For rates, first assess costs, the Medicare fee schedule, and the local market.
  • The charge mix isn’t knowable yet, but it may be possible to discern how much of the market is of Medicare age, what portion is at/below the poverty level, and what degree of transience the community experiences. These all shape the charge mix.
  • For the purposes of this discussion, participating provider status refers to whether or not an agency will become an “in-network” provider with the various commercial payers in the mix. If so, it means accepting their negotiated payments as payments in full. If not, it typically means the billing company needs to work harder to get an agency fully paid. This isn’t a bad thing per se, as it tends to generate greater returns; it simply takes longer to receive them.
  • And this brings us to evaluating a billing partner. Finding the right one can mean the difference between failure and success. Some have longer track records than others, some are quite large, others quite small, some are controlled by capital investment firms, others owned by their employees. Price is a factor, but so is quality. In today’s market, choice is abundant, but too many choices can have a paralyzing effect. We recommend a visit the main office of a billing company, where once can spend the day not only with the sales and service people, but also the folks doing the coding, claims follow up, payment posting, staff education, and those handling IT and data security. Get to know the company, how it operates, what its core values are, and its plan for future success.

Internal Perception & Reality

One of the first obstacles may be internal resistance from long time volunteers whose personal identity is intertwined with the notion that EMS is less a business and more a calling. This sentiment is strong and valuable, because the people who own it are a large reason the agency exists at all. Yet, EMS can be a calling and a business, and so there may be some late nights spent talking about the matter.

Generally, a question will arise about how a cost recovery program affects the agency’s tax exempt and non-profit status. The main thing to understand here is that generating billing revenue does not equate to profit.

The driving principle is that the funds cannot inure (to become of advantage) to the benefit of a private shareholder or individual, and an agency cannot attempt to influence legislation as a substantial part of its activities, nor campaign for any particular political candidate.

This stated, the challenges inherent to deploying a cost recovery program aren’t all perception.
For agencies that have never billed, a cost recovery program opens up a world of regulation and accountability. Documentation becomes more important than ever, which means additional training.

With this, there may be new local or state regulations that come to bear – in terms of licensure, or if municipal ordinances need established where the municipality is entitled to establish rates. And, it goes without saying that federal compliance rules must be understood and followed.

Given the gravity of the decision, we find it best to have a solid leadership plan in place, with a strong decision maker (or decision-making system) capable of remaining nimble while managing these multifaceted new responsibilities.

External Perception & Reality

Concerned citizens unfamiliar with the practice will most certainly have questions. These typically include:

Will a person’s ability to pay affect whether or not the ambulance shows up?

  • No. An ambulance responds to each call without regard to financial standing. EMS is about patient care, and tending to those in need.

Will people be treated differently (worse) if they aren’t able to pay?

  • No. All patients will be treated just the same as they are now, with no regard for ability to pay.

How does this affect how patients interact with EMTs and Paramedics?

  • The only change is that, during the course of the call, a provider may need to gather certain information, such as the patient’s personal identifying information, insurance card, etc. This information will be used later to submit an accurate claim.

Will premiums increase?

  • No evidence supports this notion. Ambulance claims represent a microscopic portion of overall claim submissions. Additionally, many insurance plans already include allowances for ambulance transport fees; charging for service is simply a way to capitalize on available funds.

How much out-of-pocket expenses will be incurred by residents?

  • Depends on how the program is set up. This should be worked out with the billing partner, who can offer guidance.

Other questions may revolve around why EMS needs the money in the first place, and if it’s still helpful to donate. To address these concerns and the various misperceptions, we recommend adopting a formal public outreach plan.

Public Outreach

Cornerstone has experience helping EMS agencies develop and execute outreach plans in lead-up to the deployment of a cost recovery program. A plan typically involves coordinated message control through an array of outlets:

  • Press release
  • Social media
  • Newspaper article
  • Radio announcement
  • TV interview
  • Town hall meeting
  • Public speaking engagements – Rotary, Kiwanis, Lions, etc.
  • Facility speaking engagements – key hospital and nursing home personnel
  • Website – post a PDF brochure and/or create a landing page on the site

There are no limitations on EMS agencies when it comes to spreading the message. In the modern world, everything is connected. If the message is clear, and the plan well-crafted, the end result should be compelling.

Done right, the public will learn that the revenue generated from a cost recovery program can help foster improvements in nearly every important area of operations, including recruitment and retention, training, vehicle maintenance, equipment modernization, reduced response times, QA/QI, and patient care, and community engagement.

Billing Partner

As we mentioned earlier, it’s important to choose wisely. EMS billing is a fast-changing industry, and it can be challenging to differentiate one company from another. Often, the matter is reduced to who costs the least, and yet that too can be misleading.

We use the term “partner” to connote a degree of closeness, but even that falls short of describing the true nature of a relationship between an EMS agency and its billing company. When one considers the financial implications, a better term may be symbiosis.

In simple terms, symbiosis describes a state of relationship between two entities which is close, mutually beneficial, and in many ways, interdependent.

A billing company is entrusted to competently and ethically translate documentation into appropriate codes, and an EMS agency is entrusted to provide accurate and complete documentation, thus enabling the process.

That is the essence of the relationship, and the justification upon which an EMS agency relies to receive reimbursement. The very reimbursement that can mean keeping the agency’s doors open.

Given the stakes, it’s easy to see why this relationship, maybe more so than an EMS agency will have with any other vendor, is the most important.

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