Ems System Performance-Based Funding And Reimbursement Model - Finance Committee Draft Advisory Page 2
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34Finance Committee DRAFT Advisory
EMS System Performance-based Funding and Reimbursement Model
respond to extraordinary demand or natural and man-made disasters that may occur.
Additionally, NEMSAC seeks to explore the potential impact on EMS System financing of
prevention programs, treat on scene without transport, and transportation to alternative health
care settings besides emergency departments.
A significant portion of the costs associated with EMS is to achieve and maintain readiness and
to respond in a timely and effective manner. According to the Institutes of Medicine, “EMS
costs include the direct costs of each emergency response, as well as the readiness costs
associated with maintaining the capability to respond quickly, 24-hours a day, 7-days a week.”
Those costs include 24x7 staffing levels based on call demand experience, response time
reliability, level of service provided, competency training, costs of equipment and supplies, and
administrative expenses. These costs are inherent in the delivery of service and must be
adequately accounted for in the reimbursement models.
Ascertaining the total cost of providing EMS has been problematic. There have been efforts to
quantify the costs of specific components of the EMS System. In 1999, the American
Ambulance Association commissioned Project Hope to determine the cost of ambulance
transport service. This paper was instrumental in developing the Medicare Ambulance Fee
Schedule, adopted in 2002. The fee schedule was intended to standardize the methodology to
pay all ambulance providers a predetermined fee for transportation services based on the relative
cost of each level of service.
The Government Accountability Office (GAO) conducted a similar study. In their 2007 report,
the GAO concluded that Medicare paid 6% below average cost per transport of ground
ambulance services. Both Project Hope and the GAO study found great variability in the cost
per ambulance transport. Neither Project Hope nor the GAO attempted to determine the total
cost of EMS Systems.
In 2007, the Institutes of Medicine (IOM) of the National Academies of Sciences released its
landmark publication titled, “Future of Emergency Care in the U.S.” The publication
encompassed three reports addressing hospital-based emergency care, emergency care for
children and pre-hospital care. One of those reports, “EMS at the Crossroads,” evaluates the
development of EMS over the last 40 years resulting in the “fragmented system that exists
today.” The prestigious committee’s findings and recommendations rest on three broad goals for
the nation’s “systems” of emergency care:
• improved coordination
• expanded regionalization
• increased transparency and accountability
A group of researchers from the Medical College of Wisconsin was awarded a grant by NHTSA
to develop a model to capture, measure, and report EMS System costs from a societal
perspective. This project was the first attempt to capture the true cost of all the components of
an EMS System. Brooke Lerner, Graham Nichol, and others worked diligently to develop this
model. The final product is still under revision, but the Finance Committee recognized
significant challenges to developing such a model.
March 29,2012
Draft Advisory
2
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