In contract battle, AMR charges more and provides more

rgiwargis@mercedsunstar.comJanuary 9, 2013 

— While Riggs Ambulance Service battles to stay in Merced County, many residents are left wondering how the potential change in emergency service could impact their wallets.

A side-by-side comparison of proposals from American Medical Response and Riggs Ambulance Service shows AMR's rates are about 34 percent higher for an average patient charge, a difference of $699.

To be more specific, Riggs proposes an average patient charge of $2,069, while AMR proposes $2,768.23.

The average patient charge can consist of several categories: basic life support, advanced life support and critical care transport, which is a hospital-based transport service.

Riggs' proposed rate for basic life support is $1,200 and AMR's is $1,777.23. For advanced life support, Riggs plans to charge $1,600 while AMR's rate is $2,585.07.

Based on historical call volume data provided by Riggs, both companies estimate more than 20,000 transports per year, mostly advanced life support transports.

Both companies charge $45 per mile, starting from the patient's location, to the hospital. Additionally, AMR and Riggs charge $100 for oxygen, which Riggs estimates is used for 60 percent of its calls.

Jason Sorrick, AMR spokesman, acknowledged the rate increase, but said his company will be providing better care by putting more units into the system.

He said the company plans to invest $2.8 million in the first year of the contract, which will be used to purchase 25 new ambulances, heart monitors and other equipment.

Sorrick said AMR also plans to invest more than $600,000 per year on personnel, by adding five ambulances, hiring 15 to 20 additional EMT and paramedics, and offering a higher pay scale to retained Riggs employees.

Riggs Ambulance Service General Manager Don Vonarx said the additional positions do not replace the lost jobs for Riggs' billing and support staff. "It's true that AMR proposed more EMT and paramedics, but you cannot overlook the fact that many people here at Riggs will still lose their jobs at the end of the day." Vonarx said.

Another difference between the companies' proposed charges is their ability to provide critical care transport when a patient requires higher level of care.

Critical care transport, which includes a skilled nurse on board, is often used for patients with respiratory issues, but can be used to transport a patient from one hospital to another for advanced treatment. Sorrick said providing critical care transport is an advantage that will allow AMR to provide life-saving services.

"Part of the reason we were selected by Merced County is because we provide CCT care, and we're the leader in providing that," Sorrick said. "We're going to be running CCT, and those nurses are some of the most skilled professionals in the field."

Riggs officials said they offered critical care transport in the past, but stopped because there wasn't enough demand for the service, pointing to only 19 critical care requests in 2012.

Linda Diaz, Merced County's emergency medical services manager, said it's "definitely an advantage" that AMR provides critical care transport.

"The volume of calls is low, but when you have someone who is critically injured and needs transport, it's better to have those services available for the community," Diaz said. "There's a lot of medications and skills that go beyond a paramedic's scope of practice."

Chuck Kassis, chief operating officer of Mercy Medical Center, agrees, saying that critical care transport service is vital.

"Well, absolutely it's important," Kassis said. "The number of times it's requested is irrelevant because it's that one time when your loved one needs to be transferred to higher level care -- then it's vitally important."

Currently, if critical care transport service is requested by Merced-area hospitals, Riggs calls outside providers, such as AMR or American Ambulance, based in Fresno, Lodi or the Bay Area, to arrange those services. This option is used for stable patients.

If critical care transport is needed immediately, Von-arx said, Riggs will provide a regular ambulance and ask the hospital to provide a nurse or respiratory therapist to ride along.

Sorrick cited concerns that hospital nurses aren't skilled in specific critical care transport procedures.

Vonarx referenced another cost difference: AMR charges a non-transport fee of $400 for advanced life support treatment without a trip to the hospital, but Riggs provides this service free of charge. Vonarx said there is one exception: Riggs will charge the insurance only if the patient has Medicare and does not survive.

On the flip side, Riggs charges for supplies used during calls, including needles, gauze, ice packs and medications. These supplies are not charged individually with AMR, and are included in the base rate.

Riggs also charges a night rate of $100 for patients transported between 7 p.m. and 7 a.m., but AMR officials said they do not charge a night rate for any calls.

Sorrick claimed Riggs underestimated its costs in its original proposal, later sending a letter to the county reporting negative revenue starting in the first year of the contract.

"Yes, you're going to have to charge more for those services (CCT), but Riggs already identified that they grossly underestimated the cost of providing service in their bid and were seeking to readjust those rates," Sorrick said.

The Oct. 25 letter states that the company became aware "well after the RFP bid submittal and award" of many substantial changes, including a drop in actual reimbursement per transport.

According to an attached chart, Riggs' "current and projected average annual cost" begins to exceed its revenue in mid-2013, amounting to a projected loss of about $500,000. The revenue loss grows to about $3 million by the year 2017.

The letter attributes the loss to Medi-Cal only paying 25 percent of costs and some commercial insurance plans downsizing their coverage benefits.

Klark Staffan, vice president and chief operating officer of Riggs partner Sierra Medical Services Alliance, said the company did not underestimate the revenue when submitting its proposal, but simply wanted to make county staff aware of recent changes in the "open and honest" letter.

"There was no miscalculation on our part; the letter was to report new changes since the RFP was originally released," Staffan said. "Nowhere in the letter are we saying that we are defaulting on our requirements or that we cannot meet our obligations."

Staffan said the goal of the letter was to discuss best approaches of overcoming changes that negatively affect revenue, based on current trends.

Vonarx added that only about 11 percent of Riggs patients have private insurance.

Sorrick agreed that reimbursement costs are challenging for ambulance companies, estimating that about 50 percent of AMR's patients don't pay their bills. Medi-Cal pays a maximum of $140, while Medicare pays $400 to $500, Sorrick said.

Reporter Ramona Giwargis can be reached at (209) 385-2477 or rgiwargis@mercedsunstar.com.


PRICES AT A GLANCE

RIGGS AMBULANCE SERVICE

AVERAGE PATIENT CHARGE: $2,069

BASIC LIFE SUPPORT RATE: $1,200

ADVANCED LIFE SUPPORT RATE: $1,600

CRITICAL CARE TRANSPORT RATE: Service not offered

NON-TRANSPORT FEE: Billed to insurance only if patient has Medicare and doesn't survive; no charge for basic life support

MILEAGE: $45 per mile

OXYGEN: $100 per call

NIGHT RATE: $100 from 7 p.m. to 7 a.m.

SUPPLIES: Charged individually for items used

AMERICAN MEDICAL RESPONSE

AVERAGE PATIENT CHARGE: $2,768.23

BASIC LIFE SUPPORT RATE: $1,777.23

ADVANCED LIFE SUPPORT RATE: $2,585.07

CRITICAL CARE TRANSPORT RATE: $4,125

NON-TRANSPORT FEE: $400 only for advanced life support treatment; no charge for basic life support

MILEAGE: $45 per mile

OXYGEN: $100 per call

NIGHT RATE: No extra charge

SUPPLIES: No individual charge; included in base rates

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