A crisis in ambulance costs is prompting San Diego officials to seek an alternative model where non-emergency patients could take a taxi or Uber to a clinic or urgent care facility and get reimbursed by private insurers, Medicare or Medi-Cal.
The goal is stemming a sharp rise in ambulance costs for the city and patients by discouraging rampant abuse of the 9-1-1 system, where 30 percent of callers don’t end up actually needing an ambulance ride to an emergency room.
The city’s ambulance operator agreed last week to work with government officials and the insurance industry to explore such an alternative model as part of the city’s approval of a 24 percent spike in the cost of an ambulance ride in San Diego.
The spike will only immediately affect a small number of patients because many have Medicare or Medi-Cal, or have private insurance where ambulance fees are already higher than their annual deductible.
But some insurers may refuse to pay the higher rates, and industry experts say the spike will eventually prompt insurance companies to increase premiums and deductibles, making health insurance more expensive for everyone.
That’s why an alternative model is needed to stem a 22 percent increase in 9-1-1 calls for ambulances in the last four years in San Diego, said Stewart Gary of Citygate Associates, a consulting firm hired by the city to analyze the issue.
Many non-emergency patients, especially those with lower incomes, would use another form of transportation than an ambulance if their insurer or their government health care provider told them it would be covered, he said.
But private insurers, Medicare and Medical now only cover ambulance rides, not trips in a taxi or ride-sharing service like Uber or Lyft.
The new approach wouldn’t eliminate high-frequency abusers of the 9-1-1 system, such as homeless people with health problems that prompt hundreds of calls to 9-1-1 each year from passersby who see them and want to help.
But Gary said a much larger slice of the increase in ambulance calls are people who aren’t sure what’s wrong with them and don’t know what to do about it.
“In health care in America today, tragically 9-1-1 emergency medical services is the health care of last, first and only resort for many of your populations,” he said.
Anthem Health Insurance recently announced it will start covering such alternative modes of transportation in 2018, a move Gary said he hopes other insurance companies follow.
The city’s ambulance provider, American Medical Response, hopes to work with the city, county, private insurers, Medicare and Medi-Cal to copy that approach in San Diego and make the region a model.
Meanwhile, San Diego city officials plan to study the city’s call triage process to reduce the number of ambulance trips by better weeding out 9-1-1 calls where an ambulance isn’t necessary.
“It’s going to require going through each one of those determinants and really looking at what type of patient care is going to be required,” said Chief Brian Fennessy of the Fire-Rescue Department, adding that changes must be made to the existing system. “It’s just not sustainable.”
Fennessy, Gary and American Medical Response told the City Council last week that the 24 percent spike in ambulance fees — 9 percent immediately and 15 percent on Jan. 1 – is warranted based on AMR facing increased costs.
San Diego’s fees for ambulance responses including advanced life support services such as intubation or chest decompression will climb from $2,154 to $2,671.
Fees for less aggressive instances of advanced life support will climb from $1,933 to $2,396, and fees for basic life support, which might only include an assessment, will rise from $1,631 to $2,022.
The rate increase would push San Diego near the top of communities below state Route 56 for ambulance fees, according to a survey conducted by the city.
But AMR officials said the increase will affect only a small number of patients because 27 percent of San Diego ambulance patients so far in 2017 were covered by Medicare, and 30 percent were covered by Medi-Cal.
Medicare pays a flat rate of $434 for ambulance rides and Medi-Cal only pays $118.
AMR also says that 20 percent of its patients don’t pay anything at all because they have no insurance and can’t afford to pay.
And another 13.2 percent of patients have commercial insurance, where annual deductibles are typically lower than what the city already charges for an ambulance ride.
But health care industry experts said it would be unwise to conclude those patients won’t pay anything long term.
Some insurers might simply refuse to pay the higher fees, Gary said.
An AMR spokeswoman said the company is ready for that.
“When they deny coverage or short pay, we work with the patient and appeal to the insurance company,” said the spokeswoman, Madeleine Baudoin. “Sometimes the insurance company will agree to pay the full charges. If not, the patient will be responsible for the balance.”
But she said a more likely scenario is insurance plans increasing premiums and deductibles because of AMR’s fee spike, and industry experts agree.
“There’s no free lunch in health care,” said Kristof Stremikis, head of market analysis for the California Health Care Foundation. “Someone’s got to pay down the line and those health insurance companies are going to recoup those extra charges, probably by raising premiums. There’s no ‘we’re going to charge the insurance companies and it won’t hurt consumers.'”
While it might seem insurers would risk losing customers by raising premiums and deductibles, Stremikis said that’s not necessarily true because patients and employers have limited choices in the market.
“In a normal market, when you raise prices people are less likely to purchase the service,” he said. “But when it comes to health care, the normal rules of markets and consumer behavior don’t always hold.”
In exchange for raising fees, AMR agreed to let its ambulance contract with the city expire one year early, in 2019.
City officials say they plan to release a request for proposals next summer for a new ambulance contract, either with AMR or another provider.