Let Go of Reimbursement

An article in Modern Healthcare declared, “Emergency medical services reimbursement is at its core a broken system, and the industry has begun efforts to fix it.” The authors rightly identify the system as being broken. But fixing it is not the answer.  

The current system mainly reimburses only for medical transportation and does not acknowledge EMS as a stand-by service with high readiness costs. What’s more, it provides no incentive not to transport patients. This has created a system that is neither efficient nor equitable. It benefits some, punishes others and creates an uneven and illogical distribution of resources. Economic theory calls this a market failure. 

The EMS industry has found a variety of ways to squeeze the most out of reimbursement, primarily by not paying its workers fair wages. Most EMS workers donate their time or are paid notoriously low wages. And in fire departments and urban EMS departments where EMS workers are paid well, the reimbursement system has been heavily subsidized or the full cost of EMS has been buried in other budgets. In some places, monopolies have been created to subsidize emergency response and transportation with non-emergency transportation revenues. In low-volume rural areas, the public is often served with a lower and cheaper level of care that is justified as “all we can afford.”

While the industry has been complaining for decades about inadequate funding, there has been little movement toward addressing the issue for these reasons: We continue to compromise and accept declining reimbursement; we remain fragmented and refuse to work together; and we fail to tell a compelling and accurate story about the value of EMS. The compromise, fragmentation and refusal to work together are well known. Less known are the elements of a compelling story that needs to be told. 

The prime value of an EMS system is not in the individual services it provides but in its overall contribution to a community’s livability and quality of life. Most people will personally never use EMS, yet its availability and readiness are now a valued expectation.  

In contributing to a community’s livability and quality of life, EMS must be represented and storied as a public good. Public good is another economic term that describes goods and services such as education, law enforcement, fire service, national defense and parks that are used by all and benefit all. A recent presentation to the National EMS Advisory Council by its system committee explains that providing a safe and healthy environment is one of government’s highest priorities and, like law enforcement and fire service, EMS plays an indispensable role in the community’s emergency response and disaster system. “But unlike other public services, EMS does not share a consistent recognition among states and local governments as a public good,” the committee reports. 

As a key ingredient of quality of life and as a public good, EMS should not be reimbursed for services rendered. Rather, it should be fully funded as other public goods are funded: with taxes that pay equally for its presence, readiness and services. This means the industry should stop focusing on fixing the current reimbursement system. It should acknowledge that attempting to fully pay for EMS through a transportation and “services rendered” model is a 50-year-old mistake and get busy helping community, state and federal governments understand this by telling a different story about the value of EMS.  

Believe it or not, this is already happening. As the volunteer subsidy disappears in low-volume systems, communities that value EMS as an important quality-of-life element and public good are beginning to look beyond reimbursement and ask tough questions about how to pay for, not reimburse, the services they want and need. The road ahead is long, but the first steps are being taken.

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