SR-700-001-05
F:\atty\muni\strpts\mox\AmbulanceContractAuthorization.doc
Council Meeting: July 23, 2002 Santa Monica, California
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Authorization to Negotiate and Execute Agreements for Emergency
Ambulance Services with American Medical Response of Southern
California
Introduction
This report recommends that the City Council authorize the City Manager to negotiate
and execute agreements with American Medical Response of Southern California (?AMR?)
for basic emergency ambulance services and billing for advanced life support services
provided by City paramedics.
Background
AMR has provided basic emergency ambulance services to the City since 1993.
Agreement Number 5919 (CCS) provided that if local emergency hospitals
discontinued the practice of restocking Santa Monica Fire Department?s Basic Life
Support (?BLS?) units and Advanced Life Support (?ALS?) units with emergency medical
service (?EMS?) supplies used at emergency scenes, AMR would provide this
restocking of supplies at no cost to the City. Approximately four years ago, local
hospitals ceased providing the necessary paramedic supply restocking. This triggered
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AMR?s obligation to provide the EMS supplies. Procedures were implemented so that
AMR could fulfill the restocking obligation.
Recent opinions issued by the Office of Inspector General of Health and Human
Services (?OIG?), the federal agency primarily responsible for enforcing the federal
Anti-Kickback Statute (the ?Statute?), concluded that free restocking of EMS supplies
might constitute unlawful remuneration in violation of the Statute. Hospitals throughout
Los Angeles County discontinued the restocking of EMS supplies. Although the OIG?s
opinions mainly addressed restocking by hospitals, the legal analysis in those opinions,
combined with other OIG pronouncements specifically addressing municipal EMS
contracts indicates that free restocking by an ambulance company for a city which has
awarded it an EMS contract may also violate the Statute. AMR and its attorneys
contacted the City to explore other methods to assure that the necessary EMS supplies
could be provided without risking violation of federal law. The agreed upon solution
was to find a means to generate new revenues to pay for EMS supplies and enter into
new agreements to accomplish this goal. AMR has been providing emergency
ambulance services on a month to month basis since Agreement Number 5919 expired
in June of 1999.
Discussion
AMR provides the City?s ambulance transport services and bills for Basic Life Support
(?BLS?) services to patients. For patients who require a higher level of care, known as
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Advanced Life Support (?ALS?), City paramedics and AMR provide these services, both
before and during transport to the hospital. Patients and/or their third party insurance
payors have not been billed for and have not paid for medically necessary ALS
services.
Under applicable Medicare rules, the ambulance company providing transport services
may bill for medically necessary ALS services rendered by their personnel and City
paramedics both at the scene and during transport, and then reimburse the City for
paramedic services. The City may not bill directly to Medicare or other public
reimbursement programs for these services. In order for AMR to bill for the ALS
services on behalf of the City, there must be an approved agreement to do so.
The proposed ALS Billing Agreement would allow AMR to do this billing. The billing
arrangement would provide for a paramedic pass-through fee equal to the difference
between the existing BLS fees that AMR is currently charging for all emergency
transports and existing ALS fees that are allowed when a City paramedic provides
medically necessary ALS services during transport. This new arrangement would
provide repayment of legitimate costs not currently reimbursed. The reimbursement for
ALS services would be within the fee limits established by Los Angeles County. As of
July 1, 2002 the difference between the County-approved fees of $354.50 BLS and
$544.50 for ALS is $190.00. This is the additional amount AMR would bill to individuals
and/or their insurance providers. The ALS Billing Agreement would require AMR to
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remit to the City an amount equal to 90% of the paramedic pass-through fees actually
collected. The remaining 10% would be retained by AMR to cover costs of billing and
collecting the ALS fees.
The overall collection rates have averaged 15% for individuals and 85% for private
insurance companies. Medi-Cal does not reimburse for ALS services. Medicare
reimburses at rates below the County-approved fees. AMR has estimated that overall
collection averages about 43% from all pay sources.
Budget/Financial Impact
In July 2001, the Fire Department, through an enhancement, obtained authorization to
spend $60,000 to purchase EMS supplies to replace the re-stocking arrangement by
AMR. These funds are currently held in Account Number 01313-544090 and are
earmarked for this purpose. Upon implementation of the new ALS Billing Agreement,
the $60,000 will be used to purchase required supplies. Monies collected under the
ALS Billing Agreement will be deposited into Revenue Account 01312.400680. As an
assurance that sufficient funds will always be available to purchase EMS supplies, the
Fire Department MOE will continue to include that line item, subject to adjustment as
needed. These appropriations will serve as a reserve to cover the ongoing costs of
EMS supplies and related expenses and will be used to the extent of any shortfall in
ALS Billing collections each year.
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Recommendations
It is recommended that the City Council authorize the City Manager to negotiate and
execute the following agreements with American Medical Response, Inc.:
1. Basic Service Agreement for emergency ambulance service and
2. Advanced Billing Service Agreement for Advanced Life Support (?ALS?)
services provided by City paramedics.
Prepared by: Ettore Berardinelli, Fire Chief
William Kolberg, Deputy Chief - Fire Administration
Carl Bjerke, Paramedic Coordinator - Fire Administration
Marsha Jones Moutrie, City Attorney
Linda A. Moxon, Deputy City Attorney
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