Company Management

Jonathon S. Feit, MBA, MA
Chief Executive Officer

Christian C. Witt, MBA
President & CTO

David P. Saylor, M.Eng.
Chief Engineer

Dr. Mark Wittman,

Chief Medical Officer

Sergey Karishev
Senior Enginee

Lisa Suennen

Robert Favuzza

CP Primer – Part 2: Funding / Economics of Mobile Health


In the last installment of our series on Community Paramedicine (“CP”), we explored the history of this concept also known as Mobile Integrated Healthcare, or the application of Accountable Care to Fire/EMS.  Since then, the topic has enjoyed airtime at EMS Today, Firehouse World, and even HIMSS; it will be a focal point at the EMS Redline conference later this week, too.  Many of us know, however, the hitch in the plan to leverage Fire, EMS, and nursing professionals—plus individuals who are cross-trained among these disciplines—to deliver high-quality beside care for high-risk and/or underserved populations: today, there is no common way for Fire or EMS agencies to be paid for their Community Paramedicine work, because in the U.S., emergency transport agencies are paid by the mile, like taxis with really expensive, highly qualified drivers.

Assuming Medicare could take forever to adopt a new payment schema, could a more holistic, EMS-centric financial model presented by Matt Zavadsky of MedStar in Dallas (which runs one of the country’s most renowned mobile healthcare programs) justify deploying CP nationwide?  Do the circumstances surrounding CP programs in Dallas, Pittsburgh, and Reno—the most frequently cited examples—make them somehow unique, inapplicable to other settings around the country? 

    • As technologists and consultants, my team’s job is to explain the CP model and build tools to make it work at a price point that justifies the investment. Next time I’ll expand on a presentation I gave at the Connected World Conference a few weeks ago to describe innovations that can make CP  cost-effective so that hospitals and counties will be able to justify subsidizing it as a way of avoiding readmissions and wasteful ED costs.

During the week of EMS Today 2014, the U.S. Department of Health & Human Services held a summit in Washington, D.C., called “Health Information Exchange and the Prehospital Environment.”  Organized by Dr. Gregg Margolis and Kevin Horahan, with keynotes by Dr. Karen DeSalvo (National Coordinator for Health IT and former New Orleans Health Commissioner), and Dr. Nicole Lurie (Assistant Secretary for Preparedness and Response), the event had impressive credibility and topical timeliness; it highlighted the need and opportunity of a connected health ecosystem that includes EMS and Fire.  Dr. Adam Landman of Boston’s Brigham & Women—one of the country’s topic scholars of EMS process and technology—drew attention to the distinction between what’s possible and what’s happening.

But there was a problem: most of the EMS folks in the room—there weren’t many, but those who attended were industry leaders—had no idea why they were there.  HHS representatives asked vital questions, like “How can EMS help reduce healthcare costs for Accountable Care?” but you could have heard a pin drop on the carpet.  Why?  Because no one spoke on behalf of Medicare, the agency that sets EMS payment rates.  Yet CP—without a technological catalyst to help slash costs—can actually cost some EMS agencies money.

Source: Brenda Staffan (REMSA) at Firehouse World 2014

The value of Community Paramedicine as an idea stems from the heavy EMS usage skew toward the poor, elderly, and chronically or mentally ill.   At Firehouse World, Brenda Staffan of REMSA—which won a 2012 CMS Healthcare Innovation Challenge Grant to help identify new payment models—cited Hobbs and Ong (2006) and showed a simple chart  indicating that 73% of ambulance users either don’t have or don’t use private insurance.  Public insurance (i.e., Medicare and Medicaid) rates are preset by region and service type, so agencies with different costs may or may not be able to cover their expenses; on the flip side, private-pay patients may not pay their bills, especially if they are indigent.  These numbers lead quickly to the $3 billion in “uncompensated care” that Troy Hagen of Care Ambulance published in EMS World

At the same conference, Zavadsky figuratively threw his shoulders back to declare that EMS agencies deserve to be paid for their work, especially if they are delivering outsized value such as the identification of patients that do not need to be taken to the hospital—and which would ultimately cost the healthcare system more than if they were transported elsewhere.  He said EMS agencies should be paid on the basis of value, not activity, after explaining that Medstar’s CP program in Dallas avoided 813 transports through implementation of a Community Health Program for 9-1-1 transports, 514 transports through a 9-1-1 Nurse Triage program, and 16 readmissions for congestive heart failure patients.  The case is powerful: considering just the 16 CHF patients whose transports and hospital intake was avoided, the regional health system saved $441,152 in charges, and $299,216 in payments. 

But here’s my question: If CP is to work, we need to know whether the hospital agrees with these numbers—or is the health system actually being asked to give up a heavy revenue stream?  If the health system is paid $299K on $441K in charges—is it taking a loss, or is it merely generating less “profit”? 

Zavadsky’s argument is compelling if the revenues to be earned for transportation, testing, treatment (if necessary), and discharge—minus a penalty for readmissions—is less than the cost of a patient transport to the hospital; that is, if the entire process is a net loss.  This picky detail is critical because it touches what has historically been the immovable barrier to getting hospitals to adopt readmission prevention programs like CP: Zavadsky’s slides show only expenses, not revenues.  How much money are hospitals giving up if they adopt programs that keep patients out of emergency departments?  Are the penalties for readmission enough to keep hospitals from inviting patients in over and over again?

According to Chas Roades, Chief Research Officer of the Advisory Board Company (with reference to Kaiser Health News), the answer may be “No”: “The financial penalties aren’t huge right now, but hospital leaders recognize that the penalties will get bigger, and that scrutiny over readmissions rates will continue to grow.”  After all, why would a well-managed healthcare system—which usually includes a hospital, its EMS agencies, public sector agencies, and associated nursing, rehab, and other clinics—“leave money on the table” by keeping patients out of the system? 

Now from the EMS vantage point: How much money are EMS agencies giving up by not transporting patients and getting paid (even using a weak metric like mileage)?  Will Medicare compensate Community Paramedics enough to justify retraining and purchasing technology to provide beside care? 

Well…maybeThe answer on the EMS side is less clear, because the key to Zavadsky’s model – as it has been presented to the industry – is a pure economic loss to the healthcare system.  That is, it assumes that patients who are transported multiple times within a 30-day period receive zero reimbursement for care under Obamacare. That changes everything, because the incentive frame shifts immediately toward on-site care if transportation of a patient within 30 days would result in non-payment of invoiced bills.  Then the ability to provide excellent care at the lowest possible cost takes precedence—and EMS wins.

Is it true that EMS agencies transporting "frequent fliers," and hospitals receiving readmitted patients, receive zero compensation – or will they simply generate less revenue per patient than they do now?  I have had this conversation with various Accountable Care Organizations mostly in New York and California, among others, but I recall most of all a conversation with an ED team at the University of Pennsylvania Medical Center in 2012 (it was a public conversation attended by representatives from the Philadelphia Mayor’s office and the Fire Department).  We discussed patient throughput at UPenn’s ED, and one of the docs said that “as a clinician I would love” a way to identify and track frequent users of emergency services so they can get in and out of the hospital faster, with lower costs incurred, and less risk of bad data that may turn out to have been important.  But, this physician noted, “there’s no way the CFO’s office would go for it” because frequent testing and readmissions are a major source of hospital revenues.  Then the Affordable Care Act happened. 

The UPenn physician posited that the hospital would begin exploring means to handle low-acuity frequent transport patients around the same time as the readmission prohibitions were to go into effect, but not before, because those changes would transform former high-value, low-acuity, easy-to-handle repeat patients into zero-revenue wrenches in the system; in the hospital’s defense, urban hospitals like UPenn do not generally have ED room to space.  But I have had similar discussions with teams representing the Accountable Care Organizations in my own backyard: John Muir Health in Northern California operates both a regional trauma center and an ACO, so it has “two sides of its house”: one side generates revenue by doing everything that one expects from a top-tier medical center; the other side is paid based on how well it provides care outside the hospital, albeit at the lowest cost possible.

Moreover, Zavadsky’s model dramatically boosts the amortized economic value (cost-benefit) of Community Paramedicine when ambulance operations are considered, because now the combination of some patients who pay for services and others who don’t means that agencies to stuff as many billables as possible into the calls that do pay to compensate for the calls that don’t: this is the simple physics of having to pay one’s bills in a context swirling with bad debt and uncompensated care.  But if the utilization of EMS training and capabilities are optimized, medics can "go beyond the biology and the diseases of the patient" (in the words of UPMC's Dr. Dan Swayze) –  save healthcare systems money (and therefore can be paid on a value basis), the costs of maintaining crews, ambulances, ePCR technology, and more gets spread out more evenly, for more efficient staffing, more level billing, and streamlined operations with less “bloat” and fewer part-time medics needing to support themselves with second jobs. 

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