Management and financing of emergency medical services.

NC Med J July/August 2007, Volume 68, Number 4 ike other organizations, emergency medical services (EMS) systems have revenues and expenses. The unpredictability of calls and the oftentimes inefficient nature of EMS operations make EMS management and financing difficult. Annually, EMS costs patients, insurers, and the federal government billions of dollars. In fiscal year 2002, Medicare spent $3 billion on ambulance transportation. The insufficiency of reimbursement for the total cost associated with 24 hour, 7 days per week coverage is the subject of constant debate and discussion among EMS managers. Recent modifications to the reimbursement formula used by the Centers for Medicare and Medicaid Services (CMS) has both benefited and disadvantaged many of the more than 18 000 EMS systems in America; reducing the gap between costs and revenues for some while increasing that gap for other EMS systems. The purpose of this commentary is to describe the major components of EMS financing and management and to discuss the current and ongoing challenges in EMS financing. Revenues to an EMS system include subsidies from local governments, income from special event support, and reimbursement for transportation of patients. Fifty-five percent of revenues for an average EMS system come from Medicare, 15% from Medicaid, 5% from private payment, and 25% from the commercially insured. Personnel and benefits are the largest fixed expenses for the average EMS system. Revenues and expenses are not completely uniform across systems. For volunteer-staffed EMS organizations in very rural areas, processing bills for transportation is either not possible or an unattractive practice that would take away from the volunteer nature of the organization. Thus, most revenues for such organizations come from donations and support from local governments. In addition, submitting a bill to Medicare or Medicaid does not guarantee payment. In 2000, the average collection rate for bills submitted by North Carolina EMS systems was 25%. The average cost for an ambulance transport is $415, but ranges from $99 to $1218. Average costs in very rural areas are significantly higher than costs in urban areas, $538 and $409, respectively. Ten years ago, the estimated average charge for transport to the emergency department approached $400. It is unclear what the true average charge for an EMS transport actually is today. In some communities, a ride to the hospital or