Cleveland likely losing out on millions by undercharging for ambulance services, officials say

CLEVELAND, Ohio – For years, billing rates for Cleveland EMS ambulance services have lagged far below what other cities charge and below what insurers are willing to pay, causing the city to lose out on potentially millions of dollars, officials say.

The city’s rates have remained unchanged for the better part of two decades, but the costs to provide ambulance services have continued to rise with inflation. The result: Cleveland EMS isn’t coming close to recouping its rising costs for medication, supplies, salaries, fuel and ambulances.

“It’s almost like our rates are laughably low,” said City Councilman Charles Slife. “The insurance companies love it because it’s a steal.”

Slife hopes to introduce and pass legislation this year that would put the rates more in line with industry standards. At the same time, Mayor Justin Bibb has emphasized the need to boost city revenue to shore up a projected budget deficit, and his administration has begun to review all the fees and charges levied for city services.

Bibb’s spokeswoman, Marie Zickefoose, said it’s too early to tell whether the mayor will back EMS rate increases specifically, given that it’s a “complicated topic and we want to be sure that whatever approach we pursue is thoughtful and equitable.”

But proponents of the change say it is a no-brainer.

Cleveland’s base rate for an ambulance run ranges from $350 to $500 and has been in place since around 2004. Those rates are “well below” the $600 to $850 other local ambulances charge, according to a 2019 analysis from the city’s Finance Department.

And the Cleveland base rate is “well below” what peer cities charge too, like Columbus ($580 to $985), Cincinnati ($980 to $1,760) and Pittsburgh ($700 to $900), the analysis found.

But notably, Cleveland’s rates for at least two types of ambulance service also fall below the rates that Medicare is willing to pay. That means that Cleveland is losing out on essentially guaranteed money from the federal government, via patients insured through Medicare and Medicaid.

If Cleveland’s rates had been raised to reflect what Medicare would pay today, the city could’ve collected up to an additional $1.5 million in 2022 alone, according to projections from the Cleveland Association of Rescue Employees, the union representing EMS workers.

And that scenario doesn’t take into account the even higher rates that private insurers are generally willing to pay. Cleveland is “missing out the most” when it comes to privately-insured patients, city Controller Jim Gentile said during 2022 budget hearings.

To remedy that, Slife said he’s exploring an idea that would peg Cleveland’s ambulance rates at double the Medicare rates. That approach could bring in an additional $7 million per year through private insurers, Slife said.

It’s unclear why Cleveland hasn’t raised ambulance rates since the early 2000s. Failing to do so has likely resulted in “losses in the tens of millions of dollars,” the union said.

Stagnant EMS rates aren’t an outlier when it comes Cleveland service charges, though. Gentile noted that none of the city’s fees have been raised in some time.

EMS rate increases would impact uninsured and privately insured patients the most, the Finance Department’s analysis said. Medicare patients would see a slight cost increase, if the city charged them for the balance not covered by Medicare. And Medicaid patients would feel no impact because it is illegal to charge them for their balance, the analysis said.

Critics of the idea might say higher ambulance rates would prove burdensome for Cleveland’s poor residents, as they would have to pay the balance between the city’s rates and what Medicare or their private insurer would pay. But Slife and Tim Sommerfelt, the EMS union’s secretary, downplayed that argument. They pointed to Cleveland’s standing “soft-billing” practices, in which a patient’s balance is forgiven after insurers pay their portion.

Sommerfelt said the city could continue with soft-billing to ensure “we’re not negatively impacting our residents.”

“Our intention is not to have grandma paying out of pocket for an ambulance ride,” Sommerfelt said. “We’re not looking to make money on the backs of somebody’s medical emergency. But it costs money to provide services and if insurance companies are willing to reimburse a certain rate and we’re asking below that rate, then it’s something we need to look at.”

During the budget hearings, Council President Blaine Griffin said council wants to pursue higher ambulance rates, though he cautioned against “unintended consequences.” He said he didn’t want to hurt citizens not covered by Medicare or Medicaid.

“We don’t want to be punitive, but we do want to capture revenue,” Griffin said.

Council identified EMS rates as an issue more than a decade ago. It passed legislation in 2010 allowing the EMS commissioner to unilaterally raise rates, eliminating a previous rule that required the Board of Control, comprised of mayoral appointees, to set the rates. But the rates never changed, despite the easing of red tape.

“Find me something [else] that’s the same price as it was in 2004,” Sommerfelt said.

Slife sees a rate increase as an opportunity to not only recover some of the city’s costs to provide EMS care, but also as a chance to invest more money in the paramedics and EMTs who deliver it.

The division of EMS had 40 vacancies among frontline staff as of late February, representing what Safety Committee Chair Mike Polensek described as a long-term problem with high turnover.

Slife said the city pays EMTs and paramedics less than private ambulance services in Northeast Ohio, fueling the turnover. Polensek blamed another factor – the costs of training – as a contributor. EMTs must foot a roughly $5,000 bill for training that’s required to continue their employment with the city, he said.

“We’re asking people to work in a stressful environment, incur additional costs, and you know, be paid low,” Slife said. “It’s no wonder we’re in the situation we are.”

The city’s price tag for staffing, along with everything else it needs to deliver EMS services, is expected to be around $35 million in 2022. Revenues are expected to be a fraction of that — around $15 million, most of which comes from ambulance fees.

“By not attempting to account for inflation, the division becomes [an] increasing drag on the general fund of the city each year,” the union’s analysis stated.

Increasing ambulance rates could go a long way toward closing the gap, Slife said.

“What we’re missing out on is the ability to charge what insurance companies anticipate a large city would be charging,” he said during budget hearings. “We’re leaving money on the table.”