Rahm Emanuel rejects IG plan to boost ambulance-fee collections

Chicago Fire Department paramedics respond to thousands of calls each year when the patient is evaluated and treated on the scene — but not transported to a hospital.

In those cases, there is no ambulance fee. And that’s apparently how it will stay.

Inspector General Joe Ferguson reported Thursday that Mayor Rahm Emanuel’s administration has rejected his year-old recommendation to boost collections by $696,594-a-year by billing “self-pay patients” or private insurers whenever a patient is “evaluated and treated on the scene without transport.”

Even though Medicare and Medicaid pay for services only when they involve a transport, Dallas, San Antonio and San Francisco already charge private insurers and self-pay patients for “treat-no-transport” services.

But in a follow-up to last year’s audit, Ferguson reported that the city’s Department of Finance “reviewed the feasibility of treat-no-transport billing,” and decided against it because it would generate only $186,000. No cost-benefit analysis was done.

“The minimal revenue projected from this type of billing does not justify the cost of billing,” city officials told Ferguson, according to his report. “Further, as many of the patients receiving treatment but not being transported are under-insured or uninsured, the revenue would be coming from an extremely vulnerable segment of the population who can least afford it.”

Last year’s audit on Chicago’s 32-year-struggle to collect ambulance fees concluded that the city could boost collections and reduce contractor fees by $2.4 million by changing billing rules and collection terms.

The “treat-no-transport” fee was just one recommendation.

Ferguson also concluded that the city could save as much as $1.5 million a year by adopting “compensation provisions” prevalent in ambulance contracts in other cities. Another $160,799 could be gained by routinely reviewing “unbilled accounts” to make certain that they were “accurately designated as not-billable,” he said.

In Thursday’s follow-up, Ferguson credited the Emanuel administration with implementing only two of his corrective actions and partially implementing another.

The suggestion to eliminate incentive fees from future collection contracts or clarify how they are awarded was branded as “pending implementation” after negotiations with a “selected vendor.”

“The fee paid to the vendor will include a compliance component. A percentage of the total negotiated fee will be designated as a compliance fee and will not be paid to the vendor if they fail to meet the city’s compliance requirements,” the inspector general wrote.

The Department of Finance earned an “implemented” stamp by establishing a committee charged with conducting a “monthly review of unbilled accounts” and adding “several new sections to the risk assessment” to avoid submitting claims for deceased patients and by eliminating “improper upcoding of claims” and addressing other “recurring billing issues.”

Chicago began charging for ambulance service in the 1985 and has struggled to collect those fees ever since.

In 2009, then-Mayor Richard M. Daley nearly doubled ambulance fees – from $325 and $8 a mile to $600 and $13 a mile for basic life support and from $400 and $8 a mile to $700 and $13 a mile for advanced life support. Nonresidents were asked to pay $100 on top of that.

But weeks before the increases took effect, Chicago taxpayers were forced to give back $6.9 million in fees already collected for ambulance transport. Those fees had been collected from Medicare during the five-year period ending in September 2005.

Fifty paramedics were disciplined for making billing mistakes. All paramedics and emergency medical technicians were retrained.

In 2011, the City Council’s most powerful alderman suggested that Chicago privatize the collection of city ambulance fees to raise a dismal 37.5 percent collection rate that has created a $50 million-a-year debt.

At the time, Finance Committee Chairman Edward M. Burke (14th) described the ambulance fee debt as “low-hanging fruit” that would go a long way toward maintaining Chicago Fire Department operations at a time when Emanuel was demanding a 20 percent cut.

“If private ambulance operators in Illinois can collect their fees, the Fire Department needs to investigate whether or not privatizing that function would be helpful. I’m not talking about a collection agency. That’s after-the-fact a year down the line. I’m talking about current collections,” Burke said.

“Almost every one of those victims has insurance, so it’s just a question of properly identifying the insurance carrier and properly billing and collecting from the insurance company. It’s not like harassing the person who might have been stricken with a heart attack or stroke or some victim of an auto accident out on the street.”

Overdue ambulance fees have been collected by the same vendor since 2007, under a contract that has been “extended four times” and expired on June 30. Payments totaled $22.1 million over a six-year period ending in 2014.

During the same period, the city collected $317.1 million in ambulance fee revenue. Despite the city’s ongoing struggles, collections have steadily risen — from $24.4 million in 2008 to $62.6 million in 2014.

After the most recent contract extension, the DeZonia Group promised to dramatically improve collections and reduce the number of transports for which insurance coverage was not identified for a flat rate of 7 percent of actual collections.

In 2012, Chicago taxpayers spent $529.2 million to provide emergency medical services. That was up from $518.2 million the year before.