Chicago has struggled for 33 years to collect the fees for ambulance service first imposed in 1985. For the first time in more than a decade, somebody else will give it a try.

Mayor Rahm Emanuel’s administration has awarded a five-year, $17.5 million contract — with a possible three-year extension — to Advanced Data Processing, Inc.

The contract calls for the company to conduct both Part A, described as “EMS billing and collection” as well as Part B, a “patient tracking and mobile electronic patient care and reporting system.”

Deputy Budget Director Molly Poppe said the new contract
achieves $500,000 in annual savings, thanks to the “lower rate” negotiated by the city’s Department of Finance.

The old contract included a 7% fee: a 5% base fee and a 2% compliance fee paid only if the contractor achieves less than a 5% error rate on its monthly compliance audit.

The new rate is 3.95% — 2.7% base fee and a 1.25% Compliance fee. The contract also includes the monthly auditing process.

But, the biggest change includes improvements to the patient care management system.

“It is replacing the 10-15 year old tablets in the ambulances. There upgraded tablets and enhanced software will provided for easier access to reporting system,” Poppe wrote in an email.

“It also includes the ability for data to be seamlessly transferred from fire suppression members to paramedics and provides a separate application on each device for better management of major incidents.

Poppe cited a “common misconception on self-pay” and the city’s collection rate.

“After you adjust for the amounts that Medicare and Medicaid do not pay, we have a good collection rate. Self-pay collection rate is low, but that is everywhere, not just Chicago,” she wrote.

“Also, when you compare the breakdown of EMS Payers ( Medicare, Medicaid, commercial insurance, self-pay) we are comparable to other major cities.”

Two years ago, Inspector General Joe Ferguson concluded that the cash-strapped city could boost collections and reduce contractor fees by $2.4 million by changing its billing rules and collection terms.

Although the Department of Finance is authorized to set “reasonable fees for all ambulance services,” Ferguson noted then that the city “only bills for services that involve transporting patients to local hospitals.”

If a patient is “evaluated and treated on the scene without transport, the city does not bill the patient for any services,” the inspector general said then.

By changing that policy alone, the city could boost annual ambulance fee collections by $696,594, the audit stated.

“Although Medicare and Medicaid will only pay for services that involve a transport, cities such as Dallas, San Antonio and San Francisco charge private insurers and self-pay patients for such ‘treat-no-transport’ services,” Ferguson wrote.

Emanuel subsequently rejected Ferguson’s 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.

While the city reviews accounts to “guard against overbilling” for ambulance services that can result in “penalties and fees,” Ferguson also noted that the Department of Finance did not “routinely review unbilled accounts” to make certain that they were “accurately designated as not-billable.”

That oversight resulted in $160,799 in “missed fee revenue” in 2014 alone, the inspector general concluded.

But the biggest potential savings came when Ferguson compared Chicago’s ambulance billing contract to those of other municipalities. By adopting “certain compensation provisions” prevalent in other cities, the inspector general concluded that Chicago could “save between $883,211 to $1.5 million annually.”

“Opportunities exist to increase fee revenue and reduce costs….We recommend that [the city] take measures to ensure that it bills completely for all billable transports and consider expanding the range of services subject to a fee,” Ferguson wrote then.

“We also recommend that DOF consider eliminating the incentive fees from its contract with the billing vendor as means of reducing costs. If it does not eliminate incentive fees, we recommend DOF more carefully review documentation used to justify monthly incentive payments.”

The Department of Finance responded to the audit with a promise to launch a “monthly review of unbilled accounts” and a “cost-benefit analysis to determine whether it should charge” in instances where patients are treated on the scene without transport.

As for the recommendation that the city alter its billing contract, the Emanuel administration said it planned to “take this opportunity into account … when it negotiates a new contract.”