"Cuts signal ambulance wreck"

From San Jose Business Journal

Ambulance companies in Silicon Valley are bracing for a new round of Medicare reimbursement cuts next year that some predict will bring further consolidation to the industry.

In January, a new government policy will take effect that phases out payments for disposable supplies and oxygen that ambulances routinely use when transporting patients, the industry says. In addition, ambulance companies are expecting cuts in their mileage reimbursement rates at a time of record gasoline prices and a reduction in payments for transporting Medicare patients, which typically make up half their customers.

Statewide, the new fee schedule could mean a 23 percent cut, or $110 million less, in Medicare payments for California's 280 ambulance companies, according to David Nevins, president of the California Ambulance Association, which is pushing for a freeze in next year's rates. "We project in 2006 that we could see nine to 10 businesses in California go under."

Ambulance companies say they cannot afford another decrease in government payments because Medicare reimbursement rates already fail to cover their costs. In 2002, the industry was shifted to a national fee schedule which bases reimbursements on national averages rather than on an individual company's customary charges. The new policy, which is being phased in over five years, has meant that companies in California, which have some of the highest operating costs in the nation, saw a loss on Medicare patients of $29 million in 2005, Mr. Nevins says.