Confront Managed Care's Impact on EMS
June 1, 1997
Confront Managed Care’s Impact on EMS
As managed care organizations (MCOs) increasingly perceive ambulance agencies as a key leverage point in their cost-cutting efforts, EDs are beginning to feel the heat. ED managers need to confront these changes head-on to maintain healthy patient volumes in the coming years, say experts.
In the past, if paramedics responded to a call but failed to transport the patient by ambulance to the ED, they didn't get paid. "The hospital industry needed us to bring in the patient to bring in revenue, and if we did anything in the field to limit cash flow, we'd be considered renegades," says Jack Stout, chairman of CapTrans, a network model provider of capitated episodic care, based in West River, MD.
The growth of managed care has changed all that, with today's HMOs demanding that less expensive transport options be available. Paramedics are encouraged to offer a full spectrum of cheaper transport methods, including wheelchair transport, critical care transport, drivers trained in personal assistance, taxicabs and, in some cases, no transport at all.
MCOs push for alternative dispositions
Many MCOs now require ambulance services to follow algorithms designed to reduce the use of ambulances. "In the past, when the phone rang, we'd send the most expensive vehicle we could findan ambulanceand take them to the most expensive place we could findthe ED," says Stout. "Everybody was happy with that in the fee-for-service world, but with managed care, things have changed." A significant percentage of patients who would have previously been brought straight to the ED are now taken to a primary care doctor by a cheaper transport method, he adds.
In the past, calling 911 was the only option if an individual perceived a health emergency. MCOs are now encouraging their members to call their own toll-free advice lines instead, so that the plan can determine the most cost-effective course of action. "Now, the patients will call an 800 number and the HMO's pathway management will tell them whether or not they get an ambulance," says Stout. The algorithm approved by the medical board of the HMO will determine whether a patient goes to the ED, he says.
MCOs are attempting to cut costs by encouraging their members to resist calling 911 except in extreme emergencies, but some experts suggest the risk is not worth the dollars saved. "If people are really sick, let's not do anything to discourage them from using 911," says James Augustine, MD, FACEP, CEO of Premier Health Care Services in Dayton, OH, and Chair of the Department of Emergency Medicine at nearby Miami Valley Hospital. "You'll always have those patients who call with bubble gum stuck in their hair or some minor thing, but it's another problem when patients don't call 911 because they're afraid it isn't a covered service, and they may call when it's too late."
A proactive approach to managed care
ED managers should consider the interface between managed care and EMS when negotiating with MCOs, says Stout. It's important to stress that management of unscheduled care is a skill that the specialty of emergency medicine alone can bring to the table. "Eighty-three percent of all health care is scheduled, and handling unscheduled care is very difficult," he explains. "Making rapid decisions with limited information is a very rare and valuable ability, and that is the expertise of emergency medicine."
The following list contains strategies for taking a proactive approach to managed care and EMS:
Consider charging less for low acuity care. To counter the trend of EMS bringing patients to other cheaper care sites, EDs should take the opportunity to corner the market on unscheduled health care needs by offering lower acuity care at a reduced price, says Stout. "Having a fast track attached to the ED makes a lot of sense, but it has to be price competitive, not just slightly discounted from an ED visit," he says.
To be competitive with the urgent care centers created by MCOs, it may be necessary to reduce fees for lower-acuity ED visits. "In many communities, EDs need to say, There's a problem with our charging structure; maybe we shouldn't be charging so much for low acuity, and maybe we should be charging more for high acuity,'" says Augustine.
Maintaining current fee structures may be penny-wise but pound-foolish, says Augustine. "EDs need to bring our reimbursement schemes along the lines a payer and patient consider a good value and possibly reflect a new reimbursement scheme," he says.
Create an urgent care center. One way to keep MCOs from requiring EMS to bring low-acuity patients to their own urgent care centers is to add one to the ED. Urgent care centers attached to EDs are one way to increase patient volumes and avoid lost revenues. "Volumes will drop, unless you're willing to recapture some of the urgent care business by creating your own urgent care centers," says Stout.
An urgent care facility that shares the staffing and resources of the ED can be very attractive to MCOs but only if it's cost-competitive. "Be competitive with the urgent care industry, so you won't give managed care the incentive to build an urgent care facility," cautions Augustine.
By maximizing the use of facilities that are fixed costs of operating an ED, costs will be reduced for MCOs. "It's still much cheaper to make the ED work efficiently than to use bricks and mortar to build an urgent care center in order to save money," says Augustine. "It's not going to be less expensive for a managed care group to open another building when the lights of the ED are still on."
If EDs don't take a proactive approach, MCOs will continue to encroach on other types of ED services, says Augustine. "If we don't do this right, urgent care centers will suddenly have observation units, and so on. To prevent that, we need to set up a system that is truly competitive."
Form partnerships with prehospital services. Ambulance services and EDs are natural partners in the managed care era, says Michel A. Sucher, Vice President of Medical Affairs and Chief Medical Officer of Rural/Metro Corp., based in Scotsdale, AZ. "We have very aligned interests and incentives, and the challenges we face are very similar. By working together to integrate the spectrum of care, we have an opportunity to provide better care to patients and more cost-effective service to the health plans, and also ensure control over our own destiny."
A bigger umbrella’
Some emergency physician groups have recognized the need to offer MCOs a broader scope of services. "There is a gigantic demand for the management of episodic care in general," says Stout. "In the future, emergency care will be sold under a bigger umbrella of episodic care."
Forward-thinking physician groups should consider creating strategic partnerships with ambulance services and pathway management vendors to manage an MCO's patients on a capitated basis, he suggests. "HMOs are going to want to contract with people who will assume all the risk for episodic care, in order to reduce their overall costs."
Having a single group assume the risk of unscheduled care is an attractive prospect for an MCO, says Augustine. "We want to set up a system with demand management, transportation, and emergency and urgent care services all as one product," he says. "We as experts in unscheduled care can assume the risk, offer good service, and save payers doing extensive re-education for their members, and just take care of all of it for them."
• Provide a mobile outreach service. Paramedics are often encouraged by MCOs to provide care out in the field to eliminate the need for an ambulance trip to the ED. "Many times we respond to diabetics who may be in fairly bad shape when we arrive, but we balance them out and they're OK again," says Stout. "Under managed care, if they really are okay, nobody wants to force them to be seen, and if we're capitated, we don't need to transport them to the ED to be paid."
These developments will potentially reduce ED volume and reduce its profit margins, but emergency physicians should take advantage of this fiscal reality, says Augustine. "A number of patients who come to the ED need rather simple things done," he says. "Currently, that patient comes in through the medic system. If that visit could be done instead by a service that went out to the site, it could be done at a fraction of the price."
New health care entities may start providing that service to save MCOs money, says Augustine. "Instead of it being a $700-$800 experience, some providers are saying, give me $200 or $300, and I'll do it myself," he says. "Instead of bringing the patient to the ED with a wound, you could send a physician assistant, nurse practitioner, or even a physician straight to the patient and have them sew it up right there."
Instead of losing patient volume to EMS services who are contracted by MCOs to provide health care out in the field, emergency physician groups could partner with ambulance services to provide mobile health care, says Stout.
"A nurse practitioner or physician assistant could render services in the field, particularly in rural areas, as an employee of the emergency physician group," says Stout. "Telling an HMO you'll make house calls is a hell of a deal, and gives you a very nice competitive edge. It could lower costs dramatically, and if you're capitated, you get to keep the savings."
• Help local paramedics negotiate with MCOs. Emergency physicians should provide guidance to the paramedic community on managed care issues, says Augustine. "Paramedics are focused on providing the best care they can, but now that they are interacting with payers who may be putting pressure on them to turn down calls or move to urgent care centers, they need medical leadership," he says.
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