Burke: Privatize ambulance fees to cut $50 million in unpaid bills annually
By Fran Spielman City Hall Reporterfirstname.lastname@example.org September 23, 2011 1:22PM
Ald. Ed Burke (14th)
Updated: November 10, 2011 5:54PM
The City Council’s most powerful alderman suggested Friday 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.
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 Mayor Rahm Emanuel has demanded 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.”
Chicago began charging for ambulance service in the 1980s and has struggled to collect those fees ever since.
In 1996, the Chicago Sun-Times reported that nearly half the $18.5 million billed for city ambulance calls during the previous year went unpaid. At the time, City Hall blamed the problems on Medicare, Medicaid and third-party insurance companies that pay varying percentages.
Ten years later, the city raised $22.1 million in ambulance fees, but billed $80 million. That’s a dismal collection rate of 27.6 percent.
Only 10 percent of Chicago ambulance fees are self-paid. The rest comes from commercial insurance companies (34 percent), Medicare (34 percent) and Medicaid (22 percent).
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. Non-residents were asked to pay $100 on top of that.
But weeks before the increase took effect, Chicago taxpayers were forced to give back $6.9 million in fees already collected for ambulance transport.
The returned fees had been collected from Medicare during the five-year period ending in September of 2005.
Then-Corporation Counsel Mara Georges said the dispute with Medicare stemmed from “three different scenarios” when: transportation wasn’t deemed “medically necessary;” two people were transported in the same ambulance and Medicare was billed twice for full charges and patient signatures were not obtained, sometimes because the patient was incapacitated.
Fifty paramedics were subsequently disciplined for making billing mistakes. All paramedics and emergency medical technicians were retrained.
Overdue ambulance fees are currently collected by the DeZonia Group, under a five-year, $20 million contract that’s due to expire next year.
The company was chosen for its promise to “dramatically improve” collections, reduce from over 50 percent to 35 percent the number of transports where insurance coverage is not identified and for its offer to accept a flat rate of seven percent of actual collections.
The prior vendor had a sliding scale that started at 7 percent and rose to 15 percent.
The DeZonia Group also recommended that Chicago significantly increase the fee for ambulance transports to match the $800-to-$1,200-per transport range charged by other major cities.
Daley ignored the recommendation, but nearly doubled the fees.
As for Emanuel’s vow to wring $15 million in unpaid water bills from four impoverished suburbs — Harvey, Robbins, Dolton and Maywood — Burke essentially said, good luck.
“How do you enforce collection? We can’t very well turn off their water so that the poor citizens out there can’t exist,” he said.