A Guide to the EMS Contract
An EMS contract is simply the written agreement outlining the relationship between an emergency medical services provider and the governmental entity or other organization responsible for supplying emergency medical services for a specific geographic area. In reality, EMS contracts have become extremely important because they define the allocations of resources, prescribe related obligations and duties, as well as establish funding mechanisms . The creation and use of EMS contracts have broadened the functions, roles and responsibilities of emergency medical service (EMS) providers and have transformed what historically has been an event-based service into a system-based approach which are the result of contractual negotiations. Because of the significant role EMS contracts play in the delivery of emergency medical services, it is essential that they accurately reflect the expectations of all parties, avoid ambiguities and inadequacies in their terms, requirements and responsibilities, and are distinctive to the needs of the agency for which they are written.
Essential Terms of an EMS Contract
One of the primary components of an EMS contract is the scope of services, which identifies the specific medical care and treatment methods that will be provided. In addition to addressing the provision of general medical services, the agreement should address the number of personnel that each party will provide and the specialties, if any, of the personnel to be provided. The agreement should also address the obligation of the contractor to develop policies, protocols and standing orders, as well as to obtain and maintain the necessary licensure, certifications and accreditations. Many governmental agencies have pre-established protocols that must be followed.
Performance standards state the functional objectives that must be achieved by the contractor and/or how the services are to be delivered. Performance standards may address clinical and operational issues, including the level of pre-hospital care to be provided, in-house staffing, response time, radio communication, equipment specifications and maintenance, procedures for vehicle and equipment inspection, maintenance and replacement, personnel training and continuing education requirements, cost containment measures and quality assurance/quality improvement processes.
Liability clauses in an EMS contract may require one or both parties to indemnify the other for loss arising from the negligence or fault of the indemnifying party. For certain providers such as hospitals, this indemnity requirement may be prohibited because of state law. Additionally, a broad indemnity clause may be void under the doctrine of ultra vires because it could potentially require the nonprofit corporation to indemnify an officer or director for the corporation’s acts that do not involve his duties as an officer or director of the corporation. One nationwide trend has been to limit the indemnification requirement to certain intentional torts and negligent or improper acts that occur during the performance of the contract.
There are numerous compensation terms that should be included in an EMS contract. Reimbursement terms should be based on industry data and should take into account all available reimbursement sources, including commercial revenue, Medicare and Medicaid billing, if applicable, ground and air ambulance use and patient transfers. The base fee methodology should be specified, such as cost per transport, fee per call or flat fee. The contract should also specify the additional fees for certain treatments (e.g., intubation) and procedures (e.g., cardiac catheterization). Reimbursement sources should be reviewed, including the responsibility for cost of services that exceed the coverage provided by the reimbursement sources. For providers offering transports on behalf of another party, the agreement should specify the reimbursement methodology for those transports. If an RFP is being utilized for the selection of the contractor, respondent proposals should include a sample fee schedule and list other possible charges. In addition, the contractor should be aware of the level of collection effort that will be made for certain types of accounts, as the collection effort can vary between government and commercial payors.
Other compensation terms to consider include whether the contractor’s payment/fee schedule is subject to audit; whether there are any limits on the contractor’s fees by the governing body of the contracting entity; any limitations on collection of outstanding fees, such as a cap on annual collection activity; whether insurance contracts with the contractor should provide for direct assignment of payments to be made to the service provider; whether the contractor will have a "first right" to payments; and the collection litigation right of the contractor for third-party payer and uninsured patient accounts, e.g., whether only the contracting entity can initiate the litigation.
Legal Issues and Compliance
A crucial aspect of any EMS contract is ensuring compliance with various federal, state, and local regulations. One of the key legal considerations when drafting an EMS contract is adherence to the regulations set forth in the Medicare Ambulance Inflation Factor (AIF). The AIF sets forth annual trends in both the Consumer Price Index for Urban Consumers (CPI-U) and the Consumer Price Index for Medical Care Services. An EMS contract must take into account these changes to ensure compliance. Only after a contract has been fully executed should the AIF be factored in to the cost of EMS transport services. If an EMS contractor accepts reimbursement for transport at a rate lower than that provided for in the contract, this would result in under-billing and in non-compliance with the AIF. Likewise, transport providers who over-billing risk liability for damages and civil penalties under applicable federal and state law. Given the availability of federal funding for fire suppression and EMS transports, proper drafting of an agreement is paramount to ensuring compliance with applicable federal law.
Negotiating Terms in an EMS Contract
Negotiating an EMS contract requires a careful balancing act between the interests of the EMS service provider and its broker while also ensuring compliance with applicable laws. The article recently posted on this blog discussed the applicable legal requirements of an EMS contract. This section of the article discusses some strategies for negotiating an EMS contract.
First, a broker representing an EMS service provider should prepare the agreement with an understanding that certain key positions are critical to the success of its client. An EMS service provider wishing to avoid unanticipated liability should consider carefully the "business" terms of the agreement. These terms include, but are not limited to, the following: Second, a broker representing an EMS service provider should complete the agreement as fully as possible and clear as possible. Unrealistic expectations or terms which put a third party in too much of a conflicted position or may otherwise cause liability should be avoided so that the client understands the provider’s position.
For example, if an EMS service provider is representing a municipality, the provider should expressly help to explain the provision of services. The service provider should also articulate its role in the enforcement of the agreement, including circumstances where it may need to refuse a call and what it may expect in retribution.
If a municipal fire department is seeking to fund a crew with ambulance service revenues, it should work with counsel to craft an agreement which addresses the model of community based paramedicine such as staffing, liability protection, insurance, claim management etc.
The contract should also clearly set forth how the service provider will address violations. Broad contract terms, which provide the service provider with subjective, unilateral discretion to take action, should be avoided. For example, a service provider should avoid language in the agreement which provides conditions in which the service provider "may" take action, but does not require notifications, or provide a mechanism for appeal of such actions.
Further, the agreement should lay out the circumstances which would trigger the right of the service provider or the municipality to terminate the contract.
Third, the broker and the EMS service provider seeking a municipal client should address who will be responsible for enforcing the agreement. Will the contract require the EMS service provider to take action in the event the municipality fails to make a required payment? Will the contract provide a process for notifying the municipality and an opportunity for the municipality to cure? How will claims be coordinated?
Fourth, an EMS service provider which seeks to offer a price point must consider its "bottom line" early in the negotiation process. This is critical, in that if the EMS service provider makes a bottom line offer early on, its representatives may be less inclined to negotiate subsequent adjustments downward. If the service provider’s negotiating strategy relies on non-competitive rates initially, and consequently lower offers to other municipalities, its windows of opportunity could close quickly.
Common Pitfalls and How to Avoid Them
Agreements should give attention to potential problems. In EMS contracts, one major source of difficulty is noncompliance with protocols. In analyzing the problem, it is difficult to distinguish non-compliance from the case in which paramedics have difficulty in following a protocol, or protocols do not apply. Either way, you may have to modify the protocol to deal with the exception.
For example, a protocol for chest pain may require six parameters to be met. If a patient does not meet the first five, should the protocol allow for the sixth parameter not met to cause the protocol to be followed?
Another problem can arise with due process or grievance procedures . EMS providers may be scrambling on the scene. If a complaint is made of a medical error, great harm can be done if the member of the EMS team in control of the offending action is not interviewed in an effort to reduce the risk of similar future problems.
Is it possible that an EMS provider will be victimized by a patient who does not fulfill financial responsibilities? Agreed upon contingencies for such patients may be needed for both the EMS provider and the hospital.
Effective EMS Contract Case Studies
Several examples of successful EMS contracts exist that highlight the best practices outlined in the previous section. One such example is a long-term agreement between a city and its EMS system. In this agreement, the city is a partner, along with other local jurisdictions. Some larger cities may also have a regional EMS authority or leadership component to assist or lead the direction of the EMS system. A regional leadership structure, with a base of support throughout a diverse geographic area, is often well-received by the jurisdictions involved.
Another example is one in which the United States Department of Defense and a state EMS system successfully negotiated a long-term agreement. While there were struggles to reach a consensus in the beginning, the long-term contract has worked well to simultaneously support military and civilian populations.
One more example involves a comprehensive, regional EMS system made up of two distinct but integrated operational systems. In this case, three counties combined their existing individual systems into a single alternative delivery system (ADS). Both provider agencies agreed to pool their resources into a single county-wide system to improve patient care and service delivery.
Future Directions for EMS Contracting
Looking ahead, we see that new technological and regulatory changes will only add to an already fluid and evolving environment for EMS contracting. Perhaps the most significant trend affecting EMS contracting is the continued push toward coordinated care with an emphasis on quality and outcomes. This shift in focus is being felt in both state and federal legislation. We are seeing a shift towards bundled payments and a trend towards value-based, rather than fee-for-service, reimbursement. Given that surgeon-hospital contracts are being affected by this trend, it stands to reason that EMS contracting will also see an impact, as hospitals increasingly are the ones writing contracts for the provision of EMS . But as fragmentation subsides and more states adopt certificate of need laws that mandate certain minimum levels of service across geographic areas, prospective provider relationships may have to become far more structured and collaborative. We also expect to see an increase in the use of telemedicine in conjunction with EMS, further underscoring the importance that EMS has in a higher-level care delivery model. As payment models continue to shift, providers have to make sure that they stay ahead of the curve and adjust their contracting accordingly.