Ambulance firms try to take insurers for a ride

Salem, MA: 09-30-15: After heavy morning rains, ambulance with lights and siren on makes its way through huge puddle on Bridge St. in Salem, Mass. Sept. 30, 2015. Photo/John Blanding, Boston Globe staff story/ , Metro ( 01storm )
After heavy morning rains, an ambulance made its way through a huge puddle in Salem.

Hope springs eternal on Beacon Hill — and unfortunately, that’s particularly true when it comes to the politically powerful ambulance companies and their desire to leverage higher rates for their services. This year, those companies and their legislative allies are once again hoping to use the budget to advance goals that have otherwise gone nowhere through the more traditional legislative process.

One check on health care costs is the role insurers play negotiating rates with service providers in their networks. As the state’s Health Policy Commission notes in a policy brief: “Provider networks are an important way for insurers to control costs while providing benefit and value to patients. When a provider joins an insurer’s network, it agrees to receive negotiated prices for services (or an allowed amount), which are often substantially lower than a provider’s full list price or charges for a service.”

In emergencies, however, a patient is sometimes transported and treated by an out-of-network ambulance company. In those cases, the insurers usually pay that company their in-network rate. Out-of-network ambulance companies aren’t happy with that arrangement. They want considerably more for their services. Over the years, there have been various good-faith attempts to work out a compromise. None have proved acceptable to those ambulance companies. And so the companies are once again pushing legislation to let cities and towns set the rates for ambulance rides that originate in their localities.


That legislation failed to make it out of committee last session. But legislative allies of the ambulance companies have managed to get it included as an amendment to the House budget. Their preferred arrangement would certainly work well for out-of-network ambulance companies and for the many municipalities that operate ambulance services and haven’t signed contracts with the insurers. They would all receive the locally set rates.

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It makes little sense as public policy, however. Cutting insurers out of the process of deciding the appropriate rates for ambulance services obviously removes the pressure to keep costs down. And if those efforts succeed, the new arrangement would reduce incentives for other ambulance companies to remain in insurers’ networks. Why would they, if they believe there’s more money to be made through higher billing as out-of-network providers?

Budget riders have their uses, but making policy on an issue this complicated shouldn’t be one of them. Indeed, the fact that this legislation failed to make it out of committee in the last session suggests that knowledgeable legislators understand it’s poor public policy. After all, it makes no sense to pass legislation aimed at controlling health care costs, as the Legislature did in 2012, and then undermine that effort with budget amendments like this.

“This goes in the wrong direction,” says David Seltz, executive director of the Health Policy Commission. “I think it undermines our health care cost containment effort.”

If this survives the conference committee that will hammer out a final budget after the Senate passes its own spending plan, Governor Charlie Baker should be at the ready with a veto.