Ambulance charges on Oahu could grow as city emergency services officials seek to close an estimated $9 million budget hole in the next fiscal year that was created when the state Legislature transferred operations and billing from the Department of Health to the City and County of Honolulu.

Top officials with the Honolulu Emergency Services Department say they are looking at more aggressive debt collection, charging for more services, such as treating people at the scene even if they aren’t transported in an ambulance, and potentially raising fees.

Those fees already have skyrocketed in recent years, with the state raising ambulance rates 10% annually, the statutory maximum.

The cost of a basic ambulance ride increased 46% between 2017 and 2021, from $1,127 to $1,649, according to DOH. For ambulance rides that include advanced life support, the cost also increased 46% from $1,265 in 2017 to $1,851 currently.

Additionally, the charge per mile increased during that time period, from $16.50 to $23.

DOH said it intends to increase those rates statewide by another 10% in January.

But beginning July 1, the start of the 2023 fiscal year, the City and County of Honolulu will be able to determine its own rates and no longer will be limited by the 10% annual cap.

According to Jim Ireland, director of the Honolulu Emergency Services Department, the city hasn’t decided on future fees, which he said could go up, down or stay the same.

“We are really looking at all options because certainly we don’t want people to be shocked by high bills that their insurers may or may not pay,” he said.

But during a briefing before the Honolulu City Council earlier this month, Ireland suggested there was room for higher rates, pointing out the ambulance rates in Contra Costa County, Calif., were about $700 higher than in Hawaii and the mileage rate was double.

Nationally, rates vary widely, with some jurisdictions covering all of the costs for ambulance rides and not charging patients anything.

Ryan Hirasuna, director of provider contracting and relations at the Hawaii Medical Service Association, the state’s largest health insurer, criticized Hawaii’s soaring rates and said the annual increases undermine normal negotiations between HMSA that help keep health care affordable for its members.

“There is no other provider that receives a 10% increase every year, and this increase far exceeds both normal inflation and the more specific medical consumer price index (CPI) increases,” Hirasuna said in a statement.

Growing budget hole

Earlier this year, as the Legislature was facing a massive budget shortfall due to the COVID-19 pandemic, lawmakers transferred the cost burden of ambulance services from the state to the City and County of Honolulu. The state will continue to cover the costs for the neighbor islands.

Under the new law, the transfer will take place gradually over several years, with the cost burden increasing for the city. By fiscal year 2025, the state will provide only $3.5 million in assistance from a vehicle tax.

In fiscal year 2021, which ended June 30, the overall cost of ambulance services for the city was $49.7 million.

But Dr. Alvin Bronstein, who serves as chief of DOH’s Emergency Medical Services and Injury Prevention System Branch, warned that figure can be expected to grow. The state charged patients $92 million for the city’s ambulance services during that period, but only 30% of that amount, or $27.4 million, was actually collected. The state had to cover the difference.

Bronstein said that despite Hawaii’s soaring ambulance fees, there’s actually only so much that can be collected from patients. Medicare and Medicaid cap their reimbursement rates and prohibit service providers from charging beneficiaries beyond that.

The average reimbursement is $305 for Medicare and $520 for Medicaid, according to Bronstein. Medicare and Medicaid beneficiaries comprise 71% of patients. Uninsured patients make up 10%, but on average, the state has been able to collect only $75 per uninsured patient.

Individuals with private insurance make up 19% of ambulance patients and, on average, the state has been able to recoup $1,300 from them, Bronstein said. But the state may send those patients a second bill to make up any difference between what they recoup from the insurance and the state’s fee, which can total hundreds of dollars.

Bronstein said DOH is ending that practice beginning Jan. 1 in anticipation of federal legislation that could ban the practice, but that it will be up to the city whether it wants to continue billing patients with private insurance twice.

More city autonomy

The widely varying reimbursement rates mean that some patients pay a minimal fee, while others, particularly the uninsured or patients who have private insurance that doesn’t have good ambulance coverage, can end up with huge bills.

It also means there is only so much additional revenue the city will be able to squeeze out of patients.

Still, Ireland said he plans to put out a new bid for a billing service company, which could help with better debt collection. The city also is looking to start charging for services it renders at the scene of emergencies, even if patients aren’t transported to a hospital, which covers about 50% of calls. Ireland said that could bring in an additional $5 million in revenue.

Overall, he’s hoping to increase billing revenue from ambulance rides in the coming years from about $27.4 million to as much as $42 million in 2026.

Despite the financial burden, Ireland said he supported the transfer. In exchange, he said, the city obtained greater autonomy over ambulance operations and will now be able to sidestep the bureaucracy of having to obtain approval for operational and funding changes from DOH, the Legislature and governor.

“We think by having local control, with less bureaucracy, we can make changes that will help everyone in the City and County of Honolulu with respect to EMS response,” he said.

He believes his department can make up the projected shortfall in the next fiscal year and that it won’t end up costing the city anything.

A spokesman for Honolulu Mayor Rick Blangiardi didn’t respond to questions about whether funding is being set aside in 2023 fiscal year to cover the millions in potential ambulance costs, and if so, whether the city is looking to cut costs in other areas to compensate.

“We feel that as a city-managed agency, EMS will be able to build in cost-efficiencies to save money, thus reducing any potential fiscal gap,” said Tim Sakahara, a spokesman for the mayor. “We are working hard to ensure a smooth transition.”

Not everyone is as optimistic about the change.

John Titchen, chief of the Honolulu Emergency Services Department’s Ocean Safety Division, said he is concerned the transfer will negatively affect the city’s lifeguard services. Already, he worries that it has delayed funding for the city’s new “Dawn to Dusk” program, which was supposed to have lifeguards on duty at beaches from sunrise to sunset.

“So we essentially have an unfunded mandate,” Titchen said.

He said he worries his division may end up having to battle its own department for more resources.