American Legion Ambulance Service is a fee for service provider. Meaning we bill for services rendered only and we are not subsidized by taxes. Our projections for increase in revenue are mainly based on an increase in call volume or patient transports. Last fiscal year we projected a 1.5% increase in patient transports (6,873) and hit 99.7% of projection (6,831). In the past years, prior to the recession, we have had an average increase of 6% a year in transports. Since the recession it has averaged 1.6% a year. For this fiscal year we will remain conservative and project a 1.5% increase in transports (6,933).
Reimbursement from government agencies continues to be a high priority for the company. American Legion Ambulance has been a member of the California Ambulance Association (CAA) for over 20 years. Throughout the years, Mr. Lennox has sat on many committees and the Board of Directors of the CAA. Today our Vice President, Alan F. McNany, is serving his second year as a Secretary/Treasurer of the Board of Directors.
Through the CAA, we continuously monitor bills that will affect our industry. One of the most recent topics was the 10% Medi-Cal cut Governor Brown implemented June 1, 2011. This reduction in the Medi-Cal reimbursement was approved by Centers for Medicare & Medicaid Services (CMS). Even without the reduction, Medi-Cal only covers 1/4 of our actual cost.
Medicare patients are over 50% of our business. Medicare reimburses approximately 2/3 of our actual cost and has not increased reimbursement to providers over the last 2 years. The prediction for January 1, 2012 is again with no increase in reimbursement. With the rising costs of operating expenditures each year, Medicare will continue to pay below our costs.
Approximately 70% of our total accounts are fixed reimbursement under State or Federal law. So, when we raise the rates for service, it only affects approximately 30% of our patients.
Another factor that affects revenue is “Payor Mix”. In the past 2 years we have seen little change. Medi-Cal and the uninsured have each risen by 2%, while private insurance has dropped by 4%. This change in payor mix does affect the bottom line.
Like most healthcare providers, we are forced to cost shift the costs off to private insurances. This practice over the years is one major reason for the healthcare crisis our nation. American Legion Ambulance will continue to be politically pro-active for the ambulance industry and fight for the citizens in our community and the State.
President Obama signed into law in 2010 the Health Care Reform Bill. Since that time State and Federal government has not increased reimbursement, but only reduced it. There are still a lot more parts of the law that will be phased in over the years with unknown or unpredictable impacts on the ambulance industry.