Largest Transport Provider Signs With Largest HMO

In December 1998, Kaiser Permanente, the largest health maintenance organization (HMO) in the nation, signed a reported five-year, $600 million national contract with American Medical Response (AMR), the country's largest medical transport provider. The contract commissions AMR to manage and provide medical transportation services for Kaiser members across the country. The program is designed to be implemented in stages starting March 15, 1999, with final completion by Jan. 1, 2000.

This is the first national contract of this magnitude between a managed-care organization and an ambulance provider. Previously, there had been geographic or state contracts, such as when Rural/Metro and Aetna entered into an agreement to manage the transport needs of Aetna patients in Ohio several years ago.

Kaiser, founded in 1945, is a non-profit, group-practice pre-payment organization based in Oakland, CA. It employs about 90,000 technical, administrative, and clerical employees, 10,000 physicians, and serves 9.3 million members in 18 states and the District of Columbia. AMR, owned by the Canada-based Laidlaw Corp., operates in 37 states.

In January 1998, Kaiser publicly made it known it wanted to sign a long-term contract with ambulance providers that could offer a full range of medical transportation services. At the time, Cathrin Stickney, Kaiser's director of national health services consulting, indicated the company wanted to sign at least two providers to contracts for up to 10 years.

As is the emerging trend with managed care, payment for such services is paid by the health care organization before the member receives any services. With "capitated payments," the organization providing the services is paid a set monthly fee for each member, each month. In this case, AMR will need to be fiscally responsible managing the enrolled members' needs. In the example in which an enrolled member who uses a wheelchair and needs transportation to a Kaiser facility for a simple medical procedure, does AMR use an advanced life support (ALS) ambulance with two paramedics or a wheelchair van with one emergency medical technician (EMT)? Obviously, the wheelchair van and EMT would cost less to operate and be fiscally more responsible since AMR has already received the money up-front to manage the member's transportation needs.

Fitting a member with the right transportation resource is in essence a component of pathway management. Under such contracts, Kaiser and AMR will work to establish protocols to objectively pre-determine what transportation vehicle, and in many cases, where the patient should be transported.

The process will start with a Kaiser member calling an 800 number to reach an AMR dispatcher, who will screen the call. Following established telephone triage protocols, the AMR dispatcher will determine, for example, whether the person needs immediate care or if an appointment can be made at the doctor's office within a couple of days. In essence, the AMR dispatcher is in a "gatekeeper" role. With the "gatekeeper" concept, there is "access management," not "demand management." Most fire agencies operate in a "demand management" mode in which every call for medical assistance, regardless of the nature of the incident, receives an immediate response.

Should the fire service be concerned about this type of arrangement? Yes, for several different reasons. First, enrolled members in Kaiser may be confused about who to call during an emergency. Do they call 911 or the 800 number? James Cusick, a physician who is Kaiser's director of emergency medical services in Colorado, said, "The HMO still encourages Kaiser members to call 911 for emergency service in life or limb-threatening situations." He further said for medical conditions that may require emergency transportation, but are not life-threatening, Kaiser encourages its members to call the HMO emergency number where AMR dispatchers will assess the severity of each patient's condition. The term "emergency" is hard to define. What may be an "emergency" to one person may not be an "emergency" to another person. Thus, someone who is having a true medical emergency may call the 800 number, circumventing the 911 system.

Even if the AMR dispatcher determines this is the type of call the 911 system should handle, routing the call back into the 911 system is a problem. Besides the obvious delay to the 911 system, the caller and the AMR dispatcher will most probably be in two different states. The only way to route the call back into the 911 system is for the caller to hang up and dial 911.

Another consequence is that fully insured patients are being removed from fire-based EMS systems, resulting in decreased run numbers and financial reimbursement.

There are other questions:

  • Is the cost reimbursable or will it be denied as medically unnecessary?
  • Will AMR be responsible for reimbursing the fire agency?
  • If there is reimbursement for transport, what will the rate be?

The fire service needs to be aware this will not be the last large contract to be signed between a managed-care organization and an ambulance provider. Certainly a major component to the success and profitability of other large managed-care organizations will be their ability to control and manage health care costs through "access management."

Gary Ludwig is the chief paramedic for the St. Louis Fire Department and is currently serving his fourth term as an elected member of the EMS executive board for the International Association of Fire Chiefs. He was awarded Missouri's EMS Administrator of the Year for 1998.