industry issues

Understanding the Disaster Cost Reimbursement Process

By Klark Staffan
Regional Emergency Medical Services Authority, Reno, NV

Most ambulance service providers respond to routine emergencies everyday. We have become quite familiar with the operational aspects and the cost reimbursement requirements associated with these routine emergencies. However, if you ask any ambulance provider about their operations and cost recovery success in response to a recent large disaster, you may hear that it was anything but routine.

Following a rash of large disasters in the early 1990s, which included the increased involvement of private ambulance providers, I wrote a number of articles in an attempt to help ambulance providers understand the unique process involved in preparing for such events. One article, “Disaster Preparedness for Ambulance Providers,” appeared in the March/April 1994 edition of the AAA’s Ambulance Industry Journal. This article outlined a comprehensive approach to better understand the four phases of Integrated Emergency Management and how ambulance service providers can integrate their operations into the local and regional emergency management process. Most of the discussion in this article addressed planning, response, EOC integration and recovery operations. One section, however, very briefly addressed surviving a disaster’s financial impact and the cost recovery process.

The September 11th terrorist attack has once again raised our awareness to future disaster threats, including biological, chemical and weapons of mass destruction. For obvious reasons, ambulance services are an essential resource and a vital part of the emergency response system. There have been several recent accounts of ambulance service providers who have responded with numerous resources to local and regional disasters, only to find out, after the fact, that the cost recovery process for their services, supplies and other expenses is very complex. The unfortunate reality is that they are often not reimbursed for their services.

This article is intended to help you understand how and why this reimbursement problem exists and what can be done to mitigate the problem. The emergency management process is complex and involves all levels of government–local, state and federal–and therefore, is difficult to navigate. Your success at receiving reimbursement is in part based on your understanding of the different stages of a disaster, the powers and capabilities of government during each stage of a disaster and the steps you should take before a disaster strikes.

LOCAL EMERGENCY DECLARATION
A “Local Emergency” declaration may be proclaimed by a local governing body for an actual or threatened emergency event posing extreme peril to the safety of persons and property within the territorial limits of a city or county. The actual proclamation of a Local Emergency provides local government the following legal authority:

• Request the Governor to proclaim a “state of emergency,” if warranted
• Promulgate orders to provide protection of life and property, including curfews
• Activate mutual aid plans and emergency plans including the emergency operations center (EOC)
• Require the emergency services of local government officials and employees
• Request or commandeer resources as needed for public safety
• Impose penalties and grant immunity from civil action during emergency operations

Unfortunately, unless you have a pre-existing agreement with your local government that guarantees payment for your service, the only opportunity to seek reimbursement for the services you provided during a Local Emergency will be through your patient billing efforts.

A well-written agreement with local government can lay the foundation for you to receive reimbursement for the cost of your services. It is otherwise difficult to gather accurate documentation for billing purposes during a disaster response. Imagine, after the fact, trying to collect the necessary documentation during a disaster and then attempting to convince your Medicare carrier that the evacuation of each nursing home patient was indeed medically necessary.

The AAA is currently preparing a model local government agreement that will be presented at an upcoming AAA education track at the annual reimbursement conference in March.

STATE OF EMERGENCY DECLARATION
A “State of Emergency” declaration may be proclaimed by the Governor when conditions exist that exceed the capabilities of any local government, or when a disaster or extreme peril to the safety of persons and property within the state exists or is threatened. A State of Emergency declaration provides state government the following legal authority:

• Request a “federal disaster declaration,” if warranted
• Provide state-wide mutual aid and activate state-wide emergency plans
• Exercise all police powers vested in the state constitution
• Command the aid of citizens as deemed necessary to cope with the emergency
• Suspend the provisions of state statutes or regulations
• Commandeer any private property or personnel in carrying out the state’s responsibilities

Even though most states have provisions for state disaster relief funds, in most cases, the “fund” has no money, or, the financial resources will only be allocated as “matching funds” when, and if, the state or local government receives relief funds from the federal government. Federal funds are only available as a result of a “Federal Disaster Declaration.” Once again, unless you have that magic agreement with local government guaranteeing payment for the services you provided, your only reimbursement option will be through your patient billing efforts.

FEDERAL DISASTER DECLARATION
Upon the request of the Governor or as otherwise determined by the President of the United States, a “Federal Disaster Declaration” may be proclaimed to supplement the resources of the effected jurisdictions and to provide federal financial assistance. For example, this level of disaster declaration generally occurs in very large natural disasters with enormous damages such as earthquakes, floods, tornadoes and hurricanes. The Federal Emergency Management Agency (FEMA) is the President’s executive agent for managing the approved disaster relief funds and programs.

The Robert T. Stafford Disaster Relief and Emergency Assistance Act (the Stafford Act) provides the framework for using federal funds to: 1) reimburse local and state governments, and federal agencies for their losses and expenses; 2) to pay for actual disaster related costs to help the community recover, and; 3) to provide relief to affected businesses and individuals to assist with rebuilding. It is the Stafford Act that authorizes and provides guidance on the criteria for federal reimbursement including the types of eligible entities and individuals and the types of eligible services.

First, FEMA assesses the financial impact of the disaster and estimates the amount of funds needed for response, recovery and rebuilding. FEMA then forwards the approved disaster relief funds to the effected states, which then manage and distribute the funds. The Governor’s Office of Emergency Services, in cooperation with local authorities, is the state agency responsible for the coordination of disaster relief efforts and the administration of disaster relief funds.

Although reimbursement of ambulance services in a federally declared disaster is clearly appropriate and covered by the Stafford Act, unfortunately, some of the act’s language is vague. As a result, there have been recent reports that payment of federal funds for legitimate and requested services provided by ambulance firms has been tied up in the bureaucratic decision making process or has been denied. These problems have occurred even when local providers have been requested by government officials to provide ambulance services as part of the disaster response and relief effort and have been issued a claims mission number. The AAA is addressing this issue and is seeking clarification regarding ambulance service reimbursement under the provisions of the Stafford Act.

During the next few months, a number of initiatives will be undertaken by the AAA to educate the membership, provide needed tools (such as the model disaster agreement), and to improve the language within the current regulations. Look for upcoming education tracks, articles and additional information on this subject. There are many actions that local ambulance services, both emergency and non-emergency, can take to not only assure your organization is positioned to serve your community well, but also to assure you can survive the financial impact when disaster strikes your community.

Klark Staffan is the Vice President of the Regional Emergency Medical Services Authority (REMSA) in Reno, Nevada and is a Certified Emergency Manager. Klark has extensive experience at the local, state and federal level in the field of emergency management including participating in numerous actual responses to major disasters including the Northridge, CA earthquake and Hurricane Hugo, in SC, managing emergency operation centers and staffing recovery field offices. Klark has been a provider, manager and executive in the ambulance industry for over 30 years working in both the public and private sectors.