City Council
Report
City Council Meeting: August 23, 2022
Agenda Item: 10.A
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To: Mayor and City Council
From: Danny Alvarez, Fire Chief, Fire Department
Subject: Introduction and First Reading of an Ordinance Amending Municipal Code Section 4.65.030 and Approval of First Modification to Contract 10605 for Emergency Medical Patient Transport and Billing Services Recommended Action
Staff recommends that the City Council:
1. Authorize the City Manager to negotiate and execute a first modification to agreement #10605 with Westmed Ambulance Service Inc. DBA McCormick Ambulance Service for emergency ambulance services and medical billing services for the Fire Department.
2. Authorize the City Manager to negotiate and execute a cost recovery agreement with McCormick Ambulance for two years, on the same terms and conditions, for a total agreement period of seven-years.
3. Introduce for first reading an ordinance to amend Municipal Code Section
4.65.030 to extend the Living Wage Ordinance exemption for the term of the contract with McCormick Ambulance for emergency transportation and billing services.
Executive Summary
The City has utilized an emergency ambulance and billing service company since 2004 to provide emergency medical transport and billing services for the response, assessment, treatment and/or transportation of members of the public by Fire Department paramedics. On January 9, 2018 Council approved Contract No. 10605 (“Agreement”) with McCormick Ambulance to provide emergency ambulance and billing services for a three-year term beginning February 1, 2018 with two additional one-year options to extend the term. On February 1, 2021 the City Manager notified McCormick of its intent to extend the term for the period of one year. On January 31, 2022 the City Manager notified McCormick of its intent to extend the term for the period of one year. 2 of 6
The current Agreement term runs through January 31, 2023. This proposed modification to the Agreement would extend the Agreement for an additional two years, or until January 31, 2025. McCormick’s compensation under the Agreement is based on billing for transported patient services. McCormick also generates a separate bill for City services, resulting in anticipated cost-recovery of $973,258 as reflected in the FY 2022- 23 Budget.
Discussion
The Santa Monica Fire Department (“SMFD”) responds to nearly 17,000 emergency calls for service annually and approximately 75% are calls for medical services.
McCormick transports approximately 7,500 patients annually. The Fire Department’s response model includes seven paramedic engine companies, the Community Response Unit, and other support units deployed as needed, including three rescue ambulances that are mainly used for special events. Contracted McCormick emergency ambulances are used to transport patients on behalf of the Santa Monica Fire Department with Department paramedics on-board during an advanced life support transport to provide patient treatment in the ambulance while enroute to a medical facility.
McCormick’s compensation under the Agreement is not a direct payment from the City.
Rather, McCormick bills the patient directly for their transport services. McCormick will also bill the patient on behalf of the Santa Monica Fire Department for Advanced Life Support assessments provided by the Fire Department; $973,258 in cost-recovery has been included in the Fiscal Year 2022-23 Budget.
Charges are assessed based on the Advanced Life Support (ALS) Assessment Fee adopted by Council on June 15, 2004 and the ALS Assessment for Basic Life Support (BLS) Transport fee adopted on October 26, 2021. The Advanced Life Support Assessment Fee is the difference between the Los Angeles County approved Advanced Life Support (“ALS”) rate (currently $2,710) and the Los Angeles County approved Basic Life Support (“BLS”) rate (currently $1,809) as set forth in the most current Los Angeles County General Public and Ambulance Rates Schedule. On the City’s behalf, 3 of 6
McCormick bills approximately $901 per transport based on the current fee structure, however Medi-Cal and Medicare patients are billed at their respective contracted rate.
McCormick bills for the BLS transport services and are paid directly from the payer.
McCormick bills the patient for ALS assessment or treatment; the City receives the ALS billable rate for services provided by SMFD paramedics.
The City is currently under contract with McCormick Ambulance until January 31, 2023 as its ambulance provider and ambulance-related billing services provider. McCormick has successfully provided ambulance services for over the past four years. Staff recommends extending their term for an additional two years of service while the Department undergoes a cost/revenue analysis of all options available for the delivery of Fire Department-based emergency medical services including the current delivery system and practices.
Previous Contractor Selection
On January 9, 2018 Council awarded the current emergency ambulance and billing services. Representatives from the Fire Department and Finance Department recommended McCormick Ambulance as the best qualified firm based on the evaluation criteria. McCormick Ambulance’s proposal demonstrated their depth and breadth of experience and their organizational structure displayed their highly qualified personnel.
Exemption From Living Wage Requirement
Contractors who provide emergency ambulance services to the City are different from other City contractors subject to the Living Wage Ordinance (LWO) because emergency ambulance providers do not control rates for the services they provide. Rather, the Los Angeles County Board of Supervisors sets rates for all emergency transport services.
The County rates are the maximum allowable ambulance rates chargeable to the general public. Thus, while there is an established methodology for increasing rates that takes into account some wage changes, these factors do not include the higher Santa Monica living wage. Additionally, revenue collected by ambulance companies is dependent on the insurance payer mix of the patients transported. Payer mix varies from community to community, and in Santa Monica, approximately one third of payers 4 of 6
are Medicare and another third are Medi-Cal recipients. These payers pay considerably less to the ambulance company than what is billed. All of these factors, in addition to employee wages, influence the bottom line of any ambulance company providing services in this community.
On June 09, 2020, Council extended Living Wage Ordinance amendment 2458 CCS that exempted ambulance services from the living wage for a limited time which sunsets on January 31, 2023. Staff identified that emergency ambulance services providers have specific challenges that differentiate them from other City contractors. This action has ensured continuous provision of effective emergency services. Impacted vendors must still comply with the City’s minimum wage law. Staff is seeking to extend this exemption for the duration of the contract with McCormick by adopting the attached resolution extending the term. (Attachment A)
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Past Council Actions
Meeting Description
03/08/2005 City Council adopted Ordinance No. 2152 an ordinance of the City Council of the City of Santa Monica adding chapter 4.65 to the Santa Monica municipal code creating minimum wage requirements applicable to city contractors
07/11/2017 City Council adopted Ordinance No. 2548 an ordinance of the City Council of the City of Santa Monica amending Santa Monica municipal code section 4.65.030 to provide a
temporary exemption for emergency ambulance and billing services
01/09/2018 City Council awarded RFP#144 to Westmed ambulance inc. dba McCormick ambulance
06/23/2020 City Council adopted Ordinance No. 2640 an ordinance of the City Council of the City of Santa Monica amending Santa Monica municipal code section 4.65.030 to provide a
temporary exemption for emergency ambulance and billing services
Financial Impacts & Budget Actions
There is no immediate budget or financial impact related to this staff report. McCormick Ambulance’s compensation is not a direct payment from the City; the provider bills the patient directly. McCormick Ambulance will also bill the patient on behalf of the Santa Monica Fire Department for services provided by the Fire Department; $973,258 in costrecovery has been included in the Fiscal Year 2022-23 Budget.
Prepared By: Deanna Kendall, Administrative Analyst
Approved Forwarded to Council
Attachments:
A. McCormick OAKS INITIATIVE FORM - Updated 12.2021
B. McCormick Ambulance Staff Report 1.9.2018 Item 3F
C. Attachment A Proposed Ordinance Amending LWO Exemption 2024 CAO 6 of 6
D. Living Wage Exemption 2548
E. Living Wage Exemption 2640