Ambulance provider warns towns of larger subsidy after insurance reimbursement changes

Steve Smith, a representative of All Star (North Star) ambulance service, told the Rangeley budget committee on Feb. 11 that changes in insurer reimbursement and lower-than-expected collections have left the service projecting a much larger operating shortfall and that the company is asking member towns to increase subsidies.

Smith said the provider had expected to collect a substantially larger share of billed ambulance charges but is now “only collecting about 30¢ on a dollar,” a decline he traced in part to a change that limits many private insurers to paying 200% of the Medicare rate for ambulance services. He said that change, together with higher operating costs and growing call volumes, contributed to an actual loss of about $1.2 million last year and to a planned budget that now assumes an $800,000 loss for the current fiscal year.

The ambulance service bills per-call and per-transport rates and historically relied on private insurance reimbursements to offset low Medicare payments, Smith said. He used a simplified example: Medicare pays roughly $350 for a typical ambulance transport and pays a lower per-mile rate; private payers used to cover a significantly higher share of billed charges but now often pay only about double Medicare’s payment, reducing the offset the provider can count on from private plans.

Town subsidy and formula changes

Smith said the provider presented the shortfall and several proposed changes to its advisory board, which includes local town leaders. The recommended approach includes adjustments to the subsidy formula (which uses tax valuation and per-capita elements) and increases in the per-person and “sit-at-the-table” fees that towns pay. The provider mailed letters in December giving municipalities until April 1 to opt in or out of the adjusted formula; opting in requires no action by the town.

Why the story matters

Local officials and residents rely on ambulance coverage for emergency medical response and interfacility transfers. The provider’s financial shortfall — if not reduced through subsidies, rate changes or other measures — could affect staffing decisions, coverage patterns and how frequently neighboring services must cover calls.

Key details and context

- Call volume: Smith said the system’s annual calls have risen from about 4,000–5,000 two decades ago to roughly 7,500 calls a year across the service area. Roughly 400 calls are associated with the Rangeley area coverage discussed in the meeting. - Collections and losses: Smith said the service budgeted last year to lose about $400,000 but the actual loss was closer to $1.2 million. For the current budget year it is budgeting an $800,000 loss; Smith said the hospital will absorb a portion but the towns will see higher subsidy requests. - Insurance change: Smith said many private insurers are now required to pay only 200% of Medicare reimbursement; that policy change reduced average collections on billed ambulance charges across the system. - Medicare and MaineCare behavior: Smith described Medicare’s fixed fee schedule and lower mileage payments and said that MaineCare generally matches Medicare’s lower payments, leaving more of the service’s billed amounts uncompensated. - Staffing: Smith said the service is “almost 100% staffed” regionally but noted local vacancies and recent overtime driven by injuries and a paramedic leaving for nursing. He described staffing strategies — including salaried managers filling shifts and a pool of PRN EMTs — aimed at keeping ambulances available in remote locations. - Response-time benchmark: For Rangeley-area calls, Smith reported an average time from tone to on-scene at about 12 minutes and 53 seconds for the wider coverage area; he said that figure compares favorably to national rural standards and that response times inside Rangeley proper would be shorter but he did not supply a town-only average.

Comments from local officials

Budget committee members pressed Smith on staffing details, overtime exposure and whether the town’s tax valuation should be the primary driver of subsidy allocations. Several officials urged closer examination of dispatch procedures and of whether mountain resorts and other businesses that generate seasonal demand should contribute more to coverage costs.

No formal vote recorded

The meeting record does not show a committee motion or final vote on a subsidy change at this session. Smith said his staff will supply data to towns and that towns can opt into the revised formula or ask for additional detail before taking action.

Ending

Smith offered to return to follow up with data and to meet with individual towns during the budget season. Budget committee members requested more detailed call-by-call data and indicated they will review the provider’s letters and the advisory board’s recommendations before deciding on local appropriations.