Kennewick council reviews options to raise ambulance transport and mileage rates

Interim Fire Chief Michael Heffner presented data and options to the Kennewick City Council on Sept. 23 for revising the city's ground ambulance transport and mileage rates, saying the last resolution-setting the flat transport rate was adopted in 2012 and mileage was set in 2005. Staff will bring proposed ordinances and updated fiscal projections to the council on Oct. 7, 2025.

Heffner told the workshop that the city currently charges a flat resident transport rate of $660 and a long-standing nonresident rate set 50% higher at $990; mileage has been billed at $10 per mile since 2005. "The last time the rate was evaluated and changed by resolution was in 2012," Heffner said, noting the city bills mileage to the tenth of a mile and that Medicare and Medicaid reimbursement rules affect what the city can collect.

Why it matters: Heffner said roughly 60% of the city's transported patients are covered by Medicare and that Medicare's allowable reimbursement for certain high-level transports now exceeds the city's flat transport charge. The city currently supplements ambulance costs with an ambulance utility rate, state GEMT (ground emergency medical transport) reimbursements and general-fund support; Heffner said the general fund presently covers remaining shortfalls.

Key numbers and payer mix: Heffner presented the following figures from city billing and state files: an average cost per transport in state fiscal 2024 of about $3,000; in 2024 the city billed $6,692,763 for ambulance services and collected $4,091,692; about $2,000,000 (roughly) was written off or disallowed by Medicare and Medicaid. Heffner said about 2.1% of billed transports (117 patients in 2024) were coded and billed at the highest-tier ALS2 (advanced life support level 2). Payer mix figures shown in the presentation were about 60% Medicare, 20% Medicaid (Apple Health), and the remainder commercial or private/self-pay, with self-pay about 3.7% in 2025.

Medicare and Medicaid limits: Heffner said that for ALS2 transports Medicare's allowable has risen to about $804 for the transport portion and that Medicare separately reimburses mileage (Heffner cited $9.15 per mile). By contrast, Medicaid allowable rates are much lower (examples shown: ALS2 Medicaid allowable $168.43; ALS1 about $168.43; BLS about $115.34), and the city cannot bill Medicaid or Medicare patients beyond those program limits.

Options presented: Heffner offered two illustrative rate strategies for council consideration.

- Option A (staff's recommended, "market correction"): Create tiered rates by level of service so fees align more closely with Medicare allowances and recent CPIW increases. Under the option described at the workshop, ALS2 would be adjusted to about $828, ALS1 would be set roughly midway between ALS2 and BLS, BLS would increase to about $695, and mileage would rise to about $11. The city's long-standing practice of a 50% higher nonresident rate would remain in place.

- Option B (more aggressive, CPI-only catch-up): Bring the flat resident rate up to the level that would have resulted from annual CPI adjustments since 2012, producing a resident flat rate near $990 and corresponding tiered marks cited in the presentation (BLS about $810; ALS1 about $900; ALS2 about $990).

Projected impacts: Heffner said most transports would not be directly affected by the ALS2 increase because only a small share (about 2.1%) are billed as ALS2 and many of those are capped by Medicare or Medicaid reimbursement. He described a chain of protections and limits: "the overwhelming majority, over 80% of our patients, would be fully protected from these changes. Their rates are capped by their providers and they would not be expected to pay above what their providers pay," Heffner said. He also warned that commercial insurance and private-pay patients could see higher bills or higher co-pays depending on their plan design.

Questions and council reaction: Council members raised fiscal and equity questions. Council member Anderson said he supported the larger increase: "Not really a question. I just feel like I would support option B. I think we're well below where we should be." Council member McShane urged caution about shifting costs to individuals and said the city should consider how utility, transport fees and general fund dollars together pay for the service: "we don't want the general fund to pay for any of it and that we want the ambulance utility and the transport fees to pay for 100% of the costs associated with this service," McShane said, noting concerns about undue burdens on families with limited coverage. Other council members expressed a preference for the graded, tiered approach in Option A while acknowledging the system's long-running underpricing compared with neighboring agencies.

Collections and administration: Heffner said the city uses a third-party billing contractor, System Design West, to submit claims and pursue collections; unpaid balances are routed through a collections process and the contractor negotiates payment plans in some cases. Heffner reported that, historically, the city bills about $6'7 million per year and collects roughly $4' million.

Next steps and deadlines: Staff will return to the council on Oct. 7, 2025 with draft ordinance language for Options A and B and with updated fiscal estimates, including projections of how much each option could reduce general-fund support for ambulance services. Heffner reminded the council that state law requires ambulance providers to submit any rate changes to the Washington Office of the Insurance Commissioner by Nov. 1 for changes to take effect Jan. 1 absent an approved emergency exception.

Earlier procedural vote: At the start of the workshop council members voted 5-0 to excuse the absences of Council member Trumbo and Council member Beecham; the vote was moved by Council member Anderson and seconded by Mayor Pro Tem Torelli.

The council did not adopt a rate ordinance at the Sept. 23 workshop; the matter was sent to the Oct. 7 meeting with staff follow-up requested.