The Palo Alto Fire Department's new insurance program, which allows residents and businesses to pay a monthly fee for ambulance transfers, is nearly ready to debut after getting unanimous support from the City Council Finance Committee on Tuesday.
The program, which the department has been refining for more than a year, has two major goals: help the department obtain a new revenue source during a period of budget cuts and provide peace of mind to customers seeking some assurance that they would not face steep bills if they suffer a medical emergency and need to be taken to a hospital.
Under the terms that the Finance Committee approved on Tuesday, residents would have the option to pay an $8 fee per month to participate in the program. For businesses, the rate would depend by the number of employees, with fees ranging from $20 for companies with a head count between one and 10 employees and $1,000 for those between 251 and 1,000 employees.
The Fire Department estimates that if about 25% of local residents and businesses enroll in the program — a rate that would be comparable to ambulance-insurance programs elsewhere in the state — the city would receive about $1.2 million in annual revenues. The city plans to start marketing the program in the coming months, according to a report from the Fire Department. Those who choose to participate would see the charge show up on their monthly utility bills.
The city expects most of the participants to be residents and employees who are not covered by Medicare and who, as such, are billed hundreds of dollars for a transport fee. Palo Alto fire, which is the only department in Santa Clara County that has an ambulance service, runs about 3,500 transports annually and its base fee is $2,509 for transport. While Medi-Cal and Medicaid cover that entire cost, and Medicare covers up to 90% of the costs, those who rely on private insurance face a copay that typically ranges from $386 to $650, according to the department's analysis. These individuals, who make up about 27% of the department's patients, are the main targets of the new program.
The program will be available to all permanent residents and will also cover their guests, should they need medical transport. The employer program would not, however, cover customers but only employees.
Since initially presenting the program to the Finance Committee last December, the department has conducted a survey and a focus group to gauge interest in the program. About half of the survey responders said they believe the program would be extremely or very valuable, which includes 57% of the commercial insurance responders and 43% of Medicare responders, according to the Fire Department's report. The focus group participants also expressed interest in the program, with members suggesting that the program charge a monthly — rather than an annual — fee and that the rate be set somewhere between $6.67 and $10.
The rate in Palo Alto would be somewhat higher than in other jurisdictions. The Fire Department identified five other agencies that offer ambulance insurance, according to the report. Each charges a flat annual fee, which ranges from $43 to $60. According to the report, the fees were set when the respective programs started and had not been adjusted since.
The committee enthusiastically supported the new program on Tuesday, paving the way for its approval by the full council.
"I hope this brings a little bit of stability and comfort to people who might need to use that ambulance service frequently," council member Alison Cormack, who chairs the Finance Committee, said during Tuesday's discussion.