Why Waiving Fees for Austin Travis County EMS Services for Low Income People Should Be A Thing
Austin Justice Coalition (AJC) has been in discussions with Austin Police Department (APD), Integral Care, and Austin Travis County EMS (ATCEMS) regarding reforms funded last year to 9–1–1 call center response for calls involving mental health issues. While changes are rolling out slowly, we expect that ATCEMS will soon be dispatched to more calls related to mental health crisis. People with lived experience have expressed support for this change, but have also expressed concerns about additional billing they can’t afford.
As ATCEMS is dispatched for more of these calls, low-income and uninsured Austin and Travis County residents have an interest in being able to utilize EMS services without fear of amassing medical debt. Those with lived experience of mental illness reported that they have declined EMS services solely to avoid the inevitable bill.
We’ve now had two meetings with EMS Chief Rodriguez and his leadership team, and they told us that they are open to alternatives to the current payment system and fee structure, and acknowledge that the current way the Department uses its 1115 Medicaid waiver program results in few applications for fee discounts (and therefore less reimbursement.) Although a 50% discount is available to some customers, no mention of this is made on the website. Instead, the site tells people “ATCEMS is not able to adjust an outstanding balance.” As a result, many who would qualify, never apply.
People who clearly can’t pay a several hundred dollar bill are getting routed through collections and unpaid bills are counted as “medical debt” rather than “charity care.” This is where we harm both those needing services and the public who pays for those services. Reforms to this program can both help low income people and increase revenue to the city by accurately distinguishing the charity care that can be reimbursed under the Ambulance waiver program from medical debt.
Austin Justice Coalition Proposal
- Amend the current 1115 Ambulance waiver program to eliminate billing altogether for people at or below 200% of federal poverty.
- Create a sliding scale for people from 200% to 300% of federal poverty.
- Facilitate the “application” for a fee waiver or sliding scale bill by pre-qualifying people based on many factors (homeless, living in Sec. 8 housing, eligible for CHIP, eligible for SNAP, disabled etc).
- Change all documentation given to clients to clearly state the guidelines for access to a fee reduction or waiver, and encourage clients to apply through an 800 number, on the web, or via smart phone.
- Forgive outstanding debt owed by low income people and reduce previous billing amounts for those between 200% and 300% of federal poverty to the new amounts for which they would qualify if they received services today.
Currently EMS bills all customers. EMS also “balance bills” insured customers for amounts in excess of insurance payments.¹ EMS has been prevented from waiving outstanding debt or offering a sliding scale to consumers due to a brief and outdated legal opinion from City Legal. EMS further elaborates this legal analysis on its website. The opinion from City Legal, and provided to AJC by EMS staff, states in full:
Forgiving debt is the same thing as giving money or another thing of value away to a private person or company. Art. III, Section 52 of the Texas Constitution prohibits the Legislature from authorizing political subdivisions (such as cities) to lend their credit or to grant public money. The clear purpose of this provision is to prevent the gratuitous application of public funds for the use by a private individual or company. Forgiveness of debt benefits the individual or company that owed the debt.
The Constitutional provision relied on in this opinion states:
Except as otherwise provided by this section, the Legislature shall have no power to authorize any county, city, town or other political corporation or subdivision of the State to lend its credit or to grant public money or thing of value in aid of, or to any individual, association or corporation whatsoever…” Texas Constitution, Art. III, Section 52(a).
Citing a separate provision of the Texas Constitution, the EMS website, under the billing FAQs, states:
As a governmental agency, ATCEMS is not able to adjust an outstanding balance and the State Constitution* prohibits us from forgiving any debts that are owed.
The City’s legal opinion is misguided. Government-run ambulance services in Texas can and do waive charges and provide a discount to low-income and uninsured residents. AJC urges Austin and ATCEMS to implement a discount and fee-waiver program to remove the barrier of crushing medical debt for all Austin’s most vulnerable residents.
Dallas has already implemented a similar idea
The City of Dallas (subject to the same constitutional provisions as everyone else in Texas) has developed a Hardship Assistance Policy, outlined in an August 16, 2019 memorandum from Dallas City Fire Chief Dominique Artis to Dallas City Council, from which we have modeled our recommendation. Like Austin, Dallas was already participating in the 1115 Ambulance program waiver. Last summer, Dallas altered its program to eliminate billing for applicants up to 125% of federal poverty, and reduce fees for up to 200%. That is a good start but Austin can do better. Given the size of a standard Ambulance bill, we believe it is reasonable to extend protections to those in our proposed income categories. A memo about Dallas’ new charity care program from Dallas Fire to the Dallas City Council is available below.³
The State of Texas has set up a program to manage charity care reimbursements and assist EMS agencies
Texas health care statutes assume that ambulance services can be considered “charity care” and Texas has detailed rules and procedures for local emergency providers to get supplemental funding for such charity care. ATCEMS is eligible to participate in the Ambulance Services Supplemental Payment Program (ASSPP). [1 TAC §§ 355.8081, 355.8600] Essentially ATCEMS can recover part of the cost for uninsured patients who “meet the provider’s charity-care policy.” Training is available from the Health and Human Services Commission.
(3) Charity care — Healthcare services provided without expectation of reimbursement to uninsured patients who meet the provider’s charity-care policy. The charity-care policy should adhere to the charity-care principles of the Healthcare Financial Management Association Principles and Practices Board Statement 15 (December 2012). Charity care includes full or partial discounts given to uninsured patients who meet the provider’s financial assistance policy. Charity care does not include bad debt, courtesy allowances, or discounts given to patients who do not meet the provider’s charity-care policy or financial assistance policy.
1 TAC § 355.8212(b)(3). This program would be a critical boon for the city because it would help offset ATCEMS’ $40 million a year budget, much of which is used to pay for service costs which are billed but never collected. Once the program is implemented, ATCEMS can apply for reimbursement for some of the unpaid costs.
ASSPP fee waivers and discounts do not violate the constitution
In addition to the existence of another discount and fee-waiver program for government-run ambulance services in Texas and a state program to support such local charity-care policies, there is ample caselaw proving that City Legal’s opinion and the statement on the EMS website misinterpret Sections 52 and 55 of the Texas Constitution. Below, please find our analysis of the two key questions regarding EMS debt.
EMS may waive outstanding medical debt incurred by consumers, despite being a governmental agency.
Discounting and or waiving fees is distinct from lending credit to a private railroad industry because it exclusively benefits ATCEMS, the government-run ambulance service for Austin, and the residents of Austin who may need to use this service. A three-part test, articulated by the Texas Supreme Court, should be used to determine whether an expenditure or transfer of public funds satisfies Article III, Section 52(a). Texas Municipal League Intergovernmental Risk Pool v. Texas Workers’ Compensation Commission, 74 S.W.3d 377, 384 (Tex. 2002). The test requires that (1) the predominant purpose of the expenditure is to accomplish a public purpose, not to benefit private parties; (2) the public entity must retain sufficient control over the expenditure to ensure that the public purpose is accomplished; and (3) the public entity receives a return benefit. See id. Each of these factors will be analyzed in turn to show that ATCEMS discounting its ambulance services and waiving patient debt does not violate Article III, Section 52(a) of the Texas Constitution.
1) The expenditure’s predominant purpose is to accomplish a public purpose of the public entity, not to benefit private parties;
A public expenditure must be for something within the public entities’ powers. See Guynes v. Galveston Cty., 861 S.W.2d 861, 863 (Tex. 1993), State ex rel. Grimes Cty. Taxpayers Ass ‘n v. Tex. Mun. Power Agency, 565 S.W.2d 258, 265 (Tex. Civ. App.-Houston [1st Dist.] 1978, writ dism’d). Cited by KP-0237, p.2. ATCEMS is authorized to provide emergency ambulance services to Austin and Travis County by the Austin City Council and the Travis County Commissioners Court. The Commissioners have the authority to “make special provisions” for indigent people receiving ambulance services, and to delegate the provision of ambulance services to the city. Health and Human Safety Code, Ch. 774.003(e).
The Attorney General has found that the use of county funds to fulfill a statutory function of the County generally serves a public purpose of the county. See KP-0237, citing Tex. Att’y Gen. Op. No. KP-0104 (2016) at 2 (determining that a county using public funds to purchase flags for display in front of local businesses on holidays served a county purpose because the county was acting within its statutory authority to display the United States flag on specific holidays). ATCEMS fulfills the statutory functions authorized at Health and Safety Code, Title 9, Chapter 773 and 774, including providing ambulance services to the County under an agreement with the Commissioners Court. The use of city and county funds to pay for ATCEMS expenditures serves a statutory public purpose of the county and city.⁴
ATCEMS’ Mission is, “To provide excellent patient care to anyone, any time, any place to decrease suffering, improve the health of the community, and save lives.” Their website also states, “Because we are a publicly funded organization, it is our responsibility to act prudently with the community’s money and conduct business in a fiscally responsible manner. We continuously seek innovative ways to maximize the return on the dollars we spend and ensure our spending best meets the needs of our community.”
The discount or waiver of ATCEMS fees would aid ATCEMS in the fulfillment of its mission and benefit the entity in several ways. First, a discount program would allow ATCEMS to continue to provide necessary emergency services via ambulance to residents of Austin and Travis County without forcing ATCEMS to accrue large amounts of past-due bills for services, many of which will never be collected. Although ATCEMS provides services regardless of a patient’s ability to pay, its business model of allowing bills to remain on the books, unpaid, for years, is far from fiscally responsible. ATCEMS’ debt-collection efforts alone waste LOTS OF MONEY, which could be significantly reduced with a robust discount program. Lastly, discounts and waivers would have the additional benefit of dissuading residents from rejecting necessary medical treatment via ambulance for fear of being billed for services. AJC has seen evidence that individuals with lived experience of mental illness are refusing services because of outstanding bills or the threat of receiving high bills. Lastly, it will allow residents to avoid debt for those necessary services.
2) The public entity retains sufficient control over the expenditure to ensure that the public purpose is accomplished
The Texas Attorney General articulated that, “[A] political subdivision may retain public control over the funds by entering into an agreement or contract that imposes upon a recipient of public funds the obligation to accomplish the public purpose. Tex. Att’y Gen. Op. No. KP-0237 (2019) at 2, citing Tex. Att’y Gen. Op. No. KP-0091 (2016) at 2. Our proposal satisfies prong two because ATCEMS would administer the ASSPP as approved by the city, and agree that the funds would be used to accomplish the public purpose of providing EMS services to residents. ATCEMS would maintain billing records in such a way to share what amounts were billed vs. waived.
3) The public entity receives a return benefit.
An agreement between ATCEMS and the city to approve the ASSPP would also satisfy prong three. As the Texas Attorney General explained, “Such an agreement or contract could also ensure a political subdivision receives the return benefit in satisfaction of the third prong,” See id. at 2–3, and further clarified, “The return benefit received by the county need not be monetary, but could instead be the accomplishment of the county’s public purpose.” Tex. Att’y Gen. Op. No. KP-0237 (2019) at 2.
The AG Opinion cited above analyzed whether this Section of the Constitution is implicated in a similar scenario. Attorney General Ken Paxton discussed that Midland County could use public funds to pay a public school district for providing several public services, and concluded that, “Spending public funds for a legitimate public purpose to obtain a clear public benefit, however, is not an unconstitutional grant of public funds.” Citing Edgewood Indep. Sch. Dist. v. Meno, 917 S.W.2d 717, 740 (Tex. 1995); citing also Barrington v. Cokinos, 338 S.W.2d 133, 140 (Tex. 1960) (stating that an expenditure which incidentally benefits another party is not invalidated under the Constitution if made for the direct accomplishment of a legitimate public purpose).
ATCEMS can waive past medical debt without violating the constitution
Having established that an up front discount and fee waiver program can be adopted by ATCEMS, it follows that ATCEMS can forgive or reduce the balance of current outstanding debts.
Using the three-prong test from Texas Municipal League Intergovernmental Risk Pool v. Texas Workers’ Compensation Commission, forgiving current debt does not violate Art. III, Sec. 52 of the Texas Constitution because 1) the expenditure’s predominant purpose is to accomplish a public purpose of the public entity, not to benefit private parties; 2) the public entity retains sufficient control over the expenditure to ensure that the public purpose is accomplished; and 3) the public entity receives a return benefit. There are several recent examples of government entities lifting existing debt that assure us we have a strong legal basis for moving forward. The State of Texas recently lifted the outstanding debt associated with the now-repealed Driver Responsibility Program. Local jurisdictions, including Austin, have waived existing civil debt related to red light camera traffic fines. We do not believe there are any barriers to waiving debts people have no way to pay, and giving everyone a fresh start.
[1]: http://www.austintexas.gov/page/billing-and-medical-records-frequently-asked-questions: “Austin-Travis County EMS does balance bill for any unpaid amount not received from the insurance company.” and further down “Austin-Travis County EMS balance bills for all non-Medicare, Tricare, VA, Medicaid and Worker’s Compensation insurers. We do not have contracts with private insurance companies therefore we do not waive any unpaid portion of the bill.”
[2]: See http://www.austintexas.gov/page/billing-and-medical-records-frequently-asked-questions.
[3]: See memo from Dallas City Fire Chief Domonique Artis to Dallas City Council dated August 16, 2019, attached here .
[4]: A transfer of funds for a public purpose, with a clear public benefit received in return, does not amount to a lending of credit or grant of public funds in violation of state constitutional provision prohibiting legislature from authorizing any county, city, town, or other political subdivision to lend its credit or grant public money to any individual, association, or corporation. City of Donna v. Ramirez (App. 13 Dist. 2017) 548 S.W.3d 26, rehearing denied, review denied. Municipal Corporations 870. Transfer of funds for public purpose with clear public benefit received and returned, does not amount to lending of credit or grant of public funds in violation of Texas Constitution. Edgewood Independent School Dist. v. Meno (Sup. 1995) 917 S.W.2d 717, as modified, rehearing overruled.
