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Institute of Medicine (US) Forum on Medical and Public Health Preparedness for Catastrophic Events. Medical Surge Capacity: Workshop Summary. Washington (DC): National Academies Press (US); 2010.

Cover of Medical Surge Capacity

Medical Surge Capacity: Workshop Summary.

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Financing Surge Capacity and Preparedness

A continued theme throughout the workshop was that current financing strategies have not and will not be able to support efforts to plan, prepare, and respond to catastrophic health incidents. For example, one gap discussed in detail was the need to appropriately finance training. As William Smith, senior director for emergency preparedness at University of Pittsburgh Medical Center, said, “We have lots of stuff, but we don’t have the money to pay people to learn how to use it properly and how to deploy it properly.” The need to fund training exists at all levels of medical surge, from front-line emergency workers, clinic staff, nurses, and physicians to non-medical staff who will be called on in a crisis.

The old adage “form follows finance” was brought up many times throughout the workshop, and participants noted that the existing finance system is not helping. “Everything we do about how we finance and engineer healthcare delivery in the United States is designed to thwart preparedness,” suggested Emory University’s Kellerman. To set the stage for discussions, workshop participants examined the various ways health care is paid for in the United States and how each can contribute to emergency preparedness planning and medical surge.

Centers for Medicare & Medicaid Services

Medicare can represent 30 percent or more of an average physician’s revenues. Hospital revenue is often even more heavily dependent on Medicare, with as much as 50 percent of operating revenue coming from inpatient and outpatient services to Medicare patients. Because of this, the continued flow of Medicare payments during a mass-casualty incident is financially critical for healthcare systems.

One of CMS’s roles is to ensure the continuity of healthcare services to its beneficiaries by paying for services rendered to individual patients. “We assist when there is a disaster, in trying to ensure that our payments flow more easily,” said Marc Hartstein, deputy director of the CMS Hospital and Ambulatory Policy Group. CMS has created an emergency preparedness website that is updated with various resources such as links and answers to payment and billing policy questions.

During an emergency, CMS has some limited flexibility in the rules that can be waived. If a public health emergency has been declared, an 1135 waiver can be made. An 1135 waiver allows CMS to waive some rules and regulations—but not all of them.3 Hartstein explained, “Most of the rules and regulations that we’ll waive will be related to things like conditions or participation, certification requirements, requirements that physicians and other healthcare professionals hold licenses in states where they provide services, sanctions under the Emergency Medical Treatment and Labor Act—[those] would be some examples—and sanctions and penalties arising from noncompliance with certain HIPAA [Health Insurance Portability and Accountability Act] privacy regulations.”

But some things cannot be waived. “One of the things that we can’t wave is payment regulations,” Hartstein said. This means that rules about fee-for-service payments or about transferring patients between acute care facilities cannot be abridged. This issue was particularly important in Arkansas when patients were evacuated from Louisiana after Hurricane Katrina. CMS worked with the Arkansas hospitals to help them understand how the transfer policy regulations work in those situations—what to do when the patients were there for a length of time that caused them to go into “outlier” status.

In short, the rules and regulations of CMS remain functionally intact from a payment perspective regardless of the crises. The 1135 waivers serve primarily to ensure that patients receive care, not to provide additional, alternative, or streamlined funding for healthcare providers.

Private Insurance Plans

Although there is no insurance code that physicians can use to bill for disaster-training activities, the private insurance companies do play a part in preparing and responding to catastrophic incidents.

The most important factor for the healthcare system is that insurance companies are up and running and paying for services. Private insurers, just like Medicare and Medicaid, need to be prepared for the payment issues that arise from mass-casualty events, especially when patients may be seeking treatment at facilities that are not part of their insurer’s network. “We have asked our plans to look at rules that actually need to be waived,” said Diana Dennett of America’s Health Insurance Plans. “For example: cost sharing, out of network, those kinds of rules.” Straightening out problems can become quite complicated, especially when a disaster is focused in a certain geographical area and waivers are requested for people in those areas, but not in others. For example, during Hurricane Katrina waiver requests were coming in based on what parish (Louisiana’s equivalent of a county) people lived in, but the insurance plans don’t organize their members that way. Dennett noted that thinking about regional approaches would reduce these types of complications.

Ultimately, it is in insurance plans’ best interest that their members be prepared for emergencies, and some use existing nurse hotlines to supply their members with access to medical information or advice without requiring an office visit during a crisis. It makes good business sense from the insurers’ point of view to reduce the need for office visits if a member can be safely and effectively treated at home. If they need to enter the healthcare system, private insurers need to know where their patients are, so patient tracking is important to them as well. Unfortunately, large-scale funding of preparedness programs by private insurance companies is absent.

Funding EMS Surge—A Gap in Planning?

“In the fee-for-service world, you really don’t fund surge, you fund what exists,” said Kurt Krumperman, clinical assistant professor at the Department of Emergency Health Services at the University of Maryland–Baltimore County. In the EMS world, that means a fee-for-service model that is tied to transports with no money for readiness costs. Funding is based on day-to-day patient care needs, and even then it may not be adequate. A Government Accountability Office report on Medicare funding showed that on average, Medicare pays 6 percent below the average cost of service for EMS (GAO, 2007). In urban areas, Krumperman explained, there may not be adequate resources to meet response time standards of 8 minutes or less for 90 percent of calls received.

Workshop participants noted that local EMS surge ability currently comes through local or regional mutual-aid relationships. Nationally, there are two systems for mutual aid in a disaster—the Emergency Management Assistance Compact and the FEMA ambulance contract. Under EMAC, states provide mutual aid to other states using resources drawn from their local communities. With FEMA ambulance contracts, the agency contracts directly with EMS companies to provide resources to an affected community.

Both systems have their problems. “There are a lot of issues that relate to the EMAC response,” Krumperman said. “It has to do with the lack of set rates, the issue of low bid, lack of consistent standards, delays in payments or no payments, different rate structure between the FEMA ambulance contract and what EMAC reimbursement is, not being able to backfill overtime on EMAC responses, and also, finally, who assumes the risk?”

Despite the problems mentioned above, the nation has demonstrated the ability to field a large national response after Hurricane Katrina and other hurricanes. Still, Krumperman asked, what kind of capacity is expected for a community to have at a local level if federal response is not available?

Funding Alternatives

“The point has been made before—the IOM report on EMS made it—that the funding for training and for equipment related to disaster response from the first responder grant program, it’s only been 4 percent for EMS and it’s been that way since the inception of the program,” explained Krumperman.

This makes funding anything not immediately put to use on the street—spare capacity—problematic. Biologue’s Runge proposed a shift away from straightforward payments for capacity to a plan-driven, requirement-defined system that pays for capabilities instead.

“The bigger issue is how do we get the people, how do we provide enough people on the ground to provide that surge that we want?” asked Krumperman. “If we don’t figure that out, the equipment’s just going to sit there.” The solution is to create spare personnel capacity within the EMS system, and fund it through community-based funding, rather than on a pure fee-for-service basis.

Krumperman outlined an example of how such a system might work. He suggested starting by calculating the costs to provide basic emergency medical services to the community—ambulance, first response, and medical communications—all of the components that the community wants to include. The community can then determine what amount of surge capacity the community wants above that, realizing that those resources would be idle on a day-to-day basis specifically so they could be available when needed. EMS would then be funded to maintain those capabilities.

The question becomes: How should those capabilities be used for the public good? What activities can those providers offer given their skills as EMS responders? “Is it in public health? Is it in immunizations?” asked Krumperman. “EMS providers play a lot of different healthcare roles in disasters, and perhaps they could be done on a regular basis in a community” to prepare ahead of time.

Instead of funding on a fee-for-service basis, Krumperman suggested funding on a per-capita basis, a monthly fee that all insurers pay into—including Medicare and Medicaid. At the time of the workshop, the draft bill on healthcare reform from the Senate Committee on Health, Education, Labor, and Pensions committee contained a component relating to a pilot project for regional EMS systems that dealt with, among other concerns, surge and the development of adequate surge funding.

Looking Ahead

Throughout the workshop, participants noted that the way we fund medical surge capacity and emergency preparedness in this country does not work. There is no sustained funding to plan for or prepare for medical disasters, and it is only after a disaster has occurred that money is available through the Stafford Act. As Runge asked rhetorically, “Where’s the Stafford Act for predisaster?” Where does the money come from to do the planning, run the simulations, or train and drill providers on how to handle disasters that may be looming ahead?

It doesn’t come from fee-for-service funding; it is only marginally addressed by grants, and possibly not all that well. The Maryland Institute for Emergency Medical Services System’s Bass said, “As a state EMS director, my personal experience is that federal efforts to drive planning and response through grants are overly prescriptive and too compartmentalized, hampering state and local efforts to address the complex issues and unique needs of state-level planning and coordination, and in the end are counterproductive.”

Any discussion of the “how” in financing preparedness quickly devolves to a discussion of “who,” and while opinions varied, workshop participants agreed national leadership was needed. “One of the few good reasons to have a federal government is to provide for the common defense,” suggested Runge. “There is a pre-event phase that has to enter into this common defense ethic. It is a shared responsibility” that flows from the federal government to the state level and down into each community.

In this line, William Smith, senior director of emergency preparedness at the University of Pittsburgh Medical Center, joined other workshop participants in suggesting that going forward, federal funding should emphasize regional capabilities. “My idea for future funding is to emphasize regional planning,” said Smith. “Maybe even mandate that in terms of the utilization of the money, so it’s most effective for the populations served, not necessarily for the individual institutions.”

Of note, since the workshop took place President Obama declared a public health emergency (October 24, 2009), which among other things provided HHS Secretary Kathleen Sebelius the authority to permit CMS to waive a number of its requirements.



Of note, since the workshop took place President Obama declared a public health emergency (October 24, 2009), which among other things provided HHS Secretary Kathleen Sebelius the authority to permit CMS to waive a number of its requirements.

Copyright © 2010, National Academy of Sciences.
Bookshelf ID: NBK32862
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