Crime & Safety

Contra Costa County Accused Of Rigging Ambulance Bids

Officials say allegations unjustified and state action will have no immediate impact on response to 911 calls.

CONTRA COSTA COUNTY, CA — For nearly three years, 911 emergency ambulance service in the Contra Costa County Fire Protection District has been provided by a unique public-private partnership that’s improved performance and generated millions in revenue the District reinvested in the county's emergency medical system.

But recent allegations by an obscure state agency, the California Emergency Medical Services Authority (CEMSA), that ConFire colluded with the county’s local Emergency Medical Services Agency to rig bidding on contracts underlying the partnership has ignited a legal catfight bringing into question just how much power a state regulatory agency has to dictate local contracting practices.

The issues involved are almost as complex as the state's emergency medical infrastructure itself as few average citizens understand the intricate mechanics set in motion when they call for help after an accident or other mishap. How the Contra Costa dispute is resolved could have lasting impact on the cost, quality and delivery of future 911 ambulance service for many Californians as other counties consider similar arrangements.

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CEMSA accused Contra Costa officials of engaging in anti-competitive behavior by conspiring to manipulate the bidding process for an emergency ambulance service contract and further claimed county Supervisors had a conflict of interest when they voted to approve it.

As a result, CEMSA invalidated bid documents it had approved in 2015, rescinded its approval of the county’s 2016 EMS plan and abolished the Exclusive Operating Areas in which the contracted ambulance service is provided. The county says CEMSA overreached, and its actions were an abuse of discretion and exceeded its jurisdictional authority, raising legal questions, not the least of which are whether the state agency actually has the authority to retroactively cancel procedures it previously approved and can arbitrarily nullify exclusive operating zones.

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CEMSA’s actions also raise questions about how much influence a private trade group may have exerted on the Authority to pursue its allegations at a time the issue of public-private ambulance partnerships was being argued in an Alameda Superior Courtroom, and why CEMSA waited nearly two years before launching what public documents suggest was nothing more than a superficial examination.

Related: Alameda County Fire Abandons Ambulance Partnership Plans

Timothy Ewell, Contra Costa’s deputy chief county administrator, said the county doesn’t comment on potential litigation, but confirmed an April letter from CEMSA to Patricia Frost, director of the county EMS Agency, was the first notice of state action received by the county.

“When the State EMSA denies any portion of a local EMS plan, the entire plan is effectively denied,” Ewell said, adding there will be no immediate impact on emergency medical response when residents dial 911 for help because CEMSA suspended its action until 2020.

A Simple Concept

Contra Costa’s “alliance model” is a simple concept: Instead of the county EMS Agency contracting directly with a private ambulance company, it contracts with ConFire to provide emergency ambulance service. ConFire in turn subcontracts the service to a company that can provide ambulance vehicles and staff to answer 911 calls.

The Contra Costa model is composed of three separate five-year contracts: A prime contract between ConFire and the county EMS Agency; a $200 million subcontract between ConFire and American Medical Response West, Inc. (AMR) which had already been providing emergency ambulance service in the county for more than a decade, and a third, $8.5 million contract with Advanced Data Processing, Inc. of Florida to handle billing for both emergency and non-emergency ambulance services.

This approach to providing ambulance service in an area covering about 654 square miles stretching from San Francisco Bay to the borders of San Joaquin and Sacramento Counties differs from practices common in most other California counties. By contracting with ConFire, the county’s EMS Agency delegates to fire officials the
responsibility for ensuring its subcontractor meets performance standards established by county ordinance and Agency rules.

With ConFire personnel being dispatched to most incidents requiring ambulance response, the theory goes, the department is better able to determine if consumers of emergency healthcare are being served efficiently. At the core of ConFire’s ambulance service are Exclusive Operating Areas, geographical regions containing large rural tracts. By granting just one ambulance provider the sole right to operate in these areas, this company is protected from competition in the more profitable urban segments of the exclusive zones in return for being required to provide the same quality of service to residents of the unprofitable
sparsely populated portions. Creation of these monopoly zones was permitted by a 1984 amendment to state law.

Under its subcontract AMR provides 911 ambulance service within four zones encompassing about 81 percent of the county. Emergency ambulance service in remaining areas is provided by the Moraga-Orinda and San Ramon Valley Fire Protection Districts which operate their own ambulances under separate contracts with the county.

In addition, the county has First Responder Agreements with six other fire departments – Crockett-Carquinez, East Contra Costa, El Cerrito, Pinole, Richmond and Rodeo-Hercules – to provide medical care until an AMR ambulance arrives, or the patient refuses transportation. Six companies, including AMR, are authorized to provide non-emergency transport throughout the county.

Contra Costa’s alliance was the first of its kind in the state and in 30 months of operation ambulance response times have improved. Last year ambulances responding with red lights and sirens to 60,920 potentially life-threatening situations arrived at the scene within the maximum time allowed under the contract on 95.6 percent of the calls. In some cases response times exceeded 98 percent.

‘Public Benefit’ Profit

At the same time, the alliance has provided millions of dollars for ConFire’s use in providing more emergency medical services rather than being deposited into a private company’s bank account. In 2017, ConFire’s ambulance operations produced $47.3 million from charges for services, producing a surplus of $14.1 million for reinvestment in EMS services after subtracting $1.3 million that was used for fire-based first responder fees.

This public benefit profit, or surplus is the difference between what ConFire charges for ambulance services and what it pays AMR to provide them and was used to improve the district's communications center, add more available ambulances on the streets and for other EMS services to the community.

AMR bills ConFire an “Ambulance Unit Hour Rate” for every ambulance and crew available for emergency call response. The rates range from $130.51 to $139.64 an hour depending upon the number of hours. For example, if AMR had 27 fully-staffed ambulances available 24 hours a day the company would charge ConFire $139.64 per hour for each unit, a total of $633,407 per week for the 4,536 hours ambulances were
on duty, or about $23,460 per ambulance.

Of course there’s a downside for AMR. If the company doesn’t meet performance requirements it must pay penalties ranging from a few hundred dollars for paperwork errors to $1,500 every time an ambulance fails to arrive at the scene of top priority calls within the contract’s maximum allowed response times. Last year, ConFire reported 2,774 AMR penalty responses of one kind or another, about 4.5 percent of total top priority calls. Of those penalty responses, only 139 exceeded the maximum allowed response time.

For those dialing 911, a ride to the hospital isn’t cheap. Rates reflect the actual cost of providing around-the-clock service. ConFire’s base rate is $2,245.40 with additional charges of $53.56 per mile for distances in which a patient is aboard, $187.46 for administering oxygen and $481 if a patient is treated at the scene but refuses transportation. These rates are reviewed annually using a formula of economic indicators.

Base rates charged by the San Ramon Valley and Moraga-Orinda fire departments are slightly higher, although ancillary charges are less than the county’s, with the exception of a $600 First Responder Fee for initial medical care at the scene. Last year the San Ramon Valley fire district reported $4 million in ambulance revenue; Moraga-Orinda $1.1 million.

Ambulance and other emergency medical costs are covered, at least in part, by Medicare, Medi-Cal or private insurance. In 2017, about 70 percent of ConFire reimbursements were made by Medicare or Medi-Cal with the remainder from private insurance or individuals who picked up the tab themselves.

What the County Did

Fire departments and emergency ambulances have always enjoyed a symbiotic relationship. Generally the first on the scene of a fire or accident, fire crews include an Emergency Medical Technician (EMT) or Paramedic who stabilize injured parties until an ambulance arrives to further treat patients and transport them to nearby hospitals.

In Contra Costa, having to provide this obligatory service was just one of more than a dozen public health programs managed by the EMS Agency, a division of the county’s Health Services Department, making the concept of a ConFire public-private partnership attractive.

With its existing ambulance contract set to expire in 2015, the EMS Agency hired Fitch & Associates, a Missouri consulting firm, to conduct a comprehensive study of the county’s EMS system and suggest ways it could be modernized. Among nearly 80 recommendations encompassing virtually all aspects of county healthcare delivery contained in the firm’s June 2014 report, Fitch recommended consolidating emergency
dispatch services and concluded there would be no issues if ConFire was allowed to compete for providing emergency ambulance service.

Fitch’s findings prompted ConFire to engage another Missouri consulting firm, the Ludwig Group, to assess the financial viability of operating its own emergency ambulance service. That study determined a ConFire operation would not only be cost effective, but could ultimately generate operating profits exceeding $7.5 million annually.

Anticipating an EMS solicitation for ambulance service providers, on Sept. 9, 2014 fire district directors gave ConFire permission to submit an alliance proposal when bids were advertised. Five days later the county conducted a workshop to develop parameters for a new contract and the process by which it would be awarded. That meeting drew 47 attendees representing local government, law enforcement, fire
departments, labor unions and medical organizations along with seven executives from four ambulance companies.

A Parallel Process

On Feb. 16, 2015 ConFire, with the assistance of an outside consulting firm, issued a Request for Qualifications – a solicitation significantly different than a Request for Proposals – seeking companies willing to partner with ConFire that could qualify to provide services required by the EMS Agency. Only two companies responded: American Medical Response West, Inc. and Falck Northern California.

AMR was the existing emergency ambulance provider and had been operating in that capacity for several years under an EMS Agency contract. Formerly a unit of the Envision Healthcare Corporation, a publicly-traded $16.5 billion conglomerate operating hospitals, other medical facilities and physician staffing services, AMR is now part of Global Medical Response, Inc., a company formed in March when AMR combined with
Air Medical Group Holdings, in a further consolidation of the US medical transportation industry. At the time, AMR was the largest ambulance company in America, operating in 40 states.

Falck Northern California is a subsidiary of Orange County-based Falck USA, which in turn is owned by Falck A/S a privately-held Danish multinational ambulance and healthcare company controlled in part by the KIRKBI group, an investment company run by Denmark’s Kristiansen family, creators of the popular LEGO toys, and through a separate company, operators of LEGOLAND amusement parks. Falck USA operates 22
US ambulance companies and last year generated $196 million in revenues, about 15 percent of the parent company’s worldwide ambulance income.

Following two rounds of evaluation interviews, in March ConFire selected AMR and on May 12 fire district directors approved a Pre-Award Agreement outlining the terms of a subcontract with AMR if, in fact, ConFire was successful in obtaining the county contract.

In a parallel and nearly simultaneous process, on Feb. 27 the county EMS Agency issued its formal Request for Proposals to provide emergency ambulance service, initiating a convoluted selection process that would consume nearly a year before any contract was awarded, and set the stage for the current dispute.

On March 19, the EMS Agency conducted a prospective bidder’s conference attended by just three companies – AMR, Falck and Medic Ambulance, the emergency provider in Solano County. Ultimately, only ConFire submitted a proposal to the EMS Agency by its May 21 deadline and two months later after an evaluation by outside experts and an independent financial review by the county administrator’s office, supervisors authorized the EMS Agency to negotiate a contract with ConFire. In August, the county announced its intention to award ConFire the contract and supervisors formally approved the agreement Nov. 17.

An Unhappy Industry

None of this set well with the California Ambulance Association (CAA), a non-profit trade and lobbying group whose members include several private ambulance companies, insurance companies, medical billing and collection agencies and consulting firms. CAA executive director Ross Elliott, a former Kern County official,
owns a private company, Trilogy EMS Consulting LLC, which is paid to manage the organization.

In April 2016, four months after the ambulance contract became effective, and eight months past the deadline for unsuccessful bidders to protest the contract award, the CAA filed a complaint with CEMSA requesting an investigation of Contra Costa’s selection process saying it was “nothing more than a sham to satisfy [CEMSA] RFP process standards” because the selection of an ambulance company had already been made on the basis of what “appears to be financial gain,” something the CAA said might violate state law, “anti-trust parameters and possibly violate a private company’s ability to engage in free trade.”

Further, the CAA suggested a conflict of interest existed since county supervisors, who also serve as the fire district’s board of directors, were the same people approving both ConFire’s subcontract with AMR and the county EMS Agency’s contract with ConFire.

“The action by the county to bypass EMSA’s oversight of competitive processes for selection of Exclusive Operating Area providers is unprecedented, and these actions have the potential to alter EOA selection processes statewide,” said the CAA.

Elliott told Patch the value of his organization “is that it can be used as a spokesman for members who believed they have been wronged,” but declined to identify the member making the complaint, and said the delay in contacting CEMSA was because “CAA didn’t realize the extent of the problem until after the fact.”

“The damage was already done. In Contra Costa County the horse is out of the barn,” Elliott said, “and CAA’s concern in filing the complaint was whether this was going to be happening in other parts of the state. The CAA’s position is to ensure whatever process is used provides for fair competition and gives everybody a chance to compete.”

“What the county did through a two-step process was something that should have been done by the [county] EMS Agency. That’s how you select a contractor,” he said. Elliott conceded CEMSA authority to review and approve the fire department’s separate RFQ was a “gray area” but maintained the process used circumvented state authority.”

State Slow to Act

The CAA’s complaint apparently languished in CEMSA’s Rancho Cordova headquarters until last Jan. 8 when the Authority submitted a Public Records request for county documents related to the EMS Agency’s RFP. The county responded a month later with scores of documents. In April the CEMSA notified the county of its decision.

Citing the CAA’s two-year-old grievance, CEMSA said it had conducted an “investigation” of the county’s contracting process and determined collusion between the EMS Agency, ConFire and AMR had “stifled competition due to bid rigging and was anti-competitive due to other factors related to the bid,” alleging AMR “agreed in advance not to compete against ConFire for the EMS [Agency] contract,” and challenging the Pre-Award Agreement.

CEMSA further asserted the bid rigging was compounded when county supervisors, who were also directors of the fire district, in essence awarded the contract to themselves “creating a situation that has a chilling effect on all other competition.”

Just how extensive CEMSA’s probe of the ConFire bidding was is unknown. CEMSA told Patch that despite what its letter to the county said, there really was no investigation, just a “review,” of documents received from the Contra Costa EMS Agency.

“It wasn’t an audit type situation where we provide them with our findings,” a CEMSA spokesperson said in an email response to Patch questions. “We aren’t required to, nor did we provide them with an investigatory report.” CEMSA said it conducted no interviews during the review.

A Quick Response

Thomas Geiger, an assistant county attorney representing the EMS Agency, quickly appealed the decision saying the allegations were baseless and the CEMSA had both abused its discretion and exceeded its authority by retroactively rescinding approval of the county’s RFP, because CEMSA’s power is limited only “to reviewing and approving a local EMS agency’s competitive process” and CEMSA has no authority to create,
manage or abolish Exclusive Operating Areas.

Geiger said allegations of collusion were unjustified because the contract with AMR was a “legitimate, publicly disclosed joint partnership” lawfully created through bidding activities subject to public meetings and conducted in a fully transparent manner.

Suggesting CEMSA’s action itself was a politically-motivated sham, Geiger wrote: “CEMSA's decision was improperly influenced by non-governmental organizations, including the California Ambulance Association. CEMSA relied on unfounded allegations made by the [CAA] and did not conduct an independent, complete
investigation into the facts and circumstances surrounding this matter before issuing its decision.”

What could be most troublesome for CEMSA as the county’s appeal wends its way through the administrative law process, and later, possibly the courts, was Geiger’s assertion the state Authority had erroneously relied upon its own guidelines in reaching its decision, saying “CEMSA Guidelines are improper underground regulations that do not have the force of law, because they have not been approved under the California Administrative Procedure Act,” the state law dictating how regulations must be implemented.

Limits of Power

Created in 1980, CEMSA is a division of the California Health & Welfare Agency that coordinates and integrates all emergency medical services through a wide range of statewide standards and guidelines for emergency and disaster medical care that includes some oversight of local EMS agencies.

Among its primary responsibilities, CEMSA establishes standards for training of Emergency Medical Technicians and Paramedics and administers testing for their certification and recertification. The Authority also sets the minimum CPR and first-aid training and certification standards for firefighters, police officers, lifeguards and school bus drivers, and coordinates the state trauma system and California Poison Control
System.

As the foundation of California’s two-tiered EMS infrastructure, state law requires CEMSA to develop planning and implementation guidelines for EMS systems that cover not only training, communications and emergency ambulance transportation but responsibility for assessing local EMS system organization, management and operation along with evaluation of hospitals and critical care centers.

One of these tasks is the review and approval of local EMS agencies’ formal or updated emergency medical services plans. As the second tier in the statewide system, local agencies must outline their readiness and ability to manage emergencies including a mandatory requirement for providing transportation of emergency medical patients.

Whatever authority CEMSA may have where local emergency ambulance service is concerned is found in the massive state Health & Welfare Code, which regulates every aspect of California emergency medical care, and authorizes each county to independently develop its own EMS program.

That law was amended in 1984 permitting county EMS agencies to create Exclusive Operating Areas as part of local plans required to be submitted annually for CEMSA for review and approval. These plans were to contain descriptions of how competition would be conducted in selecting exclusive ambulance operators.

In reaching its Contra Costa decision, CEMSA relied heavily on this requirement, citing its own Guideline 141, a nine-page document outlining how RFPs must be constructed and the bidding process managed.

However, nowhere in this guideline does CEMSA claim any authority to rewrite or dictate the wording of an RFP, and nowhere does it claim an RFQ, such as that utilized by ConFire, must be submitted for approval, only that the competitive process must comply with generally accepted public bidding practices. Nothing in the guideline, or the law, appear to give CEMSA any power to rescind an RFP once it’s been approved.

Another section of the law requires that all of CEMSA’s own “regulations, standards and guidelines” must be approved by the state Commission on Emergency Medical Services, an 18-member body appointed by the governor and legislature that includes healthcare professionals, law enforcement officers and fire officials.
Records of the Commission’s official actions in approving the CEMSA’s original 1985 emergency ambulance contracting guidelines are missing from the State Archives and minutes of Commission meetings in 1997, when CEMSA issued a re-worded Guideline 141, contain no discussion or approval of the updated document.

In fact, CEMSA concedes its guidelines are just that, simple advice to local EMS agencies.

“While the guidelines do not have the same weight or authority as [state law] or regulations, they are important directions that a local EMS agency should consult when planning and implementing their system,” a CEMSA spokesperson told Patch.

Correction: County officials say that contrary to Patch's initial report, none of the money generated from ambulance operations was used to make payments of any kind on fire district pension obligations. All revenues in excess of expenses were used for emergency medical services.

Photo via Shutterstock


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