Executive Summary

Emergency Medical Services (EMS) in rural Virginia are reimbursed at rates that do not reflect the true cost of providing 24/7 emergency coverage. While federal law does not explicitly mandate lower rural reimbursement, the structure of Medicare, Medicaid, and state funding formulas systematically underfund rural EMS agencies that operate across large geographic areas like Southwest Virginia with low call volumes and high readiness costs.

This issue statement was prepared by someone for the Murphy Campaign and highlights the issues facing SWVA and other rural areas in the United States. There are policy changes at the end of the document for the Commonwealth and Federal systems.

I. Federal Law Governing EMS Reimbursement

A. Medicare Ambulance Fee Schedule (42 U.S.C. § 1395m(l))

Medicare reimbursement for ambulance services is governed by:

• Social Security Act §1834(l)
  

• Implemented under 42 CFR Part 414, Subpart H
  

This federal structure pays EMS agencies based on:

• Level of service (BLS, ALS)
  

• Mileage
  

• Geographic adjustment factors
  

Critically, federal law pays per transport, not per readiness.

This means:

• No reimbursement for standby coverage
  

• No reimbursement for non-transport medical care
  

• No reimbursement for staffing rural stations 24/7
  

For rural EMS systems with low call volume, this creates a structural funding deficit even if the per-transport rate appears similar to urban areas.

B. The “Medical Necessity + Transport” Requirement

Under Medicare Part B policy, ambulance reimbursement only occurs when:

• Transport is medically necessary
  

• Patient is transported to an approved facility
  

In rural communities:

• EMS often treats without transport
  

• Long-distance response times increase cost per call
  

• Many calls result in zero reimbursement
  

Urban systems, by contrast, generate more reimbursable transports due to higher population density and hospital proximity.

II. The Structural Rural Disadvantage in Federal Payment Design

A. Volume-Blind Reimbursement Formula

Federal reimbursement assumes higher call volume efficiency.
Rural EMS reality is the opposite:

• Larger service territories
  

• Fewer calls per shift
  

• Higher cost per transport
  
  

The Government Accountability Office (GAO) has repeatedly noted that low call volume, not distance alone, is the primary driver of higher rural EMS operating costs.

Yet federal reimbursement formulas adjust mainly for mileage, not readiness or coverage burden.

B. Limited Rural Add-On Payments Are Insufficient

Congress has enacted temporary rural add-ons:

• 3% rural bonus
  

• 22.6% “super rural” bonus
  

• Mileage enhancements
  

However, these adjustments:

• Are temporary extensions, not permanent law
  

• Do not reflect real staffing costs
  

• Do not compensate for 24/7 coverage requirements
  

Unlike Critical Access Hospitals, EMS agencies are not reimbursed at cost-based rates under federal statute.

III. Medicaid: Federal Authorization, State-Level Underpayment

A. Title XIX Flexibility and State Reimbursement

Medicaid reimbursement is governed federally under Title XIX of the Social Security Act but administered through state plans.

Virginia’s Medicaid program:

• Sets ambulance reimbursement rates through DMAS (Department of Medical Assistance Services)
  

• Typically reimburses below actual cost of service
  

• Does not provide readiness or rural coverage payments
  

Because rural Virginia populations skew older and lower-income, EMS agencies in Southwest Virginia rely disproportionately on:

• Medicare
  

• Medicaid
  

• Local tax subsidies
  

This creates a triple funding squeeze.

IV. Virginia-Specific Impact: Southwest Virginia and the Coalfield Region

Across Wise, Russell, Buchanan, Scott, and Washington Counties:

• Large geographic coverage areas
  

• Aging populations
  

• Hospital closures and consolidation
  

• Long transport times (often 30–60+ minutes)
  

Local governments are increasingly forced to:

• Raise property taxes
  

• Subsidize EMS through county budgets
  

• Depend on volunteer systems nearing collapse
  

This is especially concerning given Virginia’s Dillon Rule structure, which limits local funding flexibility without state authorization.

V. Public Safety Classification Gap in Federal and State Policy

EMS is legally classified for reimbursement purposes as a transport service, not an essential public safety service like:

• Fire departments
  

• Law enforcement
  

• Emergency management
  

This classification mismatch in federal policy results in:

• Inadequate reimbursement models
  

• Lack of infrastructure funding streams
  

• Over-reliance on local governments
  

VI. Policy Recommendations (Federal)

1. Establish a Federal Rural EMS Cost-Based Reimbursement Model

Modeled after Critical Access Hospitals (42 U.S.C. §1395i-4), Congress should create:

• Cost-based reimbursement for rural EMS agencies
  

• Readiness payments for 24/7 coverage
  

2. Permanently Codify Rural Add-On Payments

Make the rural and super-rural Medicare add-ons permanent rather than temporary Congressional extensions.

3. Create a Federal “EMS Essential Service” Designation

Reclassify EMS under federal law as essential public safety infrastructure, not merely transportation.

4. Allow Reimbursement for Treatment Without Transport (TREAT Model Expansion)

Expand CMS pilot programs that reimburse EMS for:

• On-scene treatment
  

• Telehealth triage
  

• Community paramedicine
  

VII. Policy Recommendations (Virginia General Assembly)

1. Establish a Virginia Rural EMS Stabilization Fund

Dedicated funding for:

• Volunteer EMS agencies
  

• Rural county EMS departments
  

• Equipment and staffing retention
  

2. Direct DMAS to Reevaluate Medicaid EMS Reimbursement Rates

Mandate a cost study specific to rural ambulance services in Southwest Virginia.

3. Authorize Regional EMS Authorities

Provide legislative authority for multi-county EMS funding structures to stabilize rural coverage.

4. Provide State Matching Grants for Rural EMS Readiness

Recognize EMS as essential infrastructure similar to public schools, roads, and public safety.

VIII. Conclusion

Rural EMS agencies are not failing due to mismanagement.
They are operating under a reimbursement framework designed for urban volume efficiency rather than rural geographic necessity.

Federal law pays for transports.
Rural America pays for readiness.

Until reimbursement policy recognizes the true cost of maintaining life-saving coverage across sparsely populated regions like Southwest Virginia, rural communities will continue to face longer response times, station closures, and increased mortality risk.

In plain terms:

If reimbursement policy does not change, rural 911 systems will erode — not from lack of dedication, but from a funding model that does not match rural reality.

Prepared for policy discussion with:

• Virginia House Committee on Health, Welfare and Institutions
  

• Virginia Senate Committee on Education and Health
  

• U.S. House Energy & Commerce Committee
  

• U.S. Senate Finance Committee