Rural cities press for more state funding for emergency medical services

3 April 2024

In March, when Gov. Tim Walz released his administration’s plan for $226 million in new spending, it included $16 million to aid emergency medical services across the state. 

The proposal sets aside $6 million for the creation of an Office of Emergency Medical Services, which would replace the current Emergency Services Regulatory Board, as well as for a pilot program to test different ways of providing emergency medical services. 

The remaining $10 million, meanwhile, would be used for the creation of an aid program for licensed ambulance service providers in EMS regions that had operating losses of more than $1 million in 2022. 

The proposal, however, fell far short of what Greater Minnesota advocates had asked for — $100 million short, to be exact. They are hoping to secure more funds as the end of the session nears. 

Several EMS providers that count on insurance reimbursements have been operating at a loss. Those providers serve many people on Medicare and Medicaid — and, as a result, receive lower reimbursements and must tap local funds to fill in the gap.

Rural Minnesotans are more likely to have public health insurance coverage, such as Medicare, Medicaid or MinnesotaCare Credit: Source: Minnesota Health Access Survey, 2021; Geographies based on RUCA zip-code approximations. *Indicates significant difference from Metropolitan at the 95% level.

Virginia, a city in the Iron Range, is one of those. According to Mayor Larry Cuffe Jr., its EMS has been running at a deficit for the past seven years. Each year, around $3.8 million from the city’s budget goes toward EMS. However, last year the city only recovered around $1 million from Medicare reimbursements, he said. 

‘A little boost’

The Coalition of Greater Minnesota Cities is one of the organizations that’s been advocating for the governor to dedicate more funds to help EMS providers stay in service. 

“(We’re) obviously very disappointed” in the Walz proposal, said Bradley Peterson, the executive director of the Coalition of Greater Minnesota Cities. “There’s just a lot of those providers that are hurting financially and just need a little boost here just to even keep going for the next year or so.”

Sen. Grant Hauschild, DFL-Hermantown, represents an area that’s familiar with the issue and faces some unique challenges in supporting EMS delivery. 

In many rural areas, there is no financial incentive for private or nonprofit organizations to operate EMS services, so cities “are taking on these licenses and running their ambulance service,” he said. 

Tower, for example, is a northeastern Minnesota town with a population of around 440 people that has done precisely that. For a time, their EMS ran thanks to volunteers. 

But once they began getting more calls, they realized they needed more people to help, and it became more difficult to find volunteers willing to do the work, said Dena Suihkonen, the area’s EMS director. To keep its staff, the city began paying people to be on-call.  

“As time went on, it became where you had to have two people on your roster every minute of the day, 24 hours a day. So that’s an awful lot to expect somebody who’s volunteering their time to do,” Suihkonen said.

Suihkonen said they get around 500 calls a year. This year, they’re already at 130 calls and she thinks they’ll have more calls than they did last year. 

Tower has around 16 ambulance staff. Its EMTs make $11.50 an hour while its EMRs make $10.50, Suihkonen said. While personnel is one part of their costs, the other is the medical supplies and medications. 

The financial cost is a strain. In 2023, the city spent 10% of its annual property tax levy (over $51,000) to keep the services running, according to Suihkonen. 

“We don’t take in enough to support our service,” she said. “So then our small city, which is a low- to moderate-income community, is having to subsidize us. It can’t be forever because, eventually, they’re not going to be able to do that either.” 

That’s something that the Coalition of Greater Minnesota Cities has heard from its member cities. 

“This is a make or break for us. We have literally cities that are facing decisions that they don’t want to face. And that is a matter of do we continue or do we give up this license,” Erik Simonson, a lobbyist for the coalition, said during a House committee hearing on a bill advocating for $120 million in EMS support funds. 

Another issue in some Greater Minnesota regions is that the number of people on Medicare and Medicaid is rising — and because reimbursements are lower for people with that insurance, the providers in the areas are taking more costs on. 

Greater Minnesota has a higher aging population than metro areas, and for several reasons — including age, income and insurance coverage through employers — those living in rural areas are more likely to be on Medicare and Medicaid, according to an analysis by the Minnesota Department of Health. 

Credit: Sources: U.S. Census Bureau, Population Estimates

Suihkonen said a high number of calls are among Medicare and Medicaid patients. She estimated that about 85% of their population is on those programs, which reimburse around 20%-40% of the charges. 

When someone has Medicare or Medicaid, or no insurance, the city still provides the same services. 

Another big cost they take on is for the medication used on patients. EMS providers pay in full for medications, like Epi-Pens, for example, regardless of insurance status, she said. 

More funding possible? 

Peterson, of the Coalition of Greater Minnesota Cities, worries that the $10 million dedicated to supporting EMS providers won’t help all of the regions struggling with high costs because of the provision that requires funds to go toward providers serving EMS regions with at least $1 million in operating losses.

He said that only the northeast and central EMS regions would get any of the $10 million —  about $3.6 million and $5.5 million, respectively, based on their operating losses last year. “And even at that level, it would be getting significantly less than what the needs that have been identified,” he said. 

Lawmakers like Sen. Andrew Lang, R-Olivia, who sits on the EMS Task Force in the Legislature, are upset with the proposed $16 million. 

“With $3.5 billion left on the bottom line, I’m stunned to learn the governor wants to pinch pennies before funding emergency medical services for greater Minnesota. This is a laughable amount and no one should be proud of this proposal,” he said in a prepared statement. 

Hauschild is authoring a bill in the Senate that proposes $120 million for EMS support. 

Hauschild’s bill has support from many EMS organizations, cities and towns — and not just rural ones. Hennepin Healthcare and the Hennepin County Association of Paramedics and EMTs are among those who expressed support for the $120 million in funds. 

If they don’t receive that amount, Hauschild said they’re going to determine which areas — likely in the northeast and west central parts of the state — might more desperately need the funding. 

“If the money falls between $120 million and $10 million, there’s going to be different mechanisms of how we can set up the formula to get to the right places. This is a moving target,” he said. “We’re all kind of figuring out what is the most appropriate structure based on how much money is allocated.” 

The seven ambulance services in Otter Tail County, for example, experienced an estimated $1.5 million loss last year, according to a letter to Hauschild from the chair of the Board of 

Commissioners. The county urged Hauchild to advocate for $120 million, and also for a second year of funds for 2025. 

Rep. Dave Lislegard, DFL-Aurora, one of the authors of the House version of the bill, said it’s only a “bandaid to stop the bleeding.” 

He added: “I do know and understand that there are different budget targets and stuff like that, but I’m committed to furthering this conversation as it goes through the process.”

Ava Kian

Ava Kian is MinnPost’s Greater Minnesota reporter. Follow her on Twitter @kian_ava or email her at [email protected].

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