By Mehrdad Sharif, M.D.
Anesthesiologist & Partner of CA Anesthesia Associates Group

California is on the verge of transforming its emergency medical system into a vehicle for public pension bailouts, at the expense of patients, taxpayers, and the very providers who deliver most of the lifesaving care. 

A proposed State Plan Amendment (SPA) would allow public fire departments to bill Medicaid $1,596.88 per emergency ambulance transport, while private ambulance providers, who perform approximately 70% of the state’s emergency transports, would continue receiving just $339 for delivering the same service for Medicaid patients.

This isn’t a healthcare policy, it’s a financial strategy. 

And unless the Centers for Medicare & Medicaid Services (CMS) intervenes, California’s Medicaid program could be hijacked to fund bloated public pension obligations, rather than improve care for low-income patients.

Alameda County: Ground Zero for a Broken System

The dysfunction is already playing out in Alameda County (Think Oakland / Berkeley), where the Board of Supervisors recently rejected the results of a competitive ambulance procurement process. 

A private ambulance provider had fairly won the contract through a rigorous, county-led bidding process. But instead of awarding the contract, the board has signaled its intent to hand it to the county fire department, a department that has never operated the County’s ambulance system.

Even more troubling: the fire department reportedly plans to subcontract the entire service to a private ambulance provider. In other words, they don’t intend to provide ambulance transport themselves, they simply want to serve as the billing entity, giving them access to the inflated $1,596.88 Medicaid rate under the GEMT (Ground Emergency Medical Transport) program.

What’s more, by subcontracting the services out to a private provider, the fire department avoids having to pay firefighter salaries and pensions to the private EMTs and paramedics that provide the ambulance service. 

This isn’t about patient care. It’s about controlling the billing so that the county can collect the higher reimbursement and keep the difference, funds that are increasingly being eyed to cover mounting pension costs and firefighter compensation. 

According to govsalaries.com, in 2023 the highest-paid Alameda County firefighter earned an astonishing $636,613, and the average annual compensation for the County’s fire department was $257,434. 

AB 1383: The Pension Giveaway Driving the Ambulance Grab

This money grab is happening in tandem with Assembly Bill 1383, a proposal that would dramatically increase firefighter pension benefits. 

AB 1383 would:

• Raise the cap on retirement earnings by nearly $100,000, aligning it with the federal maximum of $280,000 per year;
• Lower the retirement age from 55 to 50, allowing firefighters to retire earlier with full benefits.

A legislative analysis pegs the cost of these changes at more than $300 million annually in new payroll expenses for government agencies and public employees.

With budgets already stretched thin, fire departments see the inflated GEMT reimbursements as a solution: win control of ambulance contracts, act as the billing middleman, and redirect federal Medicaid dollars to plug pension shortfalls.

And with billions in new GEMT funds projected over the coming years, the financial incentive to edge out private ambulance providers is stronger than ever, even if fire departments don’t intend to run the operations themselves.

Voters Supported Reimbursement Increases, Newsom Didn’t

Adding insult to injury, last year California voters overwhelmingly approved Proposition 35, which mandates increased Medicaid reimbursement rates for both private ground and air ambulance providers. 

The measure passed with strong bipartisan support, reflecting a clear public mandate to ensure fair funding for all emergency medical providers.

But Governor Gavin Newsom opposed Prop 35, and after its passage, he refused to implement the increases for private ground ambulance providers. His administration redirected the voter-approved funding, denying private EMS companies the reimbursement relief voters demanded, while fire departments stood poised to receive nearly five times the amount per transport under the SPA.

This selective implementation of Prop 35 not only violates the spirit of the law, it undermines public trust and further cements a two-tiered system where access to Medicaid dollars is dictated by politics, not patient needs.

The Consequences: Less Competition, Lower Access, Higher Costs

Private ambulance providers have served California communities for decades, delivering fast, high-quality care under strict performance standards and at lower cost to taxpayers. 

Penalizing them through deliberate underpayment and exclusion from GEMT reimbursements will:

• Reduce competition in EMS contracts,
• Delay response times in already-stressed 911 systems,
• Drive up healthcare costs, and
• Ultimately, harm patients.

Meanwhile, fire departments that have never run EMS systems are being incentivized to take over contracts not to improve service, but to access higher billing rates, and then hand the work off to the same private providers they displaced.

CMS Must Uphold Medicaid’s Mission

Medicaid exists to fund healthcare for vulnerable populations, not to bankroll pension shortfalls or political agendas. CMS has a duty to ensure that federal Medicaid dollars are spent based on economy, efficiency, and quality of care, not on provider ownership or political clout.

California’s SPA fails this test. It is:

• Inequitable, favoring public agencies over private providers for the same services;
• Inefficient, encouraging financial gamesmanship rather than performance-based care; and
• Unjust, ignoring the will of the voters and marginalizing providers who deliver most of the actual care.

CMS must reject California’s SPA, and insist on a fair, patient-centered Medicaid reimbursement system that reflects reality, not politics.