Reframing EMS Reimbursement: Why Cost‑of‑Service Analysis Matters for Rate Setting
Updated on: April 28, 2026
Published on: April 28, 2026
Emergency Medical Services (EMS) systems across the country are facing a structural financing challenge. Costs have increased significantly due to 24/7 readiness requirements, workforce shortages, regulatory obligations, and expanding clinical expectations, while reimbursement models remain largely linked to transport volume. At the same time, ground ambulance payment in the United States is governed by a fragmented system of state and local rate setting authorities rather than a consistent federal standard. This misalignment has left many agencies regularly underfunded, regardless of size, geography, or service model, and has limited states’ ability to set rates that reflect the true cost of providing emergency response.
Sustainable EMS financing requires a defensible, system-wide understanding of EMS costs, that explicitly accounts for readiness as a core public safety obligation rather than an assumed byproduct of transport activity. A readiness-informed Cost-of-Service Analysis (COSA) provides this foundation by quantifying both fixed readiness costs and variable service costs using verified financial, operational, and utilization data.
PCG’s white paper, Cost of Service Analysis as the Foundation for Sustainable EMS Rate Setting, outlines how a readiness-informed COSA enables EMS agencies and policymakers to quantify the cost of emergency response. By integrating verified financial data with incident-level response data, the analysis quantifies both fixed readiness costs and variable service costs. It documents the true cost of non-transport responses, demonstrates significant cost variation across urban, rural, and super-rural systems, and shows that transport volume bears little relationship to overall cost.
“Cost analysis is critical in the EMS space as it establishes a data-driven, defensible understanding of the true cost required to deliver emergency medical services, including readiness, staffing, and operational demands. It enables agencies and policymakers to move beyond historical or fee-based reimbursement toward sustainable, equitable rate-setting that reflects actual service delivery costs,” said Dr. Vanessa Millar, co-author of the white paper. “COSA also plays a pivotal role in supporting supplemental payment programs, Medicaid rate development, and demonstrating actuarial soundness to regulators. Ultimately, it strengthens financial stability for EMS providers while ensuring continued access to high-quality emergency care in the communities they serve.”
Reimbursement rates are often inherited from historical fee schedules, benchmarked to Medicare, or set through formulas that assume readiness without measuring it. National data from the Medicare Ground Ambulance Data Collection System show that the average cost of an ambulance transport far exceeds reimbursement, creating a substantial per-trip shortfall. With labor accounting for nearly 70% of EMS expenses, agencies are increasingly squeezed by rising workforce costs while being expected to maintain response-time standards at all hours.
“When a medical emergency happens, people depend on EMS to show up without hesitation, fully prepared to care for them on what may be the most difficult day of their lives. That ability to respond exists because EMS systems remain in a constant state of readiness, with staff, equipment, training, and coverage in place long before any call is made,” said Nora Culeton, co-author of the white paper. “There is a real and measurable cost associated with maintaining that readiness, as well as with delivering different types of emergency medical responses. By understanding and accurately measuring these costs, a cost of service analysis helps ensure that funding decisions reflect what it takes for EMS to be ready, respond effectively, and remain resilient for the communities they serve.”
A key strength of COSA is its ability to disaggregate EMS activity by response type, including emergency transport, non-emergency transport, specialty care transport, and treat-no-transport or treatment-in-place responses. These non-transport responses are increasingly common as EMS agencies expand mobile healthcare and community paramedicine, yet they are typically invisible in transport-only payment models. COSA makes these costs visible and quantifiable. Beyond rate setting, COSA serves as a powerful policy and legislative tool. As states enact surprise ambulance billing protections and limit balance billing, EMS agencies lose traditional mechanisms for offsetting underpayment. Without a shift toward cost-based reimbursement, these protections can unintentionally intensify financial strain. A readiness-informed COSA offers a viable alternative—supporting consumer protection goals while ensuring EMS systems remain viable.
“EMS shows up every time. A cost of service analysis helps ensure we understand the full cost of that response — because sustainability starts with seeing the whole picture,” said Melissa Rockett, co-author of the white paper.
As EMS agencies navigate increasing complexity and persistent workforce pressures, COSA provides more than justification for higher reimbursement, it offers a transparent, auditable, and data-driven pathway to sustainable funding. In an environment where communities depend on immediate emergency response, aligning reimbursement with the true cost of readiness is not just a fiscal necessity; it is a public safety imperative.
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Nora Culeton
Nora Culeton, Consultant—Health Finance.
Nora Culeton is a Consultant at PCG who partners with local government providers nationwide to increase departmental revenue through Medicaid cost reporting and reimbursement optimization. She brings nearly seven years of experience serving public and private sector clients on research, policy analysis, operational improvement, and healthcare rate analysis initiatives. At PCG, Nora supports public safety consulting, rate analysis, cost of service studies, provider assessment programs, and Ambulance Supplemental Payment Programs (ASPP). With four years of direct Medicaid cost reporting experience, she has led several trainings on identifying the true cost of EMS transport and applying rate analysis strategies to maximize Medicaid reimbursement. She is highly knowledgeable in Medicaid ambulance reimbursement methodologies and EMS payment structures across multiple states and supports government-based healthcare providers in Florida and Oklahoma, while also auditing Medicaid cost reports in Colorado.
Vanessa Millar
Vanessa Millar, Consultant—Health Finance.
Vanessa Millar is a healthcare consultant specializing in ambulance reimbursement, Medicaid cost reporting, and EMS rate setting. She works on Ambulance Supplemental Payment Programs (ASPPs) nationwide and manages ASPP projects in Florida and New Mexico, with experience supporting rate setting analyses for the Florida Department of Health. Her experience includes cost-of-service evaluation, reimbursement modeling, Medicaid cost reporting, and support for Medicare Ground Ambulance Data Collection System (GADCS) surveys. Vanessa holds a B.S. in Finance and an MBA in Finance from the University of South Florida and is currently a Doctor of Business Administration (DBA) Candidate at Liberty University.
Melissa Rockett
Melissa Rockett, Senior Consultant—Health Finance.
Melissa Rockett is a Senior Consultant specializing in Medicaid ambulance reimbursement, supplemental payment program strategy, and EMS financial sustainability. She oversees Ambulance Supplemental Payment Program (ASPP) initiatives in Florida and Kentucky and serves as a senior advisor for ASPP development across the Southern region. Melissa works closely with state agencies, associations, and local EMS providers to support program implementation, cost reporting strategy, reimbursement optimization, and long-term program growth. Her experience includes leading provider engagement efforts, overseeing large-scale Medicaid cost reporting initiatives, and advising on supplemental payment program expansion to strengthen financial stability for public EMS systems
James Smyth
James Smyth, Consultant—Health Finance.
James Smyth is a consultant specializing in Medicaid ambulance reimbursement and supplemental payment program implementation. He serves as program manager for Oklahoma’s Ground Emergency Medical Transportation (GEMT) program and Florida’s Public Emergency Medical Transportation (PEMT) program, overseeing provider engagement, cost report coordination, and compliance with state Medicaid requirements. James works directly with public EMS agencies to support accurate cost reporting, data validation, audit response preparation, and reimbursement optimization. His hands-on leadership ensures program integrity while helping providers successfully navigate complex Medicaid reimbursement frameworks.
