To: County of Sonoma Board of Supervisors
Department or Agency Name(s): Department of Health Services
Staff Name and Phone Number: Nolan Sullivan, 707-565-4774; Amelyn Olson, 707-565-2696
Vote Requirement: Majority
Supervisorial District(s): Countywide
Title:
Title
Adjustment of 9% to Maximum Allowable Ambulance Rates Under the Sonoma County Fire District Exclusive Operating Area-1 Agreement
End
Recommended Action:
Recommended action
A) Approve, pursuant to section 10.2 of the Exclusive Operating Area-1 Agreement, the revised schedule attached as Attachment 2, reflecting an adjustment of 9% to the maximum Authorized Rates and Charges that Sonoma County Fire District may charge for emergency ground ambulance services provided within Exclusive Operating Area 1 inclusive of any otherwise applicable cost-of-living adjustment.
B) Authorize the Director of Health Services, or designee, to take actions necessary to implement the revised rate schedule and coordinate implementation with Sonoma County Fire District, subject to County Counsel approval.
C) Direct the Director of Health Services, or designee (the “Authorized Actor” under the Exclusive Operating Area-1 Agreement), to present any future request for a rate increase above the annual inflation adjustment to the Board for review and input, together with a completed independent financial audit and an account of Sonoma County Fire District’s cooperation with that audit, before the Director decides the request under section 10.2(B). This direction does not condition the 9% increase approved today on the audit or alter the approval authority established by the Agreement, and shall be implemented without unreasonably delaying a future approval decision.
end
Executive Summary:
The Department of Health Services (“DHS”) requests approval of an adjustment of 9% to the maximum Authorized Rates and Charges that Sonoma County Fire District (“SCFD”) may charge for emergency ground ambulance services provided within Exclusive Operating Area 1 (“EOA-1”). The proposed adjustment is reflected in the revised rate schedule attached as Attachment 2 and is inclusive of any otherwise applicable cost-of-living adjustment.
The County selected SCFD through a competitive procurement process in 2023 to serve as the exclusive provider of emergency ground ambulance transport services within EOA-1. EOA-1 encompasses much of central Sonoma County - from Penngrove to Larkfield and from Occidental to Kenwood. EOA-1 includes the cities of Santa Rosa, Rohnert Park, Sebastopol, and Cotati, as well as the communities of Kenwood, Larkfield, Oakmont, Graton, Occidental, and Mark West Springs.
Under the EOA-1 Agreement (”Agreement”), SCFD may charge patients only in accordance with the Authorized Rates and Charges, as adjusted pursuant to section 10.2. SCFD must separately take any action required under its own governing authority to adopt the rates it elects to charge, not exceeding the maximum rates approved by the County.
In July 2026, SCFD requested a 16.36% adjustment, citing financial pressures associated with its EOA-1 operations. Based on the information currently available, DHS recommends a 9% adjustment. The recommendation does not constitute acceptance of SCFD’s asserted shortfall, revenue projections, or methodology, and it does not approve or commit the County to approve the remainder of SCFD’s request.
The 9% increase will take effect upon Board approval and is not conditioned on completion of the audit. Separately, SCFD agreed to cooperate with DHS in conducting an independent financial audit. DHS will bring future requests for increases above the annual inflation adjustment to the Board for review and input before DHS decides them, consistent with the Agreement’s approval process together with a completed independent financial audit and an account of SCFD’s cooperation with that audit.
Discussion:
On June 6, 2023, the Board authorized the Director of Health Services, or designee, to execute a five-year agreement with SCFD for emergency ground ambulance services within EOA-1, with an option to extend the agreement for an additional five years. The Board also adopted a resolution making certain findings and adopting the County of Sonoma's Written Policy Regarding Emergency Ambulance Services Contracts pursuant to Health and Safety Code section 1797.230.
The agreement was subsequently executed, and SCFD began providing emergency ground ambulance transport services within EOA-1 on January 16, 2024.
Under the agreement, SCFD serves as the exclusive emergency ground ambulance provider for EOA-1 and is authorized to charge for ambulance transportation and associated services in accordance with the rates established under the agreement.
The County, through the Department of Health Services as the Local Emergency Medical Services Agency (LEMSA), is responsible for administration and oversight of the EOA-1 agreement. The EOA-1 agreement establishes the rates SCFD is authorized to charge for ambulance services provided under the agreement and the process for adjusting those rates.
California Emergency Medical Services Authority (EMSA) oversight applies to the County's establishment and administration of the exclusive operating area and the competitive process used to select the ambulance provider in accordance with state law. Individual rate adjustments under the executed EOA-1 agreement are administered through the rate-adjustment provisions of the agreement.
Contractual Rate Adjustment Process
Section 10.2 of the EOA-1 agreement establishes the process for adjusting the maximum Authorized Rates and Charges.
Section 10.2(A) provides that rates may be adjusted annually to compensate for inflation based on the Bay Area Consumer Price Index and/or other appropriate indices reflecting increased operating costs.
If a CPI-based adjustment is insufficient to compensate for increased operating costs, section 10.2(B) permits SCFD to request an additional adjustment. The request is subject to County approval based on documentation substantiating the need for the adjustment, including financial statements, collection rates, and payer-mix information.
Section 10.2(D) authorizes the County to conduct a local program audit when SCFD requests an adjustment exceeding 10% and requires Board approval of any adjustment of 10% or greater. SCFD requested a 16.36% adjustment. DHS is not recommending approval of that request and instead is presenting an adjustment of 9% to the Board for consideration.
For additional increases below 10%, section 10.2(B) assigns the approval decision to DHS. The proposed Board direction provides an opportunity for Board review and input before that decision; it does not change the decision maker or impose a new contractual approval requirement.
These provisions allow the County to evaluate proposed adjustments to the maximum rates permitted under the Agreement while maintaining oversight of the financial and operational performance of the exclusive ambulance system.
Current Rate Request:
In July 2026, SCFD requested a 16.36% adjustment to the maximum allowable EOA-1 ambulance transport rates identified a projected $2,457,096 shortfall for fiscal year 2026-2027 and stated that, because of its payer mix and collection rates, this increase to transport rates would be necessary to generate an approximately 6% increase in revenue to close the expected gap.
DHS evaluated the request based on the EOA-1 Agreement, the financial and operational information submitted by SCFD, the current Authorized Rates and Charges, and the County's responsibilities as the LEMSA and contracting agency overseeing the EOA-1 ambulance system.
Based on the information currently available, DHS does not recommend the requested 16.36% adjustment. DHS instead recommends a 9% adjustment to the maximum Authorized Rates and Charges, inclusive of any otherwise applicable cost-of-living adjustments. This recommendation does not constitute approval of SCFD's full request or acceptance of SCFD’s asserted shortfall, projections, or methodology.
SCFD’s financial information shows strong returns in the initial period of operations but flat revenues and accelerating expenditures in the last few years. Initially, revenues lagged expenditures because the District had to wait for reimbursements from health payers such as Medicare, Medi-Cal, and private insurance. The tables below shows the Department’s fiscal analysis of SCFD’s financial performance.
|
Operating period for SCFD |
December 2023 |
January 2024- June 2024 |
July 2024 - June 2025 |
July 2025-June 2026 |
July 2026- June 2027 |
|
Fiscal Year |
Pre-service |
2023-2024 |
2024-2025 |
2025-2026 |
2026-2027 |
|
Beginning Fund Balance |
$0 |
$300,000 |
$2,984,613 |
$12,820,813 |
$13,357,596 |
|
Revenues |
$0 |
$11,395,251 |
$40,091,666 |
$37,935,271 |
$40,199,267 |
|
Expenses |
$0 |
$14,110,638 |
$30,255,466 |
$33,398,488 |
$40,297,287 |
|
Preliminary Earned income |
$0 |
-$2,715,387 |
$9,836,200 |
$4,536,783 |
-$98,020 |
|
Cumulative Earned Income |
$0 |
-$2,715,387 |
$7,120,813 |
$11,657,596 |
$11,559,576 |
|
Transfer In from SCFD to EMS |
$300,000 |
$5,400,000 |
$0 |
$0 |
$0 |
|
Transfer out to SCFD from EMS |
$0 |
$0 |
$0 |
$4,000,000 |
$1,700,000 |
|
Enterprise Ending Fund Balance |
$300,000 |
$2,984,613 |
$12,820,813 |
$13,357,596 |
$11,559,576 |
|
Funds Assigned to Enterprise Reserve |
$0 |
$0 |
$0 |
$1,500,000 |
$1,964,410 |
Running Balance
|
Operating period for SCFD |
December 2023 |
January 2024- June 2024 |
July 2024 - June 2025 |
July 2025-June 2026 |
July 2026- June 2027 |
|
Fiscal Year |
Pre-service |
2023-2024 |
2024-2025 |
2025-2026 |
2026-2027 |
|
Remaining obligation due to SCFD |
$300,000 |
$5,700,000 |
$5,700,000 |
$1,700,000 |
$0 |
|
Enterprise Assigned Reserve Balance |
$0 |
$0 |
$0 |
$1,500,000 |
$3,464,410 |
|
Enterprise Unrestricted Fund Balance |
$300,000 |
$2,984,613 |
$12,820,813 |
$11,857,596 |
$9,595,166 |
The tables include actual results through fiscal year 2025-2026 and projected results for fiscal year 2026-2027. The fiscal year 2026-2027 projections assume SCFD approval of contract increase for their vendor Medic Ambulance but do not reflect the 9% adjustment.
Based on these figures, SCFD is projected to have a cumulative net earnings of approximately $11.5 million by the end of fiscal year 2026-2027 and an enterprise fund balance of approximately $11.6 million. The projected fund balance includes approximately $3.5 million allocated to reserves, toward SCFD’s stated reserve target of $6 million, and approximately $9.5 million in unrestricted fund balance. The initial debt of the Enterprise to the District of $5.7 million would be retired by the end of this year.
The fiscal year 2026-2027 figures are projections and remain subject to several uncertainties. These include potential changes in insurance coverage and payer mix resulting from recent federal legislation, possible changes to Medi-Cal reimbursement for public-agency ground ambulance transportation, and future costs for SCFD subcontracted ambulance-services provider, Medic Ambulance.
After reviewing SCFD’s request and the currently available information, DHS considers an adjustment of 9% reasonable and recommends that it take effect upon Board approval. The adjustment is not contingent on completion of the independent financial audit. The proposed adjustment is intended to address current financial pressures while limiting the effect on the maximum rates applicable to EOA-1 ambulance services.
Concurrently, the County intends to initiate an independent financial and operational review pursuant to its audit and records-access rights under Section 15 of the Agreement and the applicable rate-review provisions in Section 10.2 of the Scope of Services. The review will evaluate SCFD’s EOA-1 ambulance operations, financial condition, compliance with the Agreement, and asserted need for rate relief. This review will provide greater clarity around whether this increase should be sufficient for the time being or if further increases might be necessary and when those would need to occur. At this time, the Department is confident that a 9% increase provides sufficient financial cushion for the remainder of this fiscal year, particularly in light of SCFD’s indicated cash balances.
As part of the review, SCFD will be asked to provide:
• All records, reports, and information required under the Agreement;
• Relevant underlying records supporting the information and projections included with SCFD’s rate request; and
• Any additional financial or operational records and information reasonably requested by DHS, the County, or the independent reviewer to evaluate SCFD’s ambulance operations, financial condition, compliance with the Agreement, and asserted need for rate relief.
SCFD’s agreement to cooperate fully and promptly with the independent audit. The audit will proceed separately from implementation of the 9% adjustment. For any future request above the annual inflation adjustment, DHS will seek to complete the audit and provide its findings, together with information about SCFD’s cooperation, to the Board before the Director of DHS decides the request. DHS will evaluate the request under section 10.2 and will not unreasonably delay a contractual approval decision while the audit is pending. DHS will continue to monitor SCFD's compliance with the operational, clinical, financial, rate, and reporting requirements established by the Agreement.
Impact on Ambulance Charges
The revised rate schedule establishes the maximum amounts SCFD may charge for ambulance transportation and associated services provided under the EOA-1 Agreement. If approved, the existing authorized rates will increase by 9%. The maximum allowable charges do not necessarily equal the amount SCFD will collect or the amount an individual patient will be required to pay.
Medicare and Medi-Cal reimbursement is governed by the applicable program requirements. California law generally prohibits a ground ambulance provider from charging an uninsured or self-pay patient more than the greater of the applicable Medicare or Medi-Cal fee-for-service amount.
This protection is intended to shield residents from surprise ambulance billing. When a covered individual enrolled in a state-regulated commercial health plan receives ground ambulance transport from a provider outside that plan's network, the individual's out-of-pocket cost generally cannot exceed what would be owed for an in-network provider. Unless the ambulance provider and the health plan agree to a different amount, the locally approved ambulance rate may serve as the basis for the plan's reimbursement to the provider. Other types of coverage, such as self-funded employer health plans (plans in which the employer, rather than an insurance company, directly pays employee medical claims), are subject to different requirements and may not be covered by this protection.
Therefore, DHS estimates that fewer than 14% of SCFD’s transports involve patients with state-regulated commercial coverage for which the adjusted rate schedule may affect reimbursement.
Strategic Plan:
None
Racial Equity:
Was this item identified as an opportunity to apply the Racial Equity Toolkit?
No
Prior Board Actions:
September 9, 2025: The Board approved a 2.4% increase in emergency medical transportation service rates charged by Sonoma County Fire District within EOA-1, consistent with the annual rate adjustment provisions of the EOA-1 agreement.
June 6, 2023: The Board authorized the Director of Health Services, or designee, to execute a five-year agreement with Sonoma County Fire District for emergency ground ambulance services within Exclusive Operating Area 1, including an option to extend the agreement for an additional five years, and adopted a resolution making certain findings and adopting the County of Sonoma's Written Policy Regarding Emergency Ambulance Services Contracts pursuant to Health and Safety Code section 1797.230.
October 18, 2022: The Board approved a modified Request for Proposals and authorized the Director to resubmit the RFP to the California Emergency Medical Services Authority, make minor non-substantive modifications prior to release, and issue the RFP to potential proposers.
November 2, 2021: The Board approved revisions to the RFP previously approved on April 13, 2021, and authorized its resubmission to EMSA and subsequent release following any minor non-substantive modifications.
April 13, 2021: The Board reviewed the Matrix of Public Comments and staff responses and recommendations, approved changes to be incorporated into the RFP, and approved the RFP for submission to EMSA.
March 23, 2021: The Board deliberated on proposed components of the draft RFP for EOA-1 for purposes of submitting the RFP to EMSA for approval pursuant to Sonoma County Code Chapter 28-17.
October 22, 2019: The Board approved an agreement with Endpoint EMS Consulting, LLC for subject matter expertise and assistance developing an RFP for an exclusive provider of emergency ground ambulance services.
May 21, 2019: The Board approved the third amendment to the agreement with American Medical Response West for emergency ground ambulance services, extending the agreement and authorizing service rate increases effective July 1, 2019.
May 8, 2018: The Board authorized the Chair to submit a letter supporting a one-year extension request to EMSA for the Exclusive Operating Area Ambulance Services Agreement covering central Sonoma County.
December 16, 2008: The Board approved the Emergency Ground Ambulance Services Agreement with American Medical Response West.
Fiscal Summary
Narrative Explanation of Fiscal Impacts:
There is no direct County expenditure associated with the proposed action. This is a regulatory action governing the rates SCFD can charge to the individuals it transports in an emergency within the confines of the Exclusive Operating Area around Santa Rosa.
Approval authorizes a 9% increase in the rates SCFD may charge for emergency ground ambulance services provided pursuant to the EOA-1 agreement. The financial effect on individual transports will vary depending on the services provided, payer type, insurance coverage, applicable reimbursement requirements, and patient responsibility.
Narrative Explanation of Staffing Impacts (If Required):
None
Attachments:
Attachment 1 - Agreement
Attachment 2 - Current and Proposed Authorized Rates and Charges
Attachment 3 - SCFD July 2, 2026 Rate Adjustment Request
Attachment 4 - DHS August 31, 2026 Response to Rate Adjustment Request
Related Items “On File” with the Clerk of the Board:
None