California Fire Departments Fleece American Taxpayers

 With Republicans looking to cut federal spending and reduce the national debt, many are worried that Medicaid could be on the chopping block. President Donald Trump has said he doesn’t want to cut Medicaid spending, outside of “fraud,” but some GOP fiscal hawks may not be entirely comfortable with stopping there, especially if it means raising the debt ceiling again.

Interestingly enough, it was the recent fires that ravaged Los Angeles that helped reveal a state Medicaid scheme that fire departments have been plugging to backfill their hefty pensions. Some of the budget issues and mismanagement were brought to light as the local fire departments struggled to contain the fires, and people started to ask questions about where their tens of millions in taxpayer dollars were actually going.

One questionable political development in the aftermath of this crisis has emerged: Los Angeles City Council is expected to add $27 million to the fire department’s budget this year, “for the transportation of MediCal patients by city paramedics, a service that will be reimbursed by the state.”

First, some background on why this is relevant. In 2022, the Centers for Medicare & Medicaid Services (CMS), overseen by Secretary of Health and Human Services Californian Xavier Becerra under President Biden, approved California’s request to significantly increase Ground Emergency Medical Transportation (GEMT) reimbursement rates for public providers (i.e. local fire departments). This raised the per-trip rate of an ambulance ride from approximately $120 to over $1,000, a ninefold jump.

This reimbursement from the federal governments to California is called an intergovernmental transfer (IGT), where the local and state governments report the cost of something to the federal government to then be reimbursed. However, this massive expansion of the reimbursement rate applies only to public providers (e.g., fire departments, county EMS), not private ambulance companies, despite the latter handling over 70 percent of California’s ambulance rides. Private providers remain capped at lower Medi-Cal base rates (roughly $120–$250/trip).

Essentially, government ambulances were granted higher Medicaid reimbursements, allowing them to charge more for ambulance rides, burdening taxpayers across the country with the costs, and then using those extra tax dollars for whatever they want. Leave it to the disastrous political leadership in Sacramento to get creative when it comes to patching budget holes caused by their own overspending.

As a result, counties that previously used less expensive and more effective private ambulance services, have dismissed these private companies and transferred the contracts to local fire departments to provide EMS on their own, regardless of cost of patient outcome.

According to the California fire industry, the estimated cost for this program could reach $2 billion with federal taxpayers footing much of the bill outside the state. Some of these funds reportedly shore up underfunded pensions rather than enhance services.

States like Illinois, Arizona, New Mexico, and others are “cashing in” on IGTs for GEMT, mirroring California’s approach to secure higher Medicaid reimbursements for public EMS providers.  The practice leverages federal matching to offset local EMS burdens. For precise figures, state Medicaid plans or CMS data would be needed. However, GAO estimates suggest 15–25 states use IGTs for GEMT or similar programs. Total costs could range from $1.69 billion to $12.17 billion annually, depending on trip volumes and rates.

Proponents argue that increased revenue strengthens EMS infrastructure—by hiring paramedics, upgrading ambulances, or expanding training—indirectly benefiting patients. Unfortunately in California’s case, this magic revenue stream is not dedicated to health care. California fire departments are using inflated EMS reimbursements to backfill their government employee  pensions, which have been underwater for years.  It shouldn’t surprise anyone that fire departments are finding new “revenue streams” by inflating the cost of ambulance rides and collecting checks to bolster their bankrupt pensions.   These schemes, rooted in Medicaid’s joint financing, highlight a tension between state fiscal strategies and equitable healthcare funding, with billions annually at stake.

Definitive tracking requires CMS or state-specific audits; however, the trend is clear and widespread. If Republicans are looking for specific instances of fraud to investigate for Medicaid cuts, these intergovernmental transfers would be a great place to start.

Robert Goldberg is Vice President of The Center for Medicine in the Public Interest  

https://www.realclearhealth.com/articles/2025/05/09/california_fire_departments_fleece_american_taxpayers_1109253.html