FINANCIAL MODEL 08

TIP & TAD Savings Model

Treatment in Place (TIP) and Transport to Alternate Destination (TAD) are care models that allow EMS providers to resolve certain calls without a hospital transport — treating on scene or directing to a clinic, urgent care, or behavioral health facility instead of an emergency department. Both models can reduce costs for payers, ease ED overcrowding, and preserve unit availability for higher-acuity calls.

This model estimates the financial savings potential of TIP and TAD programs at the agency level, including avoided transport costs, estimated payer savings from ED diversion, and the implied subsidy or fee structure needed to make these programs viable — since TIP and TAD calls currently generate little or no billable revenue under standard Medicare and Medicaid rules.

Designed for agencies exploring TIP/TAD programs, county officials evaluating whether to fund them, and regional planners assessing system-level impact. For context on how EMS funding affects program viability, see How EMS Is Funded.

Reimbursement assumptions based on current CMS rules. Model developed by NCRETAC.

Model 08: TIP & TAD Savings Potential | NCRETAC Colorado EMS

← All Models Model 08: TIP & TAD Savings Potential Scenario Analysis v1.11

Annual 911 Responses

758,327

CO ePCR 2023-24

Urban Calls

658,327

where diversion cost savings are achievable

Rural + Frontier Calls

99,569

geography-bound — care delivery benefit only

Structural Gap

$96M–$433M

current ops to full desert remediation

ED Conversion Default

100%

reduce for conservative patient-mix estimates

Scenario Presets

Select a scenario or adjust sliders below. Scenarios reflect realistic adoption trajectories based on ET3 experience and state program literature.

Diversion Parameters

Urban & Suburban (658,758 calls/yr)

TIP/TAD diversion rate 10%

% of urban 911 calls resolved without ED transport (35% ceiling — TIP/TAD literature)

Cost savings run

Rural & Frontier (99,569 calls/yr)

TIP/TAD diversion rate 5%

Geography-bound: minimal cost savings regardless of diversion (25% ceiling)

Program & Reimbursement

TIP/TAD program cost $325

Cost per encounter: staff time, protocols, medical oversight, documentation

Value-based contract rate $0

State / payer reimbursement per TIP/TAD encounter ($0 = no VBC enacted)

Rural/frontier VBC rate $0

Separate rural rate — geographic equity requires explicit rural weighting

ED Cost Parameters

ED visit cost avoided $2,200

Average ED visit cost (HCUP 2022 baseline). Savings accrue to payers.

ED conversion rate 100%

% of diverted calls that would otherwise have been ED transports (default 100% = maximum savings estimate; reduce if patient mix skews lower-acuity)

Net Impact on EMS Structural Gap

Change to Annual EMS Structural Gap

—

EMS Revenue Lost

—

Lost transport billing

EMS Cost Saved

—

Staffing / unit reduction

Program Cost

—

TIP/TAD operations

VBC Revenue

—

State / payer contracts

Adjust sliders to model TIP/TAD impact.

System Savings (Payers & Hospitals)

ED Direct Savings

—

Medicare / Medicaid / commercial

Downstream Savings

—

Hospitalization risk reduction

Total System Savings (not EMS)

—

Accrues to payers & hospitals — not to EMS agencies without VBC

System savings accrue to Medicare, Medicaid, and commercial insurers — not to the EMS agencies producing them. Without a value-based contract, every diverted transport widens the EMS structural gap.

Urban vs. Rural/Frontier Economics

Urban variable cost fraction: 45% (short-run) / 60% (medium) / 80% (long). Rural/Frontier: geography-bound — cost floor does not move with call volume. Average APCD revenue: Urban $867/call, Rural $942/call, Frontier $1,061/call. Source: APCD revenue model, CCECBI v1.0.

Scenario Comparison — Net EMS Gap Impact at Scale

How to read this chart

What you seeEach bar pair shows the net effect on the EMS structural gap at a given urban TIP/TAD diversion rate — what percentage of urban 911 calls are resolved without transporting the patient to an emergency department. Green bars mean the gap narrows (EMS is better off); red bars mean the gap widens (EMS is worse off). The left bar in each pair shows the result without any value-based contract; the right bar (if shown) includes VBC payments.

What it meansWithout value-based contracts, every bar is red — every level of diversion makes the EMS funding problem worse, not better. That is because EMS loses the transport billing revenue while the system savings flow to Medicare and commercial insurers, not to EMS agencies. Only when VBC payments are set at or above the break-even rate do the bars turn green.

What this means for policy: TIP and TAD are good patient care. They reduce unnecessary ED visits and save payers money. But they worsen the EMS funding gap unless the legislature creates a value-based contract framework that returns a share of those savings to EMS agencies. Without that, EMS is being asked to absorb costs that benefit everyone else's budget.

Each bar shows net change to EMS structural gap at the indicated urban diversion rate, holding rural at 5%, medium-run cost savings, program cost $325/encounter. Green = gap narrows. Red = gap widens. Values assume current gap method (GADCS). VBC line shows the rate per encounter needed to break even at each diversion level.

Legislative Design Implications

Urban Systems

TIP/TAD can generate genuine EMS cost savings at sustained diversion rates above 15–20%, once unit reduction becomes operationally feasible. Savings are real but only materialize in the medium-to-long run. Value-based contracts accelerate the break-even timeline significantly.

Rural & Frontier Systems

Geography-bound counties must maintain staffed units regardless of call volume. TIP/TAD in these areas is a care delivery benefit, not a cost reduction tool. State funding must flow to rural/frontier TIP programs directly — it cannot be funded from efficiency savings that do not materialize in fixed-cost systems.

Value-Based Contracts

Without VBC, TIP/TAD widens the EMS gap in every scenario. System savings of $— accrue to payers. A state VBC framework that returns even a portion of those savings to EMS agencies is the single most impactful policy lever available to the General Assembly.

Geographic Equity Requirement

Any TIP/TAD reimbursement program must include explicit rural and frontier weighting. Urban systems benefit from cost reduction; rural/frontier do not. Without deliberate geographic design, reimbursement flows to already better-resourced urban agencies.