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Ambulance Billing & Reimbursement Update


If you thought the federal government was underfunding ambulance transport services in the past, get ready for a bumpy ride. A new way of calculating the Ambulance Inflation Factor (AIF) that changes Medicare fee schedules will mean that Medicare reimbursement will, on average, be at least 1% less than expected each year from now on. Even without this recent change, some agencies have already seen a 10% decrease in reimbursements for this year compared with 2004, despite a 20% increase in inflation during the same time period, according to Oceanside (Calif.) Fire Department Battalion Chief Peter Lawrence, a national authority on ambulance billing and reimbursement.

Since 1991, Lawrence has worked at both the state and national level on such issues as prudent layperson language for insurance coverage of ambulance transports and medication coverage. He also served as the co-negotiator for the International Association of Fire Chiefs during the 1999–2001 Negotiated Rulemaking Process and is a frequent speaker at IAFC conferences on reimbursement and billing issues.

He is more positive about the effects of healthcare reform, or the Patient Protection and Affordable Care Act of 2010 (PPACA). Lawrence believes it will have a major impact on EMS. “My current take is ... it’s going to work out for us dollar for dollar,” Lawrence says.

The Act will be phased in over several years, adding Americans to the insurance rolls until 2014, when health insurance coverage will be required for most Americans. As a result, many EMS systems will see an increase in the number of patients covered by individual insurance, giving many patients who were previously “self pay” coverage they didn’t have before.

According to the Centers for Medicare and Medicaid Services (CMS) actuary report of April 2010, the number of patients covered by Medicare and employer insurance will remain essentially the same. Medicaid coverage will increase, and the number of uninsured patients will dramatically decrease.

Unfortunately, PPACA also amended previous regulations to apply a productivity adjustment to the Consumer Price Index (CPI) and AIF. Because ambulance transport services got lumped into healthcare with everyone else in the medical community, EMS providers must find ways to become more productive.

The very nature of EMS makes this endeavor problematic. Whereas a physician might be able to improve efficiency by adjusting when to see patients, emergency responders don’t have that luxury. “Nobody has a really good predictor for when Mrs. Smith is going to call 9-1-1,” Lawrence says.

Previously, the AIF allowed for in­creases in ambulance payments equal to the percentage of increase in the CPI for all urban consumers (CPI-U) for the 12-month period ending with June of the previous year. With the new productivity adjustment added to the CPI-U/AIF update, EMS is being grouped in with private, nonfarm business multifactor productivity (MFP). The MFP is designed to measure the influence of new technologies and efficiency improvements that affect economic growth.

The problem is that health services tend to be labor intensive, limiting productivity gains. “Even CMS’s own staff does not feel that the medical community can achieve the kind of productivity increases that Congress has demanded,” Lawrence says.

In a memo on Health Care Reform dated Nov. 13, 2009, CMS Chief Actuary Richard A. Foster stated that “we are not aware of any empirical evidence demonstrating the medical community’s ability to achieve productivity improvements equal to those of the overall economy.”

John D. Shatto and M. Kent Clemens noted in an Aug. 5, 2010, memo from the CMS Office of the Actuary that the CPI-U already adjusts productivity factor averages for ambulance reimbursement rates. Therefore, under the new law, the rates will be adjusted twice, first by CPI-U, then by MFP. “[P]roviders and suppliers will essentially be required to achieve twice the rate of economy-wide multifactor productivity to break even,” they said.

“We are no longer going to be seeing our reimbursement rates keep pace with inflation or increase by CPI,” says Lawrence.

The Geographic Practice Cost Index
With the expiration of the Regional/ National Fee Schedule blending at the end of 2009, all providers in the U.S. will now receive the same reimbursement formula, with the exception of the Geographic Practice Cost Index (GPCI) and urban versus rural adjustments. The GPCI is applied to 70% of the base rate and adjusts for the cost of doing business in a particular location.

The highest reimbursement is for Northern California and the San Francisco Bay area, with a 30% reimbursement rate over the national “neutral” rate for ALS 1 calls of $406. The lowest system reimbursement is in Puerto Rico, at 11% below “neutral.”

The GPCI did change in 2011. The rates are listed at www.cms.gov/ambulancefeeschedule/02_afspuf.asp.

Rates have been updated for “frontier” states with GPCI of less than 1.0. These include Montana, Utah, North and South Dakota and Wyoming. This relates to a little known portion of healthcare reform driven by the American Medical Association to encourage physicians to move to frontier states. As a result, these states will not see a drop in reimbursement.

Base rates will be modified by a “Super Rural Bonus” of 22.6% when the point of pick up is in one of the group of designated “super rural” ZIP codes, Lawrence says. These ZIP codes are based on population density and represent the lowest 25% of all rural populations. A complete listing of those ZIP codes can be found at the Centers for Medicare and Medicaid Services (CMS) website at www.cms.gov/center/ambulance.asp.

For years, Medicare rules allowed agencies to round mileage up to a whole number. In spite of major opposition, CMS has adopted new mileage language that requires ambulance transport agencies to bill Medicare claims with actual fractional miles. Other than for dead-onscene calls, the minimum mileage for a claim is now 0.1. CMS rules also requires newly registering ambulance services to provide Medicare (the MAC) with copies of any state or federal “certifications” your department or agency is required to possess to provide healthcare services. Those organizations that provide air ambulance services must also provide CLIA and FAA certifications and notify Medicare if any of the certifications have lapsed, been suspended or revoked.

The current format for electronic claims is 4010A1. However, all agencies must change to the 5010 format by Jan. 1, 2012. CMS is accepting claims in the 5010 format now. Condition Codes are listed in chapter 15, section 40 of the Medicare Claims Processing Manual or online at www.cms.gov/manuals/downloads/clm104c15.pdf. The PPACA mandates that all claims for service provided on or after Jan. 1, 2010, be filed with your Medicare contractor no later than 12 months from the date of service. Medicare will deny late claims. An extension can be requested if it was determined that a patient was retroactively covered by Medicare. Keeping up with changes Lawrence recommends checking for quarterly updates of the CMS (Medicare) Billing Manuals on Benefit Policy (Chapter 10) and Claims Processing (Chapter 15). Changes made during the quarter are highlighted in red, so reading them every quarter is advised. The CMS has established a Medicare Learning Network (MLN) at www.cms.gov/mlngeninfo to assist with the most common questions regarding Medicare billing and reimbursement.

Lawrence is particularly concerned about legislation in California that will allow the state to reduce already low Medi-Cal (Medicaid) ambulance rates by 10% next year. The move has not yet been approved by CMS. If California succeeds in obtaining CMS approval for the rate cut, other states may also attempt the same thing.

“This will be a big issue for all of us,” Lawrence says. “They know we’re going to keep running the calls, but at some point, the system breaks.” Lawrence is working with the California Ambulance Association and the International Association of Fire Chiefs to see what can be done to protect state reimbursements.

In the meantime, the sluggish economic recovery has further depleted Medicare’s main trust fund, leading to dire predictions that, without legislative intervention, the nation’s primary safety net for the elderly will be broke by 2024. In a recent report, the trustees overseeing the program stated that for the first time in the history of both Medicare and Social Security more money will be paid out in benefits than will be collected, requiring the federal government to fund the programs using dollars from other sources. Legislators from both parties are developing reforms to save the programs. The ambulance service industry can expect additional changes in reimbursement fees and more stringent measures to curb fraud, waste and abuse in the near future.


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