Administration and Leadership, Operations, Patient Care

Pay Back Time

Issue 8 and Volume 35.

Ambulance billing might not be the most exciting topic in EMS, but it could be the most important for cash-strapped departments. At this year’s Fire-Rescue Med conference, Oceanside (Calif.) Fire Department Battalion Chief Peter Lawrence stressed two major trends to watch for in the upcoming months: changes as a result of health-care reform and a renewed effort from private ambulance services to capture a larger piece of the EMS pie.

Lawrence began employment in the ambulance billing and reimbursement field in 1991 and has worked at both the state and national levels 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 (IAFC) during the 1999-2001 negotiated rule making process and is a frequent speaker at IAFC conferences on reimbursement and billing issues.

According to Lawrence, the Patient Protection and Affordable Care Act (PPACA) of 2010, the official name of the health-care reform legislation, will have a major impact on EMS. It will be phased in over several years, adding Americans to the insurance rolls until 2014, when health insurance coverage will be required for most. Some states can offer early entrance via a waiver that’s retroactive to April 1, 2010.

However, one aspect of the act is effective immediately: The Pre-Existing Condition Insurance Plan, which has been accepting applications since July, will offer coverage as early as this month. According to the plan, patients can’t be denied coverage, even if they have a pre-existing or high-risk condition.

For most EMS systems, this will mean an increase in the number of patients covered by Medicaid. Although Medicaid reimbursement in many states is $118, well below the actual cost, patients who previously have been “self pay” will be covered by Medicaid under the new 133% eligibility rules. Under these rules, individuals who qualify for Medicaid as medically needy must pay a certain amount of their monthly income toward medical costs before Medicaid becomes available. This is called a “spend-down” or deductible. In community cases (i.e., cases other than nursing home care), the amount of the spend-down is the difference between the individual’s monthly income and 133% of the Aid to Families with Dependent Children income limit for the state in which the patient lives. The result, Lawrence says, is a net increase in dollars for ambulance transports.

“Say you have 1,000 transports per year and your net collections (cash in hand) are $350,000. Your ‘cash per transport’ rate would be $350,” Lawrence says. “If, for example, your Medicaid rate is $150 per transport and you gained, say, 20 more Medicaid patients, your net revenues increase by $3,000 and your ‘cash per transport’ increases to $353.”

Previous base rate increases have been retroactively restored by the PPACA for 2010. This includes increases in the ambulance fee schedule amounts for covered ground ambulance transports that originate in rural areas. Increases include a 3% bump for rural transports and a 2% increase for ground ambulance transports that originate in urban areas. Both are retroactive from Jan. 1 through Dec. 31, 2010.

“Through the end of this year, base rates will be modified by a 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, which are based on population, represent the lowest 25% of all rural populations.

“All of this legislation leads to regulation,” Lawrence says. CMS will be writing a proposed rule and will publish it in the Federal Register. An open comment period will allow input from people throughout the U.S. According to Lawrence, the purpose of the regulations is to implement the legislative intent set forth in the PPACA.

Medicare Fee Schedule
Mileage and base rates will continue to be covered by Medicare, Medicare HMOs and other federal programs, such as Champus/Tri-Care. “This year, reimbursement is based solely on the National Fee Schedule,” Lawrence says. “Other than the GPCI (Geographic Practice Cost Index) and urban-versus-rural adjustments, all providers in the U.S. receive the same reimbursement formula.”

For 2010, the Ambulance Inflation Factor (AIF) is 0, and Lawrence warns fire departments not to complain. “Each year, payments are updated based on a percentage increase in the Consumer Price Index for All Urban Consumers (CPI-Urban) for the 12-month period ending in June of the previous year,” he says. The CPI-Urban for this calendar year was actually -1.4%. Because the AIF was a negative number for 2010, it was left at 0%. “Theoretically, it could’ve gone down,” he says. Fortunately, the Social Security Act prescribes only an annual increase in the AIF. The GPCI didn’t change for 2010. The index, which is applied to 70% of the base rate, ranges from .694 in Puerto Rico to 1.441 in Northern California.

The ‘Red Flag Rule’
A “red flag” is a pattern, practice or specific activity that indicates the possible existence of identity theft. New red flag rules provide a protocol for a breach of protected health information (PHI). Because ambulance services possess account information that could pose a potential identity-theft risk, they’re required to have an Identity Theft Prevention program in place. Typically, this includes a breach notification plan.

A “breach” is defined as “the acquisition, access, use or disclosure of PHI in a manner not permitted, which compromises the security or privacy of the PHI.” It’s not considered a breach if there’s no significant risk of financial, reputational or other harm to the individual, if it was an unintentional acquisition, or it was accessed within the scope of the authority of the agency.

Inadvertent disclosure by an individual authorized to access PHI to another person who is also authorized to access PHI isn’t considered a breach. It’s also not a breach if the person to whom the disclosure was made wouldn’t be able to retain the information.

If there’s been a legitimate breach, the agency responsible must notify the individuals involved. Those individuals must be told what happened, what information was released and what they need to do to protect themselves. You may also need to tell them what you, as the agency, are doing to handle it and how they can contact you.
If the breach involves 500 or more residents, then prominent media outlets, such as newspapers with large circulation and TV stations covering the area surrounding the ambulance service, must also be alerted. In addition, the secretary of Health and Human Services must be notified.

Other Changes
This past year, CMS proposed to change the way mileage was billed, seeking to require fraction amounts instead of rounding up to a whole number. The agency withdrew the proposal in July, so all claims should continue to bill with a minimum of one mile, with the exception of claims involving patients pronounced dead on scene before transportation is initiated.

The Office of the Inspector General studied skilled nursing facility (SNF) transports in 2009 and found Medicare was being billed twice for many of the transports. Under the new plan, transports from an SNF may be billed one of two ways: directly from the SNF for transports relating to the patient’s stay at the facility, or from the Medicare carrier for emergencies or intensive outpatient hospital services, not both. “You must document why you’re transporting the patient and make sure you bill it to the proper payor,” Lawrence says.

CMS reiterated that multiple Medicare patients transported in the same ambulance must be reported on the same claim. Additionally, CMS now requires the ambulance claims to include the beneficiary’s health insurance claim number in the comments section or as an attachment. However, this requirement is only pertinent when transporting more than one Medicare patient.

Future Directions in EMS Reimbursement
Many states are evaluating ways to increase reimbursement for ambulance services when transporting Medicaid patients. Because most Medicaid funds come from the federal government and are subject to matching funds from the state, the tricky part is trying to find extra state funds to leverage an equal amount of additional federal funds.

Hospitals and SNFs have been successful in increasing the amount of Medicaid reimbursement through a process of “taxing” themselves to create a reserve of money to leverage those additional federal dollars.

The goal is to configure a “tax” and reimbursement program that offers all providers (e.g., public, private and not-for-profit) an additional return in amounts equal to the funds they originally paid in the form of the “tax.”

If the system isn’t crafted properly, there can be cases of extreme winners and losers among the providers. For example, ambulance services in more affluent areas without large numbers of Medicaid patients may pay a higher “tax” on their total transport volume, but they may not be able to recover those funds via increased Medicaid reimbursement rates. Conversely, many of the larger urban ambulance providers, especially large private providers handling both emergency and non-emergency transports, may recover a substantially larger reimbursement than they originally paid as the “tax.”

“The trick to these types of revenue enhancement programs is to go slowly and do your research up front in order to design a program that benefits all of the providers,” Lawrence says. JEMS

This article originally appeared as “Pay Back Time” in the August 2010 JEMS.