(This article also appears in the July 2014 issue of EMS Insider. EMS Insider, the premier publication for EMS managers, supervisors, chiefs and medical directors, is a must-have resource for the critical, accurate information EMS leaders need. The monthly publication offers quality investigative reporting, exclusive articles, management tips and the very latest news on legislative issues, grants, current trends and controversies. For more about how to become an Insider, go to www.jems.com/ems-insider.)
The release of national payment data by the Centers for Medicare and Medicaid Services (CMS) in early April, which describes in detail the Medicare payments made to ambulance services (as well as other suppliers of Medicare services) nationwide, has caused quite a stir. This well-publicized public release, coupled with the increased government crackdown on alleged fraud in the ambulance industry and new fraud-fighting rules, has combined to create a “perfect storm” for increased scrutiny of ambulance services in the near and long term.
The national media has been replete with headlines such as, “Medicare’s $5 Billion Ambulance Tab Signals Area of Abuse.”1 The payment data shows that Medicare pays more to ambulance services than any other type of Part B Medicare provider—more than what went to cancer doctors or orthopedic surgeons. The media portrayal was of an industry rife with fraud. Some government officials were quick to point to ambulance services as a “cash cow,” describing them as “basically like a taxi service, except an extremely expensive one that the taxpayers are funding.” These are quotes from Assistant U.S. Attorney Beth Leahy, who has prosecuted several unscrupulous ambulance providers in the Philadelphia region for Medicare fraud.
Transparency is the new watchword
With this unprecedented release of payment information from the largest payer of ambulance services, a wealth of Medicare payment information is now available on the ambulance industry and individual ambulance providers. The data is based on information from CMS’s National Claims History Standard Analytic Files and covers calendar year 2012. The data includes each ambulance provider’s name, unique National Provider Identifier (NPI) number, location, the number of Healthcare Common Procedure Coding System (HCPCS) codes the provider has billed by level of service, the total number of beneficiaries transported, the total number of services provided, the total submitted charges, the total Medicare allowable amount for the submitted claims and the total amount that Medicare paid the provider.
Interestingly, the data also show a wide variation in ambulance charges. For instance, the highest charge for a BLS non-emergency was $2,683.26, with an average submitted charge of $514.83. For ALS emergency transports, the highest charge reported was $15,500 with an average of $884.63. So the public (and your competition) now has ready access to what you charged, the amount Medicare approved and the amount you were actually paid by each level of service for which you billed Medicare.
Only one side of the coin
Unfortunately, very little has been done to counter the negative side of this media firestorm, and that’s too bad. Because this payment information wasn’t put in accurate context, the public has been led to believe that ambulance services are overused, paid too much and are riddled with “fraudsters,” ferrying people around who don’t need an ambulance and costing the taxpayers millions of dollars. Folks, we missed the boat and failed to positively respond to the media calls for comment on this one.
This payment data is only half the story of the total business picture of operating an ambulance service. The media, by and large, has ignored the flip side of the coin: what it costs to provide those services for which Medicare has made payment. These stories about the payment data ignore the fact that: 1) Medicare payments to ambulance services are a very small piece of the Medicare pie: less than 5% of the total Part B payments and less than 1% of all Medicare payments (Part A and Part B combined); 2) two recent Government Accountability Office (GAO) studies have shown that Medicare payments to ambulance services typically don’t cover the full cost of providing the service, especially in rural areas; 3) the cost of new ambulances and the increasingly sophisticated medical equipment has gone up significantly in recent years, as have costs for fuel, insurance, maintenance and personnel; 4) ambulance services nationwide are woefully underpaid from other sources, especially underfunded programs such as Medicaid and, as a result, ambulance services provide millions of dollars of free services to the uninsured or underinsured; 5) 9-1-1 ambulance services have a legal duty to respond and provide service regardless of ability to pay or payment source; and 6) the number of “fraudsters” that actually bilk the system are a very small percentage of the total ambulance provider pool (and many of them have obtained billing privileges through the government’s own flawed provider enrollment process that made it too easy to get a Medicare provider number—a recognized problem that CMS has only recently sought to correct).
The untold story in these articles is that the vast majority of ambulance services are provided by fire departments, nonprofit organizations and private companies that truly do what is best for their community. They are not motivated by individual gain and there is, in most cases, significant community oversight of what they do.
And let’s not forget the “cost of readiness.” Despite our best analytic models, we can’t predict with 100% accuracy where the next call will occur, so ambulance services still need to put more units on duty than may actually be needed to ensure a prompt response to the public when it calls. What service business do you know of that makes tons of money providing a service is actually utilized only about 25–40% of the time that it is open for business? I can’t think of any. Take a look at your unit hour utilization, and that tells the story of why it costs so much to provide the high level of service that the public has come to expect at the push of three buttons.
The media has missed these important facts in their rush to paint ambulance providers with the broad brush of fraud. And shame on us as an industry for not doing a better job of making these positive points when the media calls for a response.
Transparency & accountability is the new world of EMS
Under the new mantra of healthcare reform, transparency is the key to accountability, and accountability is the touchstone to reducing medical errors, eliminating unnecessary and ineffective services, and improving patient outcomes. The ambulance industry is part of this new revolution in healthcare whether we like it or not. We need to be on top of it and be prepared to respond to the questioning and criticism that goes with it.
Transparency and accountability are the new paradigm and we just got smacked head-on with that reality with this unprecedented release of Medicare payment information. Now couple that with the massive government war on healthcare fraud, and you have a perfect storm for intense scrutiny of the ambulance industry like we’ve never seen before. We need to be ready for it. In fiscal year 2013, the Department of Health and Human Services (HHS) and Department of Justice (DOJ) recovered a record $4.3 billion. Since last year, the federal government has proposed several new rules and launched other initiatives to enhance its arsenal of fraud fighting weapons.
What should ambulance industry leaders be doing? First, get a handle on the actual costs of providing service. Perform a complete cost analysis. This will give you the information you need when you are contacted about why your fees are so high or why you were paid so much for “just a ride to the hospital.” That ugly phrase we hate to hear in EMS is precisely why our approach to constituent relations must be re-tooled in this new era of transparency and accountability.
Educate both your staff and the public about the fiscal and compliance challenges you face. Implement a comprehensive compliance program that brings potential fraud and abuse issues to the surface so that they can be effectively dealt with internally. EMS leaders must spend the time and money now and invest in the preventive steps that must be taken to effectively navigate the turbulent ocean of healthcare reform now and into the future.
1. Pettypiece S. (April 23, 2014) Medicare’s $5 billion ambulance tab signals area of abuse. Bloomberg. Retrieved on June 17, 2014, from www.bloomberg.com/news/2014-04-24/medicare-s-5-billion-ambulance-tab-signals-area-of-abuse.html.