Expert Offers Advice on EMS Reimbursement Changes

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In his address at the annual Fire-Rescue Med Conference, Oceanside (Calif.) Fire Department Chief Fire Officer and Battalion Chief Peter Lawrence said it would take considerably more time than what was allotted to cover all the changes in EMS reimbursement brought on by challenges to healthcare reform legislation.

As a national authority on ambulance billing and reimbursement and co-negotiator for the International Association of Fire Chiefs during the 1999—2001 negotiated rulemaking process, Lawrence provided his best guess about the outcome of the divisive debate. He believes that an adverse Supreme Court ruling will affect the number of patients covered by individual and employer insurance as well as the uninsured. However, he says, the Medicaid and Medicare enrollment estimates should stand. “Medicare enrollment will be the same with or without [the Patient Protection and Affordable Care Act of 2010 (PPACA)],” he says. “Ultimately, the fewer uninsured, the better our revenue looks.”

The Centers for Medicare and Medicaid Services (CMS) estimates 19.4 additional Americans will be covered under Medicaid. Even though reimbursement rates in most states don’t cover the actual costs of transporting a patient to the hospital, a little is better than nothing, he says.

If the Supreme Court rules in favor of the PPACA, often referred to as “Obamacare,” CMS expects the payor mix in 2019 to include the following:
“¢ 1.4 million more Americans covered by employer insurance;
“¢ 15.9 million more covered by individual insurance;
“¢ 19.4 million more covered by Medicaid; and
“¢ 33.8 million fewer uninsured.

The Productivity Factor
As part of healthcare reform, Congress applied a productivity adjustment to the Consumer Price Index (CPI) and Ambulance Inflation Factor (AIF). “It’s absolutely useless when it comes to ambulance transport,” 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.
The net effect is that the MFP duplicates the CPI, essentially adjusting the same rate twice.

“We should have gotten a 4% rate increase, but the CPI-U is adjusted downward by the MFP,” Lawrence says. “We are losing $1.50 per transport at the BLS level. That productivity factor is killing us.”

Geographic Practice Cost Index
With the expiration of the Regional/National Fee Schedule at the end of 2009, all EMS providers in the U.S. 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.

For instance, the highest adjustment is for the Northern California and San Francisco Bay area, with a 25% higher reimbursement rate than the national “neutral” rate for ALS 1 transports of $415.64. The lowest system reimbursement rate is in Puerto Rico at 22% below neutral. “The GPCI is the only way the Fee Schedule currently provides regional adjustments to account for differences in the costs from one area of the country to another,” Lawrence says.The GPCI changed again in 2012.

Rates are listed by zip code here. Every year, Congress must re-approve the Medicare base rate modifier that provides increases in the ambulance fee schedule for rural and super rural states. The designations are based on population density as reported by zip codes.

Since the “super rural” base rate bonus is only for zip codes in the lowest 25% population levels, Lawrence recommends that EMS agencies operating in ZIP codes that service a large geographic area with a single city surrounded by rural areas of low population, might want to look into the possibility of having the post office split the ZIP code. By splitting the ZIP code, the EMS agency may be eligible for the “super-rural” bonus. “The best move you could make for reimbursement could be to meet with your local postal service,” he says.

Fixing the Patches
Every year Congress must re-approve the Medicare base rate modifier that provides increases in the ambulance fee schedule for rural and super rural states. The designations are based on population density and represent the lowest 25% of all rural populations as reported by ZIP codes. Base rates are modified by a “super-rural bonus” of 22.6% when the point of pickup is in a designated “super-rural” ZIP code. A complete listing of those ZIP codes can be found at the CMS website.

The Temporary Payroll Tax Cut Continuation Act of 2011 extended the add-on 2% bump in the base rate for urban and 3% bump for rural through February 2012. The Middle Class Tax Relief and Job Creation Act of 2012 pushed the extension through the end of this year, but Congress is seeking a more permanent solution to the constant patches. They directed the U.S. Government Accountability Office (GAO) to update the 2007 report by Oct. 1, 2012, with their recommendations. Lawrence noted that the GAO is sending letters to EMS agencies seeking information about costs and reimbursements. “If you get a letter, please don’t throw it away,” Lawrence says.

Additionally, the GAO has been directed by Congress to conduct a study of ground and air ambulance services to determine the actual cost of transporting patients. Every year the American Ambulance Association takes the lead on trying to get rates increased and every year it is a struggle, Lawrence says. The good news is that the physicians have thrown the full weight of their lobbying efforts into the fight. For a number of years, the rural and super-rural bumps have been used to encourage doctors to practice in frontier states. If the extension is eliminated, physicians stand to take a 30% hit. They are bringing out the big guns, Lawrence notes. “We are pocket change in this fight,” he says.

Ultimately, Lawrence would like to see the elimination of the MFP adjustment. “It was wrong to apply to us,” he says. Additionally, he recommends incorporating the “bumps” into the base rate and adjusting the mileage rate to account for lost reimbursement due to fractional mileage.

He also believes that some EMT-I skills should be counted toward an ALS transport. The concern is that, as paramedic-level skills are being pushed down to EMTs, EMS agencies are losing money because they’re no longer being reimbursed at the ALS rate. If an EMT can use a King airway, for example, the call can no longer be reimbursed at the ALS-2 rate.

It’s now a BLS call. “We embrace changes because it’s the right thing to do for the patient, but no one reimburses us,” he says. A huge issue Lawrence sees in the healthcare reform that’s already taking place is that physicians and hospitals are receiving physician incentive payments for providing advanced medicines or using new technology, such as continuous positive airway pressure and electronic patient care reports, to save downstream costs.

The reality is that some of these treatments are being provided by the EMS agencies, who seldom share in the reimbursements.
“Right now, a physician is paid extra if aspirin is given to a myocardial infarction patient within a certain time frame,” Lawrence says. He says that hospitals receive an extra 1.5 to 2 percent for applying 12 leads to a patient. “Ever wondered why hospitals are pushing for us to use 12 leads?” he asks. “EMS should be getting a piece of that.”

Medicaid Reductions
Lawrence warns that an issue in California could affect other states, depending on the outcome. It came about when California, in an attempt to cut the state budget, asked CMS for approval to reduce Medi-Cal (Medicaid) ambulance rates by 10%. Although CMS doesn’t have a policy in place to approve state rate reductions, it has approved the request while it writes a proposed rule. The rates were reduced because the state was able to show that there “would be no reduction in the access to care.”

The logic is that since EMS agencies are required by state statute to transport all patients, regardless of their ability to pay, even a reimbursement to zero will not affect access to care. California EMS providers now receive less than $110 per transport for Medi-Cal patients.

Lawrence says this issue is particularly appalling since, in the state of California, EMS agencies that transport a patient for emergency care share a pot of money that is half of what the state sets aside for individuals transported for a non-emergency in a wheelchair van. As healthcare reform adds an estimated 20 million additional people to state Medicaid programs, states could be looking at this as a way to cut costs. If PPACA is enacted, the federal government will cover the increased number of participants in Medicaid for the foreseeable future, but after that the program will be funded through the states. “Be prepared to defend your rates, but be prepared for the “˜access to care’ argument,” Lawrence says.

The 5010 Format
All EMS agencies were required to change to the 5010 format by Jan. 1, 2012. However, due to delays, CMS has decided not to take any enforcement action until this month (June 2012). The 5010 format requires the use of International Classification of Diseases (ICD) or Condition Codes. Because ICD codes are based on a diagnosis, a physician must provide them or you can pull one from the condition code list in the Medicare online manuals. The fallback is to use the code 799.99 for unspecified illness. Remember, using more than one condition code is allowed, Lawrence says.

The bad news is that there is considerable confusion in the Medicare manuals over the use of the codes. In the same manual, one section says that the absence of an ICD “will cause the ambulance claim to not be accepted into the claims processing system.” But later, in the same documents, it states that “the presence of a diagnosis code on an ambulance claim is not required as a condition of ambulance payment policy.”

To be safe, he recommends using the codes. Condition codes are listed in chapter 15, section 40 of the Medicare Claims Processing Manual or online here

Anti-Fraud Efforts
The Medicare anti-fraud efforts are yielding results. This past year, they recovered nearly $4.1 billion and saved another $208 million by preventing improper payments rather than the previous “pay and chase” procedure they had followed. Health and Human Services revoked 4,850 numbers and deactivated 56,733 providers and suppliers.

The best way to stay off their radar, says Lawrence, is to “make sure you are not doing stupid things.” Companies that were caught typically were red-flagged because they did something that drew attention, such as billing every call at the ALS level or indicating that mileage was always the same regardless of the pickup point or destination.

Additionally, recent enforcement actions in Houston targeted non-emergency transport providers who claimed they were taking patients to outpatient clinics. The sheer volume of these transports drew the attention of investigators. The bottom line, Lawrence says, is to “document your actions thoroughly, train your personnel regularly and keep up with the changing billing requirements.”

Keeping up with Changes
Lawrence admits that keeping up with CMS changes isn’t particularly exciting. “It is frustrating, absolutely,” he says. He recommends making it easier by checking for quarterly updates of the CMS (Medicare) Billing Manuals on Benefit Policy (chapter 10) and Claims Processing (chapter 15), respectively. Changes made during the quarter are highlighted in red, so reading them each quarter is advised. After the quarter, all the changes are cleared and they start new.

Publications can be found online here. To assist those new to Medicare billing, CMS has a Medicare Learning Network (MLN) here. The site attempts to addresses the most common questions regarding billing and reimbursement. Lawrence also recommends signing up for listservs that provide an opportunity to learn from others.

Lawrence told his audience that this talk represented the 488th version of this presentation since he first began speaking about reimbursements and billing in 1998. He admitted that he’s seen many changes. As far as reimbursements, many of those changes have been for the worse. Using his service areas as an example, Lawrence says that although the 2% urban bump raises the reimbursement rates for Oceanside to $440 per ALS transport, the reimbursement rates are 7% less than the department received in 2004, despite the fact that inflation has risen 25% during that same period.

The key to surviving, he says, is to change with the times. Get creative about alternative funding sources. Partner with hospitals and newly formed accountable care organizations to get reimbursed for the procedures you already do. When billing for a service, such as oxygen, an ECG or an extra attendant, do what hospitals do and include the cost of administration.

Instead of just billing for a dose of morphine, for example, include the cost required to store, disperse and provide administrative support for that narcotic. Above all, he says, “know your local and state codes; know your rights; know your processes and know when to walk away.”

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