Properly Coding Non-Covered Services

The Centers for Medicare and Medicaid Services (CMS) recently issued a directive to its MACs (Medicare administrative contractors, which are the entities that process Medicare claims.) The directive requires the MACs to begin processing claims with non-covered service codes submitted by ambulance services.1 This has raised questions–and some needless confusion–among ambulance services. This month’s column takes a closer look at what this directive means, and, just as importantly, what it doesn’t mean.


First, let’s take a look at the codes that CMS is requiring the MACs to process. The Transmittal states that MACs must process ambulance claims with Healthcare Common Procedure Coding System (HCPCS) codes A0021—A0424 and A0998. These are the “procedure” codes that tell Medicare (and other payers) what services were furnished by the provider and how much reimbursement the provider is due (or, in the case of non-covered services, not due) for its services.


It’s important to note what this Medicare Transmittal did not do; it did not establish new Medicare payment policy. Requiring MACs to process ambulance claims with non-covered service codes is not the same as requiring them to pay these claims. In fact, the Transmittal specifically directs MACs to deny claims for non-covered services.

Non-covered service claims

It’s also helpful to discuss why CMS would even require its MACs to accept and process claims with non-covered service codes. There are generally two instances in which ambulance services would submit claims for non-covered services. The first is when the patient has some form of secondary insurance that may cover the services rendered. In these cases, the payer may first require a denial from Medicare to pay applicable benefits under the secondary insurance policy. This process is generally referred to as “coordination of benefits.” Although many MACs already processed claims with these non-covered codes before the Transmittal was issued, some did not. This created a hardship for ambulance services seeking reimbursement from secondary insurers.


The second reason why an ambulance service might submit a claim for a non-covered service would be to honor the request of the Medicare beneficiary to file the claim. Medicare rules require an enrolled Medicare provider to file a claim on a beneficiary’s behalf when requested to do so. This includes claims for non-covered services. The reason for this requirement is that the filing of a claim, and the subsequent adjudication of that claim (in this case, a denial), triggers the beneficiary’s legal right to an appeal. In other words, without a claim being filed and denied, the patient’s Medicare appeal rights don’t arise.


It’s worth noting that unless an ambulance service faces one of these situations in which submitting a non-covered claim is required, it’s not obligated to file claims for denial to be able to bill the patient directly. In most instances (with a notable exception discussed below), the patient can be billed directly for a non-covered service without first having to go through the process of submitting the claim for denial.

Billing codes for denial

The next challenge for the ambulance service is how to properly bill the claim being filed “for denial.” If the ambulance service is put in the position of having to file a claim for a service it knows isn’t covered, it must code the claim properly to ensure that it isn’t viewed as a potential false claim. Certain codes and modifiers are used for this purpose. Filing a claim with proper non-covered codes signals to Medicare that the provider knows the service isn’t covered, and the claim is being filed to receive a denial rather than to receive payment.


The most common non-covered HCPCS codes an ambulance service would use include A0888 and A0998. A0888 is the non-covered ambulance mileage code and A0998 is the “treat, no transport” code.


The A0888 code would be used to bill the excess mileage when an ambulance service transports a patient to a facility beyond the nearest appropriate facility. If a patient chooses to be transported to a more distant facility, bypassing a closer one that has the capabilities the patient requires, then Medicare rules state the patient must pay the difference in mileage between the nearest appropriate facility and the one to which the patient chose to be transported. On the claim, the ambulance service is required to separate out the “covered” local mileage from the non-covered “excess” mileage, and the A0888 code is usually used to do that.


The A0998 code is often used by ambulance services that impose fees for responses that don’t result in transport of the patient. This may include fees for patient refusals, “treat and release” and other similar services. Because Medicare is primarily a transport benefit, it doesn’t pay for these types of services. Of course, not all ambulance services elect to charge a fee for non-transport services, but those that do occasionally find it necessary to obtain a Medicare denial to bill a secondary payer (such as an auto insurer), which may pay for these services even though Medicare does not.


Even some regular “covered” HCPCS codes may need to be billed for denial. For instance, HCPCS code A0428 is a BLS non-emergency transport. If the patient was transported by ambulance but didn’t meet Medicare’s medical necessity criteria (i.e., the patient could’ve safely been transported by means other than by ambulance), the transport would not be covered. In this case, the ambulance service would need to use a special “modifier” on the claim to tell Medicare that the claim is being billed for denial rather than for payment. The modifiers which are used for these services are the GA, GY and GZ modifiers.

Non-covered service modifiers

The GY modifier is the most commonly used of the three non-covered service modifiers. This signals to Medicare that the service is non-covered because it’s “statutorily excluded” from coverage as a Medicare benefit. For instance, transporting a patient to a non-covered destination (such as a physician’s office) is an excluded service, as is transporting a patient who doesn’t meet medical necessity criteria. Incidentally, the GY modifier should also be used in conjunction with the non-covered HCPCS codes discussed above.


The GA and GZ modifiers are used in situations where the transport isn’t “reasonable and necessary,” which means generally that it’s more economical to bring the service to the patient than bring the patient to the service. For instance, it would not ordinarily be “reasonable and necessary” to transport a nursing home patient to a hospital for a simple procedure, such as changing a 4-by-4 dressing on a superficial wound; that would ordinarily be done at the skilled nursing facility. In addition, it would cost less to have that done at the facility where the patient was already admitted, rather than to pay for an ambulance trip to have the same thing done in a hospital. The GA modifier is used when the ambulance service first obtained a signed “advance beneficiary notice of noncoverage” (ABN) prior to rendering this type of service; the GZ modifier is used when the ambulance service failed to first obtain this signed ABN. (It’s worth noting that the ambulance service can’t then bill the patient for a transport that isn’t “reasonable and necessary” if it didn’t first obtain a signed ABN.)

Non-covered vs. bundled services

It’s also important to point out a critical difference between non-covered services and bundled services. Several years ago when Medicare implemented the national ambulance fee schedule, it incorporated all ancillary charges (except for mileage) into a single “base rate” depending on the level of service (i.e., BLS or ALS.). When Medicare did this, it eliminated separate payment for such things as disposable supplies, oxygen, extra attendant charges and drugs. Medicare’s policy is that reimbursement for these ancillary items is included in the appropriate base rate. Therefore, it’s improper (and prohibited) for ambulance services to bill Medicare beneficiaries for these ancillary service and supply charges.


Lastly, ambulance services should carefully monitor their Medicare “remittance advice” documents and check to be sure they aren’t inadvertently paid by Medicare on claims that are submitted for denial using non-covered service codes and/or modifiers. Even where Medicare is entirely at fault for erroneously paying the non-covered claim, the funds still properly belong to the government, not to the provider, and recent amendments to the federal False Claims Act require that any Medicare overpayments be refunded within 60 days.


Though the process of billing for non-covered services may at first seem straightforward, many ins and outs are involved in doing it properly. Understanding the correct codes and modifiers to use in these situations can go a long way in helping the ambulance service maintain billing compliance.


  1. CMS Transmittal 942, CR 7489, Aug. 5, 2011.

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