In 2011, Medicare spent $5.3 billion on ambulance services. According to MedPAC, In 2011, 5.2 million Medicare beneficiaries (15 percent of fee-for-service (FFS) Medicare used an ambulance service. Medicare Part B covers 80 percent of the Medicare-approved amount of the ambulance trip.
How does Medicare reimburse ambulance services? A 2007 GAO report describes services for ambulance
Medicare ambulance payments under the fee schedule have two components: a base-rate payment and a mileage payment. The base-rate component of ambulance payments under the fee schedule consists of the relative value unit (RVU), the conversion factor (CF), and a geographic adjustment factor. Ambulance RVUs account for the relative resources needed to provide services during an ambulance transport. The ambulance CF converts the RVU into a payment expressed in dollars and is set by CMS annually. Ambulance base-rate payments are also adjusted by a geographic practice cost index (GPCI), which is intended to account for regional differences in the cost of providing ambulance services. The mileage component consists of the number of miles traveled during an ambulance transport multiplied by the applicable mileage rate.
The beneficiary is responsible for a 20 percent copayment, after their yearly Part B deductible ($140 in 2012) is met. Medicare also has a number of “add-on” payments depending on whether the point of pickup is urban, rural, or super-rural. Super-rural ares are ZIP codes located in a rural county that is among the lowest quartile of all rural counties, by population density. Additional information on add-ons is described below.
The GAO Report also found that costs per ambulance transport were highly variable, ranging from $99 to $1,218 per transport.
An updated October 2012 report used a survey methodology to determine that in 2010, ambulance cost ranged from $224 per transport to $2,204 per transport, with a median cost per transport of $429. In 2010, the median Medicare margin, including add-on payments, for ambulance providers was positive 2 percent in 2010. Additional analysis found that supplemental “add-on” payments increased Medicare outlays for ground ambulance transports by $175 million for calendar year 2011. Further, between 2004 and 2010, ambulance transports for Medicare FFS beneficiaries increased by 33 percent.
MedPAC will also be issuing a report on ambulance cost in June 2013.
MedPAC’s 2012 Payment Basics describes the current add ons as follows:
The ambulance fee schedule system currently contains two permanent and three temporary add-on payment policies. The permanent add-on policies are written into law without an expiration date and include: 1) the rural short-mileage ground ambulance add-on payment policy, which increases the standard mileage rate by 50 percent for ground ambulance transports if the pick-up ZIP code is rural and the mileage is between 1 and 17 miles; and 2) the rural air transport add-on payment policy, which reimburses providers and suppliers 50 percent more than the urban air ambulance base payment and the mileage rate if the point-of-pickup ZIP code is rural. The temporary add-on payment policies are written into law with expiration dates and include: 1) the ground ambulance add-on payment policy, which increases the base payment and mileage rate for ground transports by 3 percent for transports originating in rural ZIPs code and by 2 percent for transports originating in urban ZIP codes; 2) the super-rural add-on payment policy, which increases the base payment for ground ambulance transports by 22.6 percent where the point-of-pickup ZIP code is designated as super-rural; and 3) the air transport rural grandfathering add-on payment policy, which extends the benefits of the 50 percent add-on payment for air ambulance transports to urban areas that were formerly designated as rural. All Medicare ambulance transports are eligible for one of the five add-on payment policies, and many are eligible for multiple add-on policies if they originate in rural ZIP codes.