Ambulance Services – Is Fraud Driving the Costs Out of Control?

When reviewing the high costs of health care, especially Medicare and Medicaid costs, which are even higher than they should be due to the tremendous amount of fraud, the government has understandably been concentrating on high risk areas such as new home health agencies and newly enrolled durable medical equipment suppliers. After meeting with tremendous success and saving billions of dollars in the past few years, the focus is moving into the next group of Medicare suppliers CMS considers to be at “moderate” risk, one of which is ambulance transport services.

Medicare Part B provides for reimbursement of  “medically necessary ambulance services,” under certain strict provisions, but costs for these services have been rising. Although back in 2007 the GAO reported  a decline in these transports by beneficiaries in super-rural areas, it recommended that CMS monitor beneficiary use of ambulance transports to ensure access to services, particularly in these super-rural areas. Then in 2011, the Middle Class Tax Relief and Job Creation Act of 2012 required the GAO to update the 2007 report.  The results, while assuring CMS that beneficiaries have adequate access to transportation services may also provide more insight into the realm of ambulance transport than whether certain areas have proper access.

Cost variations in ambulance transport are staggering, GAO found. Medicare costs varied substantially in 2010, from $224 to $2,204 per transport, with a median cost of $429. GAO also discovered a wide variation in Medicare ambulance provider margins. According to the report, median margins for Medicare ranged from negative 2% to positive 9% when including the add-on payments, and margins without the add-ons ranged from negative 8% to positive 5%.

The report found that add-on payments totaled $175 million in 2011, noting that the volume of Medicare transports grew 33% from 2004 to 2010. Transports per 1,000 beneficiaries in the least densely populated super-rural areas grew by 41%, and transports per 1,000 beneficiaries in rural and urban areas increased by 35% and 32%, respectively, according to the report.

When examining reasons for the overall increase in payments GAO found it was mostly attributable to an increase of 59 percent in basic life support (BLS) nonemergency transports, which included noninvasive interventions, such as administering oxygen. When analyzing this growth by service area, GAO found that BLS nonemergency transports in super-rural areas grew the most, by 82 percent.

GAO noted provider characteristics that had an affect on cost per transport included: (1) the volume of transports (including both Medicare and non-Medicare transports), (2) intensity of transports (the proportion of Medicare transports that were nonemergency), and (3) the extent to which providers received government subsidies. Higher volume of transports, higher proportions of nonemergency transports, and lower government subsidies were associated with lower costs per transport, according to GAO’s report. Ambulance service providers agreed that personnel cost was the largest cost component in their 2010 total costs in addition to being the biggest contributor to increases in their total costs from 2009 to 2010.

Although HHS did not comment on GAO’s findings, it certainly now has more food for thought. CMS has identified the potential for fraud, and certainly is investigating further. On its website, CMS points to a 2008 ambulance fraud case, where an ambulance transport company, Greybor Medical Transportation, a Los Angeles-based ambulance company admitted it was using its ambulances to cheat Medicare. Greybor’s owners  agreed to repay Medicare $6 million for billing its ambulance services for costs that had never been eligible under Medicare.

There are two recent cases headed to trial in Illinois that highlight other types of fraud with ambulance transportation services. In those cases, the relator alleged that transportation services were provided on dates that Medicaid recipients did not receive corresponding medically necessary care from a covered entity and in other situations, Medicaid was double billed for the same transportation service.  As an area where cases are really starting to surface, certainly this may become a hot seat for fraud investigations.