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Department of Health and Human Services

OFFICE OF 

INSPECTOR GENERAL 

M P
EDICARE  AYMENTS FOR

A T
MBULANCE  RANSPORTS

Daniel R. Levinson 

Inspector General 

January 2006

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Office of Inspector General 
http://oig.hhs.gov 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 
amended, is to protect the integrity of the Department of Health and Human Services (HHS) 
programs, as well as the health and welfare of beneficiaries served by those programs. This 
statutory mission is carried out through a nationwide network of audits, investigations, and 
inspections conducted by the following operating components: 
Office of Audit Services 
The Office of Audit Services (OAS) provides all auditing services for HHS, either by conducting 
audits with its own audit resources or by overseeing audit work done by others.  Audits examine 
the performance of HHS programs and/or its grantees and contractors in carrying out their 
respective responsibilities and are intended to provide independent assessments of HHS programs 
and operations in order to reduce waste, abuse, and mismanagement and to promote economy 
and efficiency throughout HHS. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) conducts management and program evaluations 
(called inspections) that focus on issues of concern to HHS, Congress, and the public.  The 
findings and recommendations contained in the inspections generate rapid, accurate, and up-to-
date information on the efficiency, vulnerability, and effectiveness of departmental programs.  
OEI also oversees State Medicaid Fraud Control Units which investigate and prosecute fraud and 
patient abuse in the Medicaid program. 
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations of 
allegations of wrongdoing in HHS programs or to HHS beneficiaries and of unjust enrichment 
by providers.  The investigative efforts of OI lead to criminal convictions, administrative 
sanctions, or civil monetary penalties.  
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to OIG, 
rendering advice and opinions on HHS programs and operations and providing all legal support 
in OIGs internal operations.  OCIG imposes program exclusions and civil monetary penalties on 
health care providers and litigates those actions within HHS.  OCIG also represents OIG in the 
global settlement of cases arising under the Civil False Claims Act, develops and monitors 
corporate integrity agreements, develops compliance program guidances, renders advisory 
opinions on OIG sanctions to the health care community, and issues fraud alerts and other 
industry guidance.  Report Template Version  = 03-01-05_rev.07  
  E X E C U T I V E   S U M M A R Y  

OBJECTIVE 
To evaluate whether ambulance transports met Medicares coverage 
and level of service criteria and to evaluate safeguards in place to 
identify improper payments. 
BACKGROUND 
Medicare covers and pays for emergency and nonemergency ambulance 
transports when a beneficiarys medical condition, at the time of 
transport, is such that other means of transportation, such as taxi, 
private car, wheelchair van, or other type of vehicle, would jeopardize 
his or her health.  Generally, nonemergency transports involve a 
beneficiary who is bed-confined.  In calendar year (CY) 2002, Medicare 
allowed almost $3 billion for ambulance transports.  
Previous Office of Inspector General (OIG) studies indicated that 
Medicares ambulance transport benefit was highly vulnerable to abuse.  
A 1994 inspection found that 70 percent of sampled dialysis-related 
ambulance transport claims did not meet Medicares coverage 
requirements. A 1998 report found that two-thirds of sampled 
ambulance transports did not meet Medicares coverage requirements; 
the majority of the claims found in error were nonemergency transports. 
We conducted this study because of the extent of problems found in the 
past with specific kinds of ambulance transports and to determine if the 
ambulance benefit was being used appropriately.  We based our review 
on a sample of 720 ambulance claims from 2002 stratified by three 
categories of ambulance transports: transports to and from dialysis 
facilities, nonemergency transports, and emergency transports. 
FINDINGS 
Twenty-five percent of ambulance transports did not meet 
Medicares program requirements, resulting in an estimated   
$402 million of improper payments.  In CY 2002, 13 percent of 
transports did not meet coverage criteria because the patients condition 
did not warrant transport by ambulance, resulting in an estimated  
$220 million in improper payments. Nine percent of covered transports 
did not meet level of service criteria because a lower level of ambulance 
transport was indicated, resulting in an estimated $31 million paid 
improperly. Five percent of transports were found to be in error 
because the ambulance supplier, though contacted, did not respond to 
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our request for documentation, resulting in an estimated $150 million in 
improper payments. 
We found statistically significant differences in coverage error rates 
when we compared either dialysis (27 percent) or nonemergency 
transports (20 percent) to emergency transports (7 percent). We did not 
find a statistically significant difference when we compared dialysis 
transports to nonemergency transports. Level of service error rates 
varied little across these categories. 
Contractor safeguards are insufficient to identify and prevent 
improper payments for ambulance transports. The Medicare program 
mandates very few specific program safeguards to detect and prevent 
payment for improper ambulance transports. Under existing 
safeguards, contractors may choose the prepayment edits they use to 
screen claims for ambulance transports and the extent of postpayment 
activities they conduct. We found that contractors use few prepayment 
edits consistently. Less than half of the contractors we surveyed 
conducted postpayment review of ambulance claims. Of those 
contractors that conducted postpayment reviews of ambulance claims, 
most conducted only one or two postpayment reviews in CYs 2001 and 
2002. 
There are no uniform requirements regarding the kind of 
documentation contractors review to determine the appropriateness of 
ambulance transports. We were informed by contractors that contractor 
medical reviewers are allowed to and often do determine the 
appropriateness of the transport without obtaining additional 
documentation from the ambulance supplier or third-party providers, 
which include dialysis facilities, hospitals, and nursing homes. Our 
medical reviewers reported that making a determination of coverage 
required synthesizing information from various sources, particularly 
from third parties. 
Our findings indicate that third-party providers that request ambulance 
transports may not be aware of Medicares requirements for 
nonemergency ambulance transports. We found that almost two out of 
three noncovered transports originated at third-party facilities where it 
is unlikely that the patient initiated the ambulance transport. We 
found that contractors made minimal effort to educate these health care 
providers regarding coverage and level of service criteria for ambulance 
transports. 
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E X E C U T I V E   S U M M A R Y

RECOMMENDATIONS 
The Centers for Medicare & Medicaid Services should implement 
program integrity activities designed to reduce improper payments 
for ambulance transports at greatest risk for error. 
The Centers for Medicare & Medicaid Services (CMS) should: 
(1) Consider instructing all Medicare contractors to implement 
prepayment edits that target dialysis and nonemergency ambulance 
transport claims; 
(2) Instruct Medicare contractors, when conducting postpayment 
medical reviews, to obtain documentation from ambulance suppliers 
and third-party providers to determine that ambulance transports 
meet program requirements; and 
(3) Direct Medicare contractors to educate third-party providers who 
initiate ambulance transports about the appropriate use of Medicares 
nonemergency ambulance transport benefit.  Once education has 
occurred, CMS may want to revisit the issue of noncovered ambulance 
transports ordered by third-party providers.  If a problem still exists, 
CMS may want to determine if it can take administrative action and 
refer any potentially fraudulent or abusive providers to OIG.   
In addition to these recommendations, we have forwarded information 
on noncovered, miscoded, and undocumented services we identified in 
our sample to CMS for appropriate action. 
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
CMSs comments are summarized below and included in their entirety 
as Appendix D. 
CMS concurred with our recommendations.  CMS indicated that it will 
advise all contractors to consider implementing prepayment edits for 
trips with an origin or destination modifier for a dialysis facility, as well 
as nonemergency transports to and from a hospital, nursing home, or 
physicians office.  In addition, CMS noted that it will encourage 
contractors to consider obtaining documentation from ambulance 
suppliers and third-party providers to determine that ambulance 
transports meet program requirements on postpayment review.  CMS 
also stated that it plans to encourage Medicare contractors to consider 
educating suppliers and third-party providers who initiate ambulance 
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transports about the appropriate use of Medicares nonemergency 
ambulance transport benefit. If education proves ineffective, 
contractors should then determine if they can take administrative 
action and refer any potentially fraudulent or abusive providers to OIG. 
CMSs comments did not warrant any revisions to the results of our 
review or our recommendations. 
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  T A B L E   O F   C O N T E N T S  

EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
 i 
I N T RO DUC T IO N  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1

F I N D IN G S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14

Twenty-fivepercent of ambulance transports paid in error . . . . .  14

Contractor safeguards insufficient. . . . . . . . . . . . . . . . . . . . . . . . .  18

R E C O MMEN D A T ION S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24

E N D NO T ES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27

APPENDIXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  30

A:  Confidence Intervalsfor SelectedStatistics. . . . . . . . . . . . . . .  30

B:  SignificanceTests for Selected Statistics. . . . . . . . . . . . . . . . .  31

C:  Coverage Determinations by DocumentationLevel. . . . . . . . .  32

D:  AgencyComments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  33

A C K NO WL E D G M E N T S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
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OBJECTIVE 
To determine whether ambulance transports met Medicares coverage 
and level of service criteria and to evaluate the safeguards in place to 
identify improper payments. 
BACKGROUND 
Previous Office of Inspector General (OIG) studies indicated that 
Medicares ambulance transport benefit was highly vulnerable to abuse.  
A 1994 report found that 70 percent of sampled dialysis-related 
transport claims were paid in error.  A 1998 report found that two-
thirds of sampled ambulance transports were paid in error.  
Nonemergency transports made up 70 percent of these transports paid 
in error.1  OIG recommendations to address these issues included 
implementing prepayment edits designed to identify specific kinds of 
ambulance transports (e.g., dialysis transports) and education efforts 
targeted at Medicare ambulance suppliers, dialysis facilities, and 
beneficiaries. This OIG work also contributed to changes in ambulance 
policy and reimbursement practices as part of the Balanced Budget Act 
(BBA) of 1997.2 
In calendar year (CY) 2002, Medicare paid approximately $3 billion for 
ambulance transports.3  Ambulance transports in emergency and 
nonemergency situations are payable when these transports meet 
Medicares program requirements as set forth in section 1861(s)(7) of 
the Social Security Act (the Act) and implementing regulations found in 
42 CFR  410.40 and 410.41.  An ambulance transport is considered 
covered when transportation by means other than ambulance would 
jeopardize the patients health.  Once coverage requirements are met, 
requirements regarding medical necessity (e.g., the appropriate level of 
service necessary for the diagnosis or treatment of the patients illness 
or injury) must be met. 
Medicare Coverage of Ambulance Transports 
Medicare pays for emergency and nonemergency ambulance services 
when a beneficiarys medical condition at the time of transport is such 
that other means of transportation, such as taxi, private car, wheelchair 
van, or other type of vehicle, is contraindicated (i.e., would endanger the 
beneficiarys medical condition).4  Medicare does not cover means of 
transport other than ambulance. 
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Emergency ambulance transport.  An emergency transport is one provided 
after the sudden onset of a medical condition that manifests itself with 
acute symptoms of such severity that the absence of immediate medical 
attention could reasonably be expected to: 
o 	 Place the patients health in serious jeopardy, 
o 	 Result in serious impairment of bodily functions, or 
o 	 Result in serious dysfunction of any bodily organ. 
Symptoms or conditions that may warrant an emergency ambulance 
transport include, but are not limited to:   
o 	 Severe pain or hemorrhage, 
o 	 Unconsciousness or shock,  
o 	 Injuries requiring immobilization of the patient, 
o 	 Patient needs to be restrained to keep from hurting himself or 
others,  
o 	 Patient requires oxygen or other skilled medical treatment during 
transportation, and 
o 	 Suspicion that the patient is experiencing a stroke or myocardial 
infarction.5 
Nonemergency ambulance transports.  Nonemergency transportation by 
ambulance is appropriate when a patient is bed-confined AND his/her 
condition is such that other methods of transportation are 
contraindicated; OR if the patients condition, regardless of bed-
confinement, is such that transportation by ambulance is medically 
required (e.g., the patient is combative and a danger to himself or 
others). While bed-confinement is an important factor to determine the 
appropriateness of nonemergency ambulance transports, bed-
confinement alone is neither sufficient nor necessary to determine the 
coverage for Medicares ambulance benefits.   
To be considered bed-confined, the patient must meet all three of the 
following criteria:  
o 	 Be unable to get up from bed without assistance, 
o 	 Be unable to ambulate, and 
o 	 Be unable to sit in a chair or wheelchair.6 
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Nonemergency transports are often scheduled in advance and are 
repetitive in nature, such as for patients with end-stage renal disease 
requiring maintenance treatments three times a week. 
In these circumstances, ambulance suppliers must obtain or 
document all attempts to obtain a Physician Certification Statement 
(PCS) stating the reasons a patient requires nonemergency 
transportation by ambulance.  The PCS or proof of the suppliers 
attempt to obtain it is required within 48 hours after providing the 
service.  The PCS is effective for 60 days from the date it is signed.7 
Level of Service 
While program requirements determine whether Medicare will pay for 
an ambulance transport, the level of service required by the patients 
condition determines the amount paid for a transport.  Medicare only 
pays for the level of service deemed medically necessary.  A transport 
denied due to level of service under section 1862(a)(1) of the Act, is 
usually reimbursed at a lower rate reflecting the lower level of service 
judged appropriate, rather than denied outright.8 
Medicare pays for different levels of ambulance services.  These service 
levels include Basic Life Support (BLS), Advanced Life Support (ALS), 
Specialty Care Transport (SCT), and air transport (fixed-wing and 
rotary-wing transport).9  These levels of service are differentiated by the 
qualifications and training of the crew and the equipment and supplies 
available on a vehicle that allows for treatment of more complex medical 
conditions. For example, to provide an ALS-level service, an ambulance 
must be equipped with specialized equipment, such as defibrillators and 
pulmonary/cardiac monitors and certain medications.  Another 
distinction between ALS and BLS is the personnel that staff the 
ambulance.  In most States, BLS services are rendered by basic and 
intermediate emergency medical technicians (EMT), while more 
intensive ALS services are provided by paramedic EMTs.  The SCT 
transports require a level of service beyond what a paramedic can 
provide, such as care that must be provided by a medical professional 
for example, a nurse or a respiratory therapist.10 
Payments for Ambulance Transports 
Providers of ambulance services submit claims for payment to carriers 
or fiscal intermediaries (FIs).  Independent ambulance suppliers bill 
carriers on the uniform Medicare billing form, the Centers for Medicare 
& Medicaid Services (CMS) 1500.  Provider-based ambulance suppliers 
(owned by or affiliated with a Medicare Part A provider such as a 
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hospital) bill the FIs on the uniform billing form known as the UB-82 
(form CMS-1450).  Ambulance suppliers are not required to submit 
additional documentation for billing purposes.  However, Medicare rules 
require ambulance suppliers to retain appropriate documentation that 
contains information about the personnel involved in the transport and 
the patients condition, and to obtain a PCS for nonemergency 
transports.  These documents must be kept on file and made available 
for contractor review if requested.11 
Historically, ambulance payment was based solely on reasonable 
charges for independent suppliers or reasonable cost for hospital-
based ambulance companies.  The BBA required the Secretary of the 
Department of Health and Human Services to replace these methods 
with a national fee schedule.12  Transition to the fee schedule began 
April 1, 2002.  During the transition period, payment is based on a 
blend of a providers old method and the fee schedule rates, with the fee 
schedule portion increasing to 100 percent beginning in 2006.13 The 
amount Medicare pays for covered ambulance transports is determined 
by the level of service required by the patients condition. 
The Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 (MMA) contains provisions affecting ambulance payments.  The 
MMA establishes a regional ambulance fee schedule payment rate for 
services furnished between July 1, 2004, and December 31, 2009.  For 
this same period, it increases the fee schedule payment amount for 
transports originating in the least-populated rural areas.  It also adjusts 
ground mileage payments for transports greater than 50 miles provided 
between July 1, 2004, and December 31, 2008.  For the period July 1, 
2004, through December 31, 2006, reimbursement under the fee 
schedule for ambulance transports that originate in rural and urban 
areas increase by 2 percent and 1 percent, respectively.14 
Contractor Program Safeguards 
Carriers and FIs that process and pay Medicare claims, play a vital role 
in ensuring the integrity of Medicare payments through their program 
safeguard activities. Program safeguards include activities aimed at 
detecting and preventing improper Medicare payments.  Ambulance 
program safeguards can include prepayment and postpayment 
activities, as well as educational efforts aimed at the ambulance 
suppliers, health care providers, and beneficiaries to inform them of 
program requirements for ambulance transports. 
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To assist contractors in program safeguard efforts, CMS has contracted 
with entities to promote the integrity of the Medicare program.  These 
entities, known as program safeguard contractors (PSC), perform some 
or all of the activities currently done by FIs and carriers with the 
exception of processing and paying claims.  PSC activities can include 
provider activity reviews, including medical, utilization, and fraud 
reviews; cost report audits; Medicare secondary payer determinations; 
provider and beneficiary education regarding program integrity; and 
developing and updating a list of durable medical equipment that is 
frequently subject to unnecessary utilization.15 
Prepayment edits and reviews.  Prepayment edits are automated 
procedures that identify claims that require further manual review by 
claims processing clerks or medical professionals (e.g., nurse 
practitioners or registered nurses).  CMS requires few prepayment edits 
specifically for ambulance claims.  Both the carriers and the FIs are 
required to edit zip codes for validity.16  FIs must edit ambulance claims 
to ensure proper reporting.17 
If a claim is rejected due to an edit, it is subjected to a medical review, 
which consists of examining the information contained on the claim 
itself. Usually, the contractor reviews the claim, any other documents 
submitted with the claim, and the patient claim history files.  For a 
small percentage of claims, the contractor requests additional records 
from the suppliers/providers that document the service that was billed 
to determine if it meets coverage and level of service criteria.18 
In the case of an ambulance claim review, the contractor requests 
records on file with the ambulance supplier.  These records vary by 
ambulance supplier in the amount of detail and information they 
contain.  Generally, this additional documentation consists of a trip 
ticket and, for nonemergency transports, a PCS documenting why the 
patient requires transport by ambulance.  The trip ticket is created by 
the ambulance supplier and contains information regarding the date, 
mileage, crew, origin, destination, and type and level of ambulance 
service provided.  It also contains, to varying degrees, descriptive 
information regarding the condition of the patient and the type of 
service and supplies provided to the patient while in transport.19 
Reviewing a medical record or other documentation on file to make a 
claim payment determination can be resource intensive for the 
Medicare program, providers, suppliers, and physicians.  While medical 
review activities are important to ensure that claims are paid correctly, 
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CMSs policy is to weigh the relative benefit of appropriate payments 
with the expense of conducting medical reviews.20 
Postpayment reviews. CMS does not specifically require contractors to 
conduct postpayment reviews of ambulance claims.  Apart from the 
general Medicare requirement that contractors conduct audits 
necessary to ensure that proper payments are made, there is no specific 
requirement to regularly review claims for specific services, such as 
ambulance services.21 Generally, postpayment activities involve 
analysis of claims data after payment has been made to identify 
aberrant billing patterns by service or provider type.  Postpayment 
review can be done on an individual claim, but typically is done on a 
statistically valid sample of claims. As in prepayment review, a 
postpayment review typically consists of examining the claim and any 
other documents submitted with it.  On occasion, contractors request 
more documentation for these reviews.  The findings of these 
postpayment analyses are often the basis for implementing prepayment 
edits or for targeting specific providers for corrective actions or 
education.22 
Educational efforts.  Contractor and CMS educational efforts are aimed at 
the health care community to inform them of program requirements and 
provide other useful information. Educational activities for Medicare 
services as well as ambulance services encompass a broad range of 
activities that include: (1) issuing bulletins or memorandums to the 
supplier community, (2) corresponding with a supplier who has 
consistently submitted claims in error, (3) conducting periodic 
conferences or conference calls with all interested parties regarding 
questions or clarifications of current or new policy, (4) making 
contractor personnel available to answer individual provider questions, 
(5) presenting information at public meetings where Medicare issues are 
discussed, and (6) maintaining Web sites that convey information 
regarding ambulance policies and billing procedures. 
Liability for Ambulance Transports That Do Not Meet Program Requirements 
Liability for any overpayment resulting from a denied ambulance 
transport claim depends on the type of denial.  When a claim is denied 
for coverage reasons (such as when other forms of transportation are not 
contraindicated), the beneficiary is liable for any overpayment unless he 
or she lacks constructive knowledge that the service is not covered, or is 
otherwise without fault.23 
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If the claim is denied due to level of service requirements (section 
1862(a)(1) of the Act), it is usually not denied in total. Generally, these 
types of denials result in the claim being down-coded to a lower level of 
ambulance service. If an overpayment results, the ambulance supplier 
is liable unless the beneficiary signs an Advanced Beneficiary Notice 
that shifts liability to the beneficiary.24 The Advanced Beneficiary 
Notice is rarely used and is only appropriate in limited, nonemergency 
situations.25 
METHODOLOGY 
We used multiple methodologies to determine the appropriateness of 
Medicare payments for ambulance transports. To compare error rates 
for different kinds of claims, we used a stratified random sampling 
methodology to select claims for review. For our sampled claims, we 
compared the error rates for transports occurring before implementation 
of the fee schedule (April 1, 2002) and after. Our analysis revealed no 
difference in error rates between the two periods. 
We conducted a medical review of ambulance supplier and third-party 
provider records associated with the patient for the date of transport on 
the selected claim. To determine what payment safeguards were in 
place to prevent and detect improper payments for ambulance 
transports, we interviewed officials from carriers and FIs. We did not 
verify contractor statements or written information provided about 
program safeguards. 
Sample Selection 
We defined our population as all Part A and Part B final action claims 
for ground ambulance transports occurring in CY 2002. The population 
consisted of 8,729,183 claims with a total allowed amount of 
$2,966,104,982. 
To detect statistical differences in error rates among categories of 
ambulance transports (dialysis, nonemergency, and emergency), we 
selected a representative sample of ambulance claims using a stratified 
random sampling strategy. 
The sample size was 720 claims submitted to and paid by carriers and 
FIs for ambulance transports in CY 2002. We selected the sample from 
CMSs National Claims History database. We grouped the claims into 
strata according to the origin/destination of the transport (dialysis 
facility) and the type of transport (emergency and nonemergency). We 
selected 240 claims for each of 3 strata consisting of: (1) transports 
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to/from dialysis facilities, (2) nonemergency transports (excluding 
dialysis transports), and (3) emergency transports (also excluding 
dialysis transports).   
We excluded 69 claims from our original sample for the following 
reasons: ongoing investigations by OIG (17 claims), unable to contact 
the ambulance supplier (19 claims), the ambulance supplier was out of 
business (12 claims), contractors did not provide us with claim 
information (11 claims), and claims were used as part of the medical 
review pretest (10 claims).  A description of the population and sample 
for each stratum appear in Table 1. 
Table 1:  Stratified Sample of Ambulance Claims 
Transport Type  Stratum  Population  Original  Excluded  Revised   Undocumented  Documented 
Number  Sample  Claims  Sample  Claims  Claims 
Size  Size 
Dialysis  1  866,379  240  38  202  12  190 
Nonemergency  2  2,870,482  240  17  223 14  209 
Emergency  3  4,992,322  240  14  226 9  217 
Totals  8,729,183  720  69  651  35  616 
Source:  OIG analysis of CY 2002 ambulance claims data from the National Claims History Database, 2005. 
Response to OIG Request for Documentation 
For the sampled claims, we requested records from Medicares 
contractors, ambulance suppliers, and third-party providers associated 
with the transport.  Table 2 contains a list of documents we requested 
from each source. 
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Table 2:  Documents Requested by Source 
1st Tier Documentation  2nd Tier Documentation  3rd Tier Documentation 
Nursing 
Medicare Contractors  Ambulance Suppliers  Dialysis Facilities  Hospitals  Facilities 
-CMS 1500/UB 82  -Trip report  -Treatment record  -Admit/discharge  -Admit/discharge 
or printout  -Dispatch record  -Social worker notes  records  records 
of electronic claim  -Physician certification  -Any documents  -Order sheet(s)  -Order sheet(s) 
-Ambulance supplier  statement  containing  -Patient history &  -Most recent care 
contact information  -CMS 1500/UB 82 or  information about  physical exam  plans 
printout of electronic  patients condition at  -Rx/treatment  -Most recent 
claim  the time of transport  records  patient history & 
-Nurse notes  physical exam 
-Progress notes  -Rx/treatment 
-Consultation notes  records 
-Therapy notes  -Nurse notes 
-Dialysis records  -Consultation or 
-Behavioral  ancillary notes 
management  -Behavioral 
monitoring records  management 
monitoring 
records 
We made a minimum of three attempts to obtain documentation from 
the contractors and the ambulance suppliers.  To avoid putting an 
unnecessary burden on third-party providers, we made two attempts to 
obtain documentation from them.  We used mail, phone, fax, or a 
combination of these methods to request documentation. 
Of the 651 sampled claims, we received ambulance supplier 
documentation for 616 claims and no documentation for 35 claims.  Of 
the 616 claims, we received third-party provider documentation for  
547 claims. Table 3 illustrates the number of claims for which we 
received documentation. This documentation was then forwarded to our 
medical review contractor. 
Table 3:  Claims Documented and Reviewed by Transport Type 
Transport Type  Contractor  Ambulance Supplier  Third-party Provider  Undocumented 
Documentation  Documentation  Documentation  Claims 
Received  Received  Received  (Not Reviewed) 
(1st Tier Medical  (2nd Tier Medical  (3rd Tier Medical 
Review)  Review)  Review) 
Dialysis Transports  190  190  158  12 
Nonemergency Transports  209  209  194  14 
Emergency Transports  217  217  195  9 
Totals  616  616  547  35 
Source:  OIG analysis of CY 2002 ambulance claims data from the National Claims History Database, 2005. 
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OIG Medical Review 
We contracted for the services of a medical review company that 
provided registered nurses to review the records and determine whether 
the ambulance transports met Medicares program requirements. 
Reviewers had several years of nursing, quality management, or claims 
review experience. They also had prior experience applying CMSs 
coverage policies and guidelines. Reviewers completed a medical review 
instrument for each ambulance trip billed on the sampled claims. 
Our medical reviewers conducted a three-tier review. The first tier 
consisted of reviewing only the claim form provided by the carriers and 
FIs. The second tier involved reviewing the claim form as well as 
documentation we obtained from the ambulance supplier. The third tier 
involved a review of all documents including medical records submitted 
by the third-party providers. Table 3 provides details regarding the 
number of claims reviewed in each of the three tiers. 
Claims Analysis 
Of the 616 claims for which we received ambulance supplier 
documentation, 547 also had documentation from at least one third-
party provider (either the origin or the destination of the transport). 
The 35 undocumented claims were assumed not to have met coverage 
requirements at any of the 3 tiers of medical review and are counted as 
errors. We conducted our analysis on a final sample of 582 claims (547 
third-tier reviewed claims and 35 undocumented claims considered in 
error) except for our analysis of the levels of documentation. Table 4 
illustrates the number of claims we analyzed for this report. 
Table 4: Claims Analysis 
Claim Type  Stratum  Claims Analyzed 
Number 
Dialysis Transports  1  158 
Nonemergency Transports  2  194 
Emergency Transports  3  195 
Subtotal of Claims  547 
Undocumented Claims (Automatic Errors)  35 
Total Claims Analyzed  582 
Source: OIG analysis of CY 2002 ambulance claims data from the National Claims History Database, 2004. 
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I N T R O D U C T I O N

We analyzed the medical reviewers determinations using SAS, 
SUDAAN, and Nud*IST software. We tested for statistical differences 
in error rates between the strata at the 0.05 significance level. We also 
estimated the dollar amounts paid in error in each stratum. All results 
are weighted appropriately and are reported based on the third-tier 
medical review determinations except where noted.  Details of 
significance tests and confidence intervals for selected statistics are 
included in Appendixes A and B.  For details about medical review 
determinations and documentation levels, see Appendix C.  
Structured Interviews 
In addition to the medical review, we contacted 23 contractors who hold 
73 contracts to process and pay Medicares ambulance claims.  For 
purposes of this report, we refer to each Medicare contract as a contract 
jurisdiction.  These 23 contractors processed over 80 percent of all 
ambulance claims submitted in CY 2002.  We conducted structured 
interviews with officials from these Medicare contractors to identify the 
safeguards in place to prevent improper payments for ambulance 
transports. Table 5 contains a description of the types of contractors we 
contacted for structured interviews.  Contractors provided the 
information verbally and in written form, e.g., manuals, guidelines, etc. 
Table 5:  Structured Interviews with Contractor Representatives 
Number of Contractors 
Type of Contractor  Interviewed 
Carrier - Process Medicare Part B Claims  7 
Fiscal Intermediary  Process Medicare Part A 
5 
Claims 
Carrier and Fiscal Intermediary Process Both 
11 
Medicare Part A and B Claims 
      Total  23 
We also conducted interviews with staff at the following organizations: 
CMS headquarters, two CMS regional offices, one PSC , the American 
Ambulance Association, the American Kidney Association, and two 
major ambulance suppliers. 
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Scope 
In addition to the previous and current OIG work examining ambulance 
transports, CMS, as part of its Comprehensive Error Rate Testing 
(CERT) program, measures errors in ambulance transports.  The goal of 
CERT is to measure the performance of CMSs contractors by 
calculating a paid claims error rate.  CMS bases the rate on the dollars 
paid after the contractor makes its payment decision on a claim.  The 
paid claims error rate is a percentage of dollars that contractors 
erroneously allowed to be paid.  In addition to the paid claims error 
rate, CMS calculates a provider compliance error rate and a services 
processed error rate. 
In comparison, OIGs objective was to estimate a national paid claims 
error rate for ambulance transports, as well as to compare error rates 
among emergency, nonemergency, and dialysis transports. The OIG 
study was not designed to reproduce, or to review the CERT paid claims 
error rate. 
Because the goals of the OIG review and CERT differ, the respective 
methodologies used to calculate the error rates differ.  The OIG review 
included the following factors, differentiating it from CMSs CERT: 
o 	 A stratified sample by type of ambulance transport; 
o 	 Part A and Part B ambulance claims; and 
o 	 A multitiered review with increasing levels of documentation 
including information provided by third-party sources such as 
hospitals, nursing homes, and dialysis facilities. 
The CERT program includes a random sample by contractor; includes 
only Part B claims; and reviews documentation provided by the 
ambulance supplier, which may not include third-party documentation 
for all claims. 
In addition, there are differences in how the CERT and OIG report the 
calculated error rates. As mentioned previously, CMS calculates three 
different error rates.  For the paid claims error rate and provider 
compliance error rate, CMS bases the rate on dollars.  For the services 
processed error rate, CMS bases the error rate on the number of 
services.  The OIG review bases the error rate on the number of claims.  
In addition to the overall fee-for-service error rate, CMS calculates error 
rates for individual contractors.  The OIG review calculates error rates 
for the different types of ambulance transports and projects the error 
rate nationally, as well as dollars associated with claims paid in error. 
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Our review was conducted in accordance with the Quality Standards 
for Inspections issued by the Presidents Council on Integrity and 
Efficiency and the Executive Council on Integrity and Efficiency.  
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Twenty-five percent of ambulance transports did  We found that one in four 
not meet Medicare program requirements,  ambulance transports in CY 2002 
did not meet Medicare program 
resulting in an estimated $402 million 
requirements. There were three 
of improper payments 
types of errors: (1) transports that 
did not meet Medicares coverage requirements, (2) covered transports 
that did not meet level of service requirements, and (3) transports for 
which the ambulance supplier did not submit documentation to 
substantiate the ambulance transport claim. 
Table 6:   Coverage, Level of Service, and Documentation Errors for Ambulance Transports 
Sample 
(N=582 Claims)  Projected 
Allowed  Claims  Allowed 
Type of Error  Claims  Amounts  (Proportion)  Amounts 
Coverage  94  $22,262.70  12.84%  $220,305,387.22 
Level of Service  38  $2,352.18  8.72%  $31,499,974.86 
Undocumented  35  $11,648.83  5.44%  $149,886,464.66
  - Nonresponse  34  $11,283.59  5.39%  $148,319,948.49
  - Missing documentation  1  $365.24  0.05%  $1,566,516.17
     Total Errors  167  $36,263.71  24.77%  $401,691,826.73 
Source:  OIG analysis of CY 2002 ambulance claims data from the National Claims History Database, 2004. 
Thirteen percent of ambulance transports did not meet Medicares coverage 
criteria, resulting in an estimated $220 million in improper payments 
More than one in eight claims did not meet Medicares coverage criteria 
for ambulance transport. In these instances, failure to meet coverage 
criteria means that the patients condition did not warrant transport by 
ambulance; rather, the patient could have been transported by other 
means such as taxi, private car, wheelchair van, or another type of 
vehicle. Pursuant to section 1861(s)(1) of the Act, when other means of 
transport can be utilized without endangering the individuals health 
(whether or not such other transportation is actually available), no 
payment may be made for ambulance service. 
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Typical examples of transports determined by medical reviewers to be in 
error included the following: 
o 	 Although the patient required continuous oxygen to sit up and to 
transfer from bed to a chair, a wheelchair van would have been 
more appropriate, particularly when the trip was only a distance 
of 1 mile. 
o 	 The patient was very active at the skilled nursing facility.  The 
patient sat up in a wheelchair while working at the gift shop.  The 
patient also served on the nursing home patient council.  In this 
case, use of a wheelchair van would have been more appropriate. 
o 	 The patient was able to get around in a wheelchair, although the 
patient needed assistance getting into the wheelchair.  Transport 
to the dialysis facility via ambulance was inappropriate. A 
wheelchair van would have been more appropriate since the 
driver, skilled nursing facility staff, or dialysis staff could provide 
assistance. 
Statistically significant differences in coverage error rates were found when 
comparing different categories of ambulance transports 
Dialysis transports (27 percent) and nonemergency transports  
(20 percent) had a statistically significant higher coverage error rate 
than emergency transports (7 percent).  The difference between dialysis 
and nonemergency transports was not statistically significant.  Table 7 
illustrates the error rates and the estimate of dollars paid in error. 
Refer to Appendix B for confidence intervals. 
Table 7:  Coverage Point Estimates (Percent and Dollars) by Stratum 
Transport Type (Stratum)  Point Estimate  Point Estimate 
(Percent in Error)  (Dollars in Error in 
Millions) 
Dialysis Transports (N=158 claims)  27.22 %  $ 47.93 
Nonemergency Transports (N=194 claims)  19.59 %  $101.33 
Emergency Transports (N=195 claims)    6.67 %  $71.05* 
All Transports (N=547 claims)  12.84 %  $220.31 
Source:  OIG Analysis of CY 2002 ambulance claims data from the National Claims History Database, 2004.  
* Relative precision exceeds 50 percent.  See Appendix A for confidence intervals for 
select statistics. 
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Dialysis transports had a 27-percent coverage error rate. Our medical 
reviewers determined that 27 percent of ambulance transports to or 
from dialysis facilities did not meet Medicares coverage criteria, 
resulting in an estimated $48 million in improper payments.   
The ongoing and repetitive nature of dialysis treatment makes 
transports to and from such treatment vulnerable to abuse. For 
instance, physicians or other health care providers may sign a PSC 
initiating a standing order for ambulance transport valid for 60 days.  
This ensures that persons with end-stage renal failure requiring 
dialysis treatments (usually three times a week), and whose condition 
warrants ambulance transport receive the service.  While the condition 
of some patients warrants repetitive, scheduled ambulance transports 
for dialysis treatment, many dialysis transports do not meet coverage 
criteria. 
Nonemergency transports had a coverage error rate of 20 percent. 
Nonemergency ambulance transports (not including dialysis trips) had a 
coverage error rate of 20 percent resulting in an estimated $101 million 
in erroneous payments. These transports accounted for most of the 
money we estimate was paid due to coverage errors. Nonemergency 
transports have a lower error rate than dialysis transports, but account 
for the higher estimate of erroneous payments because of their higher 
volume. 
Our medical reviewers expressed concern that ambulance vehicles are 
being misused as taxis or to facilitate transfers into and out of vehicles.  
Here is an example of this misuse of ambulance services recounted by 
our medical reviewers: 
Pt [patient] had no ongoing assessment requirements 
during transport. Assist available at hospital & SNF 
[skilled nursing facility] to transfer patient.  Stretcher van 
would have been adequate based on patients ability to 
self-propel wheelchair and the trip being only 1 mile.   
This patient could have been transported in an alternative vehicle, but 
because he or she required assistance getting into and out of the vehicle, 
an ambulance was used to provide the necessary lift service.  The 
coverage criteria, pursuant to section 1861(s)(1) of the Act, are clear 
that the need for transfer does not warrant an ambulance. 
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Emergency transports had a coverage error rate of 7 percent.  Emergency 
transports had the lowest coverage error rate and accounted for an 
estimated $71 million* paid due to coverage error.  The estimate of 
dollars paid in error for emergency transports is higher than the 
estimate for dialysis transports due to the higher volume of emergency 
transports and the higher reimbursement for emergency transports. 
Almost 60 percent of all ambulance claims processed in CY 2002 were 
for emergency transports.  
Emergency transport coverage errors were typically due to 
discrepancies between ambulance supplier documentation and third-
party provider documentation.  One example, noted by our medical 
reviewers, involved a situation in which the ambulance supplier 
documentation listed a slip and fall, but the third-party provider 
documentation (emergency room records) made no mention of such an 
incident.  This discrepancy led our reviewers to conclude that the 
ambulance transport was not warranted.   
Beyond discrepancies in documentation, our reviewers found few 
problems with the Medicare contractors decisions to pay the emergency 
ambulance claims in our sample.  The definition of an emergency is 
based on the response phase of the call (e.g., from firehouse to scene).  
These runs (911 calls) are generally considered emergencies.  In some 
cases the ambulance supplier understood the call to be an emergency, 
although the actual ambulance trip (from scene to hospital) was not. An 
example of this situation is reflected in the following scenario recounted 
by our medical reviewers: 
. . . an elderly woman notified her daughter she bumped her 
head on the bathtub and had a headache, the daughter 
suspects a head injury and calls an ambulance. On 
evaluation at the emergency department, the patient is 
found to have no significant problems and is referred to her 
primary care physician. 
In such cases, our medical reviewers applied Medicares policy and did 
not overturn the decision to cover the transport. 
* Relative precision exceeds 50 percent.  See Appendix A for confidence intervals for 
selected statistics. 
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Of all transports that met Medicares coverage criteria, 9 percent did not 
meet the level of service billed, resulting in an additional estimated  
$31 million in improper payments 
Nine percent of the transports that met coverage criteria were billed at 
a more intense level of service than was medically necessary.  Pursuant 
to section 1862(a)(1) of the Act, Medicare pays only for the category of 
service provided and then only when the category of service is medically 
necessary. 
One example, noted by our medical reviewers, involved a patient 
transferred from a skilled nursing facility to a hospital.  The ambulance 
crew noted that the patient was combative at the scene and had other 
conditions that warranted an ambulance transport.  However, vitals 
were not taken, no interventions were required, and the transport was 
documented as uneventful.  This transport should have been paid at the 
BLS level but was paid at an ALS level. 
Level of service error rates varied little across dialysis, nonemergency, 
and emergency transports.  While differences in coverage error rates for 
the various types of ambulance transports were statistically significant, 
there was little difference between them concerning level of service. 
Despite little difference in level of service error rates, almost $21 million 
of the overpayments resulting from such errors was for emergency 
transports because these types of transports are paid at a higher rate. 
Five percent of transports lacked documentation, representing an estimated 
$150 million in improper payments 
Transports for which ambulance suppliers did not submit 
documentation to our office accounted for 5 percent of the overall errors.  
In all but one of these instances, ambulance suppliers did not respond to 
our multiple requests for documentation.  In that one instance, an 
ambulance supplier had no record of conducting the transport in our 
sample and could not locate documentation for it. 
Contractor safeguards are insufficient to  Despite prior OIG 
identify and prevent improper payments for  recommendations to address 
ambulance program safeguard 
ambulance transports 
issues, Medicare mandates very 
few specific safeguards to prevent improper ambulance payments. 
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Contractors use few prepayment edits consistently 
Four of the twenty-three contractors we interviewed screened 100 
percent of their ambulance claims before they were paid.  These four 
contractors held a total of eight jurisdictional contracts (contracts 
representing different areas or States).  Five of these contracts were for 
Part A contract jurisdictions with relatively low ambulance claim 
volume, and three were for Part B contract jurisdictions.  One contract 
jurisdiction had no prepayment edits in place specifically for ambulance 
claims and another had edits in place only for paper claims.  
Most of the prepayment edits reported by contractors are automated 
and result in a suspended or an automatically denied claim.  Some of 
the suspended claims are subjected to further manual review, as 
discussed later in this report. 
Table 8 lists prepayment edits that contractors reported using in  
CYs 2001 and 2002 specifically for ambulance claims.  The edits are 
listed by the number of contract jurisdictions (n=73) with the specific 
edit in place rather than by the number of contractors (n=23) that used 
the edit.  Contractors may hold more than one contract with CMS to 
process Medicare claims, and not every contract has the same edits in 
place. 
Table 8:  Prepayment Edits Used in CYs 2001 and 2002 
Types of Edits Used  Number of Contracts 
With Edits (N=73) 
Origin/Destination (i.e., hospital to hospital, nursing home to  37 
physicians office, dialysis facility to emergency room, all 
dialysis transports) 
Mileage  27 
Other (e.g., all ALS transports, all nonemergency transports,  19 
certain modifiers, condition codes, valid contracts between 
ambulance suppliers and hospitals) 
Air Ambulance Transports  13 
Zip Code  12 
Certain HCPCS and Revenue Codes  10 
Missing Information  8 
Certain ICD-9 Codes/Diagnoses  8 
Frequency of Transports  4 
Specialty Transports  5 
Multiple Patient Transports  4 
Round-Trip Transports  3 
Source:  OIG analysis of contractor interview data, 2004. 
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Fewer than half of the contractors interviewed reported conducting 
postpayment reviews of ambulance claims 
Medicare does not specifically require postpayment reviews of 
ambulance claims.  Contractors decide the degree to which postpayment 
reviews are conducted and which services or providers/suppliers to 
target. Only 11 of 23 contractors reported conducting postpayment 
review of ambulance claims.  One contractor reported conducting   
53 such reviews.  Another small contractor was instructed by CMS to 
conduct postpayment reviews of ambulance transports to dialysis 
facilities due to widespread problems identified.  This contractor 
conducted 70 reviews during our review period.  The majority of 
contractors reported conducting only one or two reviews in CYs 2001 
and 2002.    
There are no uniform requirements regarding documentation that should be 
reviewed when conducting prepayment or postpayment review of 
ambulance transports 
Medicare requires ambulance suppliers, as most other billers, to submit 
only the claim form (CMS-1500 or UB-82) for payment.  The claim form 
contains general billing information needed for all types of claims (e.g., 
patient identifier information), the origin and destination of the 
ambulance transport, mileage, the general condition of the patient, and 
the type of service provided (ALS, BLS, etc.).26 
Ambulance suppliers are not required to submit the trip ticket or the  
PCS with the claim. While the trip ticket varies by ambulance supplier, 
it describes in more detail the circumstances of the trip and the 
condition of the patient.  Contractors do not consistently request this 
documentation when conducting prepayment or postpayment reviews of 
ambulance transport claims.   
In only 13 of 73 contract jurisdictions did contractors report requesting 
third-party medical records to determine whether the transport met 
coverage and level of service guidelines.  In nine of these instances, 
contractors report rarely or sometimes, but usually not requesting 
the third-party medical record.  
Of those requesting third-party medical records, contractors reported 
that they were not always successful in obtaining them.  Contractors 
also reported problems with the sufficiency of documentation provided 
by ambulance suppliers and third parties.  Our medical reviewers, as 
well as two contractors, noted concerns regarding the insufficient 
amount of documentation submitted by dialysis facilities.  Our 
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reviewers noted that information provided was very brief and did not 
adequately describe the condition of the patient.  Dialysis facilities 
generally maintain progress notes or social worker notes that describe 
the condition of the patient in detail, but these were often missing.  
Our medical reviewers found it essential to obtain third-party 
documentation to determine the appropriateness of ambulance 
transports.  They found that the additional amount of documentation 
reviewed, particularly that from third parties, increased their ability to 
determine whether ambulance transports met coverage criteria.  Our 
medical reviewers reported that making a determination of coverage 
depended on a synthesis of information from various sources. A review 
based on a single source could result in an inaccurate determination or 
no determination at all. 
Chart 1 illustrates the effect documentation has on determining 
coverage of ambulance transports. 
Chart 1: 
100% 
Medical Review 
Determinations by  90% 
Level of 
80% 
Documentation 
Reviewed.  70% 
60% 
50% 
40% 
30% 
20% 
10% 
0% 
1 (n=616)  2 (n=616)  3 (n=547) 
Level of Documentation 
Covered  Not Covered  Unable to Determine 
Source:  OIG analysis of medical reviewer determinations, 2004. 
The trend shows that, as the amount of documentation increased, the 
number of claims for which our reviewers were unable to determine 
whether the claim met coverage criteria decreased and the number of 
noncovered claims increased.  Most of the transports reviewed at   
Level 1 (based solely on contractor documentation) resulted in an 
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inability to make a coverage determination.  Based on a Level 2 review 
(contractor and ambulance supplier documentation), the number of 
claims the reviewers were unable to make a determination about 
decreased and reviewers began to identify more noncovered transports.  
The Level 3 review (contractor, ambulance supplier, and third-party 
provider documentation) resulted in even fewer claims for which our 
reviewers were unable to make a coverage determination and still more 
noncovered transports.  
Obtaining records from third-party providers could help expose cases of 
document tampering by ambulance suppliers that could uncover cases of 
fraud or abuse.  For example, on March 17, 2005, an ambulance 
company was sentenced to 5 years probation and was ordered to 
provide community service following its conviction in a Federal fraud 
case.27  Earlier this ambulance company had agreed to pay $1.6 million 
to settle allegations that the company submitted false claims to 
Medicare and entered into a corporate integrity agreement to settle 
charges that it instructed its EMT and paramedic staff to omit 
information from ambulance records regarding patients ambulatory 
status. The claims were for noncovered, nonemergency transports for 
dialysis treatment.28  Also in October 2004, a hospital company, three of 
its hospitals, and an ambulance company agreed to pay $20 million to 
settle allegations that they falsified PSCs to obtain reimbursement from 
Medicare for ambulance transports that did not meet Medicares 
program requirements.29 
Beneficiaries, third-party providers, and physicians, unlike ambulance 
suppliers, receive little or no information regarding Medicare requirements 
for ambulance transports 
In anticipation of the new ambulance fee schedule implemented in  
April 2002, contractors issued numerous program memorandums to the 
ambulance supplier community.  To date, contractors have issued more 
than 600 such memorandums to the ambulance supplier community. 
These provider bulletins cover a wide variety of subjects ranging from 
policy changes, billing instructions, and clarifications, to other types of 
educational information. 
However, little or no effort has been made to educate beneficiaries, 
physicians, or medical facilities about coverage and level of service 
issues affecting ambulance transports.  Eleven of seventy-three contract 
jurisdictions reported conducting training for hospitals, seven reported 
training physicians, two reported offering training to dialysis facilities, 
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and none reported providing information to nursing homes. In seven 
contract jurisdictions, contractors reported making educational contacts 
with beneficiary groups regarding ambulance coverage issues. 
The majority of contractors reported that educational activities targeted 
at Medicare beneficiaries were limited due to reductions in outreach and 
education budgets. Two contractors further commented that CMS 
believed that information regarding coverage of ambulance services 
contained in the Medicare and You Handbook (the beneficiary 
handbook issued each year) was sufficient and further beneficiary 
education was not needed. 
Lack of education may contribute to initiation of improper ambulance 
transports by third-party providers 
Third parties who request nonemergency ambulance transports may not 
be aware of Medicare requirements for nonemergency ambulance 
transport. When a health care facility is the origin of the ambulance 
trip, it is unlikely that the beneficiary called for the ambulance 
transport. In these situations, a clinical judgment must be made to 
determine whether the patients condition meets the requirements for 
nonemergency transport. This decision is usually made, out of 
necessity, by the health care facility staff rather than the patient. 
Our analysis of noncovered transports found that 63 percent of them 
originated from a third-party facility such as a hospital, nursing home, 
dialysis facility, or physicians office. The remaining 37 percent 
originated from a residence or the scene of an accident. This is in 
contrast with covered transports, of which roughly 50 percent originated 
from a third-party facility and 50 percent from a residence or scene of 
accident. Of all transports, 57 percent originated at a third-party 
facility. 
The lack of education afforded third-party providers regarding 
ambulance coverage guidelines may contribute to improper use of 
nonemergency transports. Our medical reviewers expressed concern 
that ambulances were being used as taxis or to facilitate transfers of 
patients into and out of vehicles as a convenience rather than out of 
medical necessity. Medicares guidelines for coverage of nonemergency 
ambulance transports are clear. The benefit should not be used for 
convenience, nor is availability of other types of transportation options a 
criterion for coverage.30 
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  R E C O M M E N D A T I O N S  

Since our previous work in this area, ambulance transport error rates 
have fallen, although nonemergency transports and transports to or 
from dialysis facilities continue to be problematic.  Based on our current 
findings and the estimated $402 million paid in error in CY 2002, we 
believe there continues to be a need for increased efforts to prevent 
improper payment of ambulance claims, particularly the dialysis and 
nonemergency transports that are at the greatest risk for error.  
Currently, contractors have inadequate safeguards to detect and 
prevent improper payments for specific types of ambulance transports, 
and neither CMS nor the contractors are adequately educating staff of 
third-party providers about Medicares coverage rules for ambulance 
transports.  Based on these findings, we offer the following 
recommendations.  CMS should: 
Implement Program Integrity Activities Designed to Reduce Improper 
Payments for Ambulance Transports at Greatest Risk for Error 
Consider instructing all Medicare contractors to implement prepayment edits 
that target dialysis and nonemergency ambulance transport claims.  We are 
sensitive to the fact that contractors must work within claims 
processing budgets and must be judicious in conducting additional 
reviews of claims.  Therefore, we are not recommending prepayment 
review of all ambulance claims, although some contractors are currently 
doing this. Rather, we urge CMS to instruct contractors to consider 
adding prepayment edits that would scrutinize more closely claims 
where the trip origin or destination was a dialysis facility, or other 
nonemergency transports involving a hospital, nursing home, or 
physicians office. 
Instruct contractors, when conducting a postpayment medical review, to obtain 
documentation from ambulance suppliers and third-party providers to 
determine if the transport meets program requirements.  As indicated in our 
findings, contractors do not consistently obtain documentation from the 
ambulance supplier and from at least one provider associated with the 
transport (the origin or destination facility).  We found this information 
to be necessary to determine the appropriateness of the transport. 
Direct contractors to educate medical facilities that initiate ambulance 
transports about the appropriate use of Medicares nonemergency ambulance 
transport benefit.  Information similar to that sent to ambulance suppliers 
should be sent to nursing homes, dialysis facilities, hospitals, and 
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physicians instructing them on when it is appropriate to use an 
ambulance for nonemergency transports.  The issue of beneficiary 
liability (i.e., the fact that should the transport be paid, and later 
denied, the beneficiary is liable for any overpayment unless he or she 
lacks constructive knowledge that the service is not covered) should also 
be discussed in these informational documents. 
Once education of third-parties has been completed, CMS may want to 
examine whether third-party providers continue ordering noncovered 
ambulance transports. There is no incentive for third-party providers 
not to call an ambulance in nonemergency situations, especially when 
other suitable transportation options (e.g., stretcher or wheelchair van) 
are not available or difficult to arrange.  If a problem still exists after 
educating third parties, we suggest that CMS examine existing 
departmental authorities that may permit CMS to take appropriate 
administrative actions against providers that demonstrate a pattern of 
improper use of the nonemergency ambulance benefit.  If appropriate, 
suspected fraudulent and abusive providers should be referred to OIG. 
In addition to these recommendations, we have forwarded information 
on noncovered, miscoded, and undocumented services identified in our 
sample to CMS for appropriate action. 
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
CMSs comments are summarized below and included in their entirety 
as Appendix D. 
CMS concurred with our recommendations.  CMS indicated that it will 
advise all contractors to consider implementing prepayment edits for 
trips with an origin or destination modifier for a dialysis facility, as well 
as nonemergency transports to and from a hospital, nursing home, or 
physicians office.  In addition, CMS noted that it will encourage 
contractors to consider obtaining documentation from ambulance 
suppliers and third-party providers to determine that ambulance 
transports meet program requirements on postpayment review.  CMS 
also stated that it plans to encourage Medicare contractors to consider 
educating suppliers and third-party providers who initiate ambulance 
transports about the appropriate use of Medicares nonemergency 
ambulance transport benefit. If education proves ineffective, 
contractors should then determine if they can take administrative 
action and refer any potentially fraudulent or abusive providers to OIG. 
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CMSs comments did not warrant any revisions to the results of our 
review or our recommendations. 
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  E N D N O T E S  

1	 Medicare Ambulance Payments:  A Framework for Change.  U.S. 
Department of Health and Human Services, Office of Inspector 
General, April 1999. 
2	 BBA  4531(b)(2) added  1834(l) of the Social Security Act. 
3	 CMS Parts A and B ambulance claim files for CY 2002. 
4	 Social Security Act  1861(s)(7) and 42 CFR  410.40 and 410.41. 
5	 Medicare Part B Reference Manual, September 2001, Appendix F:  
Ambulance Billing Guide. 
6	 42 CFR  410.40(d)(1). 
7	 42 CFR  410.40(d)(2)(3). 
8	 The Medicare Ambulance Benefit - Statutory Bases for Denial of 
Claims, prepared by CMS, July 10, 2003. 
9	 42 CFR  410.40(b). 
10	 Medicare Part B Reference Manual, September 2001, Appendix F:  
Ambulance Billing Guide. 
11  42 CFR  410.40(3)(v) and Medicare Claims Processing Manual, 
Chapter 26:  Completing and Processing Form CMS-1500 Data Set. 
12	 BBA  4531(b)(2). 
13	 42 CFR  414.615. 
14	 Social Security Act  1834(l)(10)-(13). 
15	 Social Security Act  1893(a)-(b).  See also CMS web document at 
http://www.cms.hhs.gov/providers/psc/pscwebp2.asp. 
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16	 Medicare Claims Processing Manual (Pub. 100-04), Chapter 15: 
Ambulance, sections 30.1.2 and 30.2.1 F. 
17	 Medicare Claims Processing Manual (Pub. 100-04), Chapter 15: 
Ambulance, section 30.2.1 F. 
18 The Medicare Medical Review ProgramPay It Right, 
http://www.cms.hhs.gov/providers/mr/default.asp, accessed       
October 18, 2004. 
19 Medicare Claims Processing Manual (Pub.100-04) Chapter 15:  
Ambulance, Section 30.2. 
20 Medicare Medical Review Program, 
http://www.cms.hhs.gov/providers/mr/default.asp, accessed       
October 18, 2004. 
21 Social Security Act  1842(a)(1)(C). 
22 Medicare Medical Review Program, 
http://www.cms.hhs.gov/providers/mr/default.asp, accessed       
October 18, 2004. 
23	 According to the document entitled The Medicare Ambulance 
BenefitStatutory Bases for Denial of Claims, 
. . . beneficiaries are liable for denial for ambulance claims under 
1861(s)(7).  Nevertheless, that fact does not abrogate any other 
protections from financial liability that the beneficiary may have, e.g., 
the beneficiary cannot be charged when a provider agreement is 
violated in some circumstances (see 42 CFR  489.21(b) regarding 
failure to submit proper claims) or instances in which a waiver of 
recovery for overpayments applies (see  1870, 1879, and 1842(l)).  
There are also protections against fraud, abuse, substandard care, 
quackery, etc. (See title XI,  1128A(a)(1)(E). 
24	 Medicare Claims Processing Manual, Chapter 30:  Financial Liability 
Protections. 
25	 CMS Program Memorandum AB-03-106, July 25,2003. 
  OEI-05-02-00590  MEDICARE PAYMENTS FOR AMBULANCE TRANSPORTS  28  Report Template Version  = 03-01-05_rev.07  
26	 CMS Publication 100-04Medicare Claims Processing.  Transmittal 
459, February 4, 2005. 
27	 Norwich Ambulance Company Pleads Guilty to Federal Health Care 
Fraud Charge.  Press Release:  United States Attorneys Office, 
District of Connecticut, October 19, 2004. 
28	 Norwich Ambulance Company Sentenced on Federal Health Care 
Fraud Case.  Press Release:  United States Attorneys Office, District 
of Connecticut, March 18, 2005. 
29	 Hospital, Ambulance Firms Agree to Pay $20 Million in False 
Certifications Case.  BNA Health Care Daily Report, Volume 9 
Number 209, October 29, 2004. 
30	 Medicare Part B Reference Manual, September 2001, Appendix F:  
Ambulance Billing Guide. 
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  A P P E N D I X   ~   A  
Confidence Intervals for Selected Statistics 
 Confidence Intervals for All Errors by Type of Transport 
Error Estimates  Dollar Estimates 
Transport Type  Point Estimate  Upper 95  Lower 95  Point Estimate  Upper 95  Lower 95 
All Transports (N=582)  24.77%  28.57%  20.97%  $401,691,827  $483,038,776  $320,344,878 
Dialysis (N=170)  37.65%  44.94%  30.36%  $  66,391,695  $  83,534,318  $  49,249,072 
Nonemergency (N=208)  30.77%  37.06%  24.48%  $172,908,954  $222,029,291  $123,788,617 
Emergency (N=204)  19.12%  24.53%  13.71%  $162,391,178  $224,926,361  $  99,855,995
 Confidence Intervals for Coverage Errors by Type of Transport 
Coverage Error Estimates  Dollar Estimates 
Transport Type  Point Estimate  Upper 95  Lower 95  Point Estimate  Upper 95  Lower 95 
All Transports (N=547)  12.84%  15.68%  10.00%  $220,305,387  $275,437,008   $165,173,766 
Dialysis (N=158)  27.22%  34.18%  20.26%  $ 47,925,942  $ 62,716,223  $ 33,135,661 
Nonemergency (N=194)  19.59%  25.20%  13.98%  $101,334,064  $134,524,689  $ 68,143,440 
Emergency (N=195)  6.67%  10.18%  3.16%  $ 71,045,381  $112,507,721  $ 29,583,041
 Confidence Intervals for Level of Service Errors by Type of Transport 
Level of Service Error Estimates  Dollar Estimates 
Transport Type  Point Estimate  Upper 95  Lower 95  Point Estimate  Upper 95  Lower 95 
All Transports (N=453)  8.72%  12.18%  5.78%  $31,499,975  $43,895,645  $19,104,305 
Dialysis (N=115)  7.83%  12.30%  2.91%  $ 3,707,973  $ 8,782,333  $               0 
Nonemergency (N=156)  7.69%  11.79%  3.50%  $ 7,080,050  $12,394,118  $ 1,765,982 
Emergency (N=182)  9.34%  13.46%  5.11%  $20,711,951  $30,695,147  $11,728,755
  Confidence Intervals for Documentation Errors by Type of Transport 
Documentation Error Estimates  Dollar Estimates 
Documentation Type  Point Estimate  Upper 95  Lower 95  Point Estimate  Upper 95  Lower 95 
All Transports (N=582)  5.44%  7.46%  3.42%  $149,886,465  $213,136,543  $86,636,386 
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  A P P E N D I X   B  
Significance Tests for Selected Statistics 
 Comparison of Coverage Error Rates by Type of Transport (N=582) 
Transport Type 
Error Rates 
P value 
Target Transport Type Comparison Transport Type 
Target  Comparison  Point Estimate  Point Estimate  Chi-Square 
Dialysis  Nonemergency  27.22%  19.59%  0.1176 
Dialysis*  Emergency  27.22%  6.67%  0.0000 
Nonemergency*  Emergency  19.59%  6.67%  0.0001 
Bonferroni threshold = 0.016667 
* Differences in error rates are statistically significant at the 0.05 level. 
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  A P P E N D I X   ~   C  
Medical Reviewer Coverage Determinations by Documentation Level 
All Transports 
Coverage Determination  Level 3 Documentation   Level 2 Documentation  Level 1 Documentation 
(N=547)  (N=616)  (N=616) 
Not Covered    12.84%   4.51%     0.16% 
Covered    79.71%   73.22%   25.01% 
Unable to Determine      7.45%   22.27%   74.84%
     Total  100%  100%  100% 
Dialysis Transports 
Coverage Determination  Level 3 Documentation  Level 2 Documentation  Level 1 Documentation 
(N=158)  (N=190)  (N=190) 
Not Covered    27.22%   5.26%   0.00% 
Covered    40.51%   37.89%   10.53% 
Unable to Determine    32.28%   56.84%   89.47%
     Total  100%  100%  100% 
Nonemergency Transports 
Coverage Determination  Level 3 Documentation  Level 2 Documentation  Level 1 Documentation 
(N=194)  (N=209)  (N=209) 
Not Covered     19.59%   5.74%     0.48% 
Covered    72.16%   58.37%   14.83% 
Unable to Determine      8.25%   35.89%   84.69%
     Total  100%  100%  100% 
Emergency Transports 
Coverage Determination  Level 3 Documentation  Level 2 Documentation  Level 1 Documentation 
(N=195)  (N=217)  (N=217) 
Not Covered    6.67%     3.69%     0.00% 
Covered    90.26%   87.56%   33.18% 
Unable to Determine      3.08%     8.76%   66.12%
     Total  100%  100%  100% 
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  A P P E N D I X   ~   D  

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A P P E N D I X   ~   D  

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A P P E N D I X   ~   D  

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  A C K N O W L E D G M E N T S  

This report was prepared under the direction of William C. Moran, 
Regional Inspector General for Evaluation and Inspections in the 
Chicago regional office, and Ann Maxwell, Assistant Regional Inspector 
General. Other principal Office of Evaluation and Inspections staff who 
contributed include: 
Marco Villagrana, Project Leader 
Erin Guay, Lead Analyst 
Suzanne Bailey, Intern 
Natalie Coen, Program Analyst 
Seema Dargar, Intern 
Tom Komaniecki, Program Analyst 
Jocelyn Moore, Intern 
Margarita Rodriguez, Program Inspections Assistant 
John Traczyk, Program Analyst 
Doris Jackson, Program Specialist 
Tricia Davis, Director, Medicare and Medicaid Branch 
Technical Assistance  
Barbara Tedesco, Mathematical Statistician 
Robert Gibbons, Program Analyst 
Gerius Patterson, Program Analyst 
OEI-05-02-00590  MEDICARE PAYMENTS FOR AMBULANCE TRANSPORTS  36