. . .
MEDICARE PART B AMBULANCE SERVICES

t""- S'tIl"VI Cl"

'0 
q"clm 
OFFICE OF INSPECTOR GENERAL 
OFFICE OF ANAL YSIS AND INSPECTIONS 
MARCH 1987
 MEDICARE PART B

AMULANCE SBRVICES 
KUSSEROW  MACH 1987 
RICHAD  P. 
INSPECTOR GBBERA 
OAI-03-86-0D012  TABLE OF CONTENTS 
Executi ve Sumary 
II. 
Introduction 
III. 
Findings 
IV.  Recommendations 
v..  Appendices  .. .
EXEUTIVE SUMMY 
Medicare Part B covers ambulance services to a hospi tal, 
nursing home or the patient' s home  only if other means

of transportation wouldJ e.n danger the beneficiary s health"

232 (i) (2) 
(42 CFR 405.  Payment is based on customary and
prevailing rates in an area. 
trip.  A base rate is paid for each
Additional charges may be allowed for mileage, 
trips. 
oxygen, waiting time, and night or emergency 
During 
1986, the Office of Inspector General, Office of 
Analysis and Inspections, conducted a national inspection of

Medicare Part B ambulance services. The inspection was con

ducted in response to concerns that Medicare may be paying

services. 
unreasonably high amounts for ambulance 
determine: 
The purposes of the inspection were to  1) why 
rapidly; 
Medicare costs have grown so  2) how to control
costs; 
3) whether public entities can be expected to shift
addi tional costs to Medicare in the future; and 4) the 
impact of Advanced Life Support (ALS) coverage on Medicare

costs. 
The inspection found that Part B ambulance costs have risen

at an average rate of over 20 percent annually since 1974. 
Data on the extent to which the increase has resulted from

increased utilization is not available. However, we

identified several other major reasons for this rapid cost
escalation: 
1) inability of the reasonable charge 
methodology to control increases in supplier charges; 
2) higher State and local emergency medical services (EMS)
standards 
resulting in part from Federal legislation; 
3) a shift of public  provider costs for emergency ambulance

services to Medicare; and 4) lack of an economic index cap 
on reimbursement increases for ambulance services prior to 
October 1, 1985. 
We found that most of the shift of public provider expenses 
for ALS services to Medicare has already occurred. 
addi tion, local regulation of EMS has helped control Medicare 
costs in some areas. Where local governments set ambulance 
low. 
rates, Medicare prevailings remain  Local subsidies for 
emergency (911) services reduce Medicare ALS costs in some
areas. - Overall, the 
extension of Medicare coverage to ALS
in 1982 has not had a signif 
icant effect on costs. 
The inspection found dramatic variation among carriers in 
services. 
prevailing charge rates and coverage for ambulance 
For example, 1984 basic life support (BLS) prevailings 
ranged from $60 to $115, while ALS prevailings ranged from 
$90 to $275. Some carriers pay extra for every mile the 
patient is transported, while others do not allow mileage 
within defined local limits. Mileage allowances range from  $2 to $6. 50 per mile. While most carriers pay extra for

emergency and night trips, a few do not. Oxygen rates range

from $7 to $25. 
The inspection found that Medicare is paying too much for 
ambulance services. Medicare pays more than the Veterans

Administration 
(VA), health maintenance organizations 
(HMOs), and hospitals for BLS services. These purchasers 
use competitive bidding to obtain low rates for BLS ambu
lance transportation. VA hospitals contract with amulance 
suppliers for BLS services at rates approximately 25 percent 
lower than comparable Medicare rates.

One Medicare carrier has applied its inherent reasonableness 
8 percent. If all
authori ty, achieving annual savings of 15.
carriers were to reduce rates by 15. 8 percent, Medicare
could save $ 
69 million annually. 
We identified 18 major American cities which provide

emergency ambulance transportation through competitively 
awarded contracts with private companies. Some of these 
arrangements have been in effect for five years or more, 
wi th no reduction in the quality of care provided to

tients . 
pa 
Our draft report contained two recommendations: to require

carriers to use their inherent reasonableness authority to

limit ambulance charges, and to seek legislative authority

to allow carriers to use competitive bidding to set

ambulance reimbursement rates (the VA approach).

Comments on the draft were received from the Health Care 
Financing Administration (HCFA) and the American Ambulance
Association (AA). 
Both respondents generally supported the 
concept of inherent reasonableness but were concerned about 
the specific method and factors to be used in determining 
the reasonableness of ambulance charges. The AA offered 
assist HCFA in arriving at the specific factors to apply. 
Nei ther HCFA nor the AA agreed with our recommendation on 
bidding. 
competi ti ve  Both respondents indicated that while 
this approach would be appropriate for non-emergency BLS
transportation 
, competitive bidding by Medicare might reduce 
the timeliness, availability and quality of care provided to 
Medicare beneficiaries in emergency situations. We recognize 
that more research may be needed to insure continued high 
quali ty and timeliness of emergency medical transportation 
received by Medicare beneficiaries. Therefore, we have 
revised our recommendations to include seeking competitive
bidding authority for BLS transportation, followed by 
transportation. 
consideration of a similar approach for ALS 
ii
 .. .
II. 
INTRODUCTION

Medicare Part B covers ambulance services to a hospi tal, 
nursing home or the patient' s home, and  only if other 
means of transportation would endanger the beneficiary
health"  232(i)(2)). 
(42 CFR 405.  Payment is based on 
customary and prevailing rates in an area. A base rate is 
paid for each trip. Additional charges may be allowed for 
trips. 
mileage, oxygen, w iting time, and night or emergency 
basic life 
Most of Medicare s ambulance costs are for "
support  ambulances, which perform scheduled or 
(BLS) a 
nonscheduled transfers of nonambulatory patients to or from 
their homes, hospi tal or nursing home, at the time 
hospi tal admission or discharge, or for scheduled therapy. 
BLS ambulances are staffed by emergency medical technicians 
(EMTs). Most BLS services are provided by private ambulance
companies. 
In 1982, Medicare extended coverage to include "advanced 
life support (ALS)" ambulance service. ALS ambulances are 
actually mobile intensive care units, staffed with highly
trained paramedic personnel and equipped with speciali zed

equipment for use in life-threatening situations, such as 
highway accidents or cardiac arrests. ALS units respond to 
with local 
911 emergency calls and are typically associated 
fire departments or rescue squads. A detailed description 
of different levels of medical transportation appears at
Appendix A. 
Part B reimbursement for ambulance services has increased 
decade. Total 
dramatically over the past  1974 expenditures 
of $34 million grew to over $350 million in 1985. At an 
average annual increase of more than 20 percent, ambulance 
costs have grown faster than most other Part B services, and 
inflation. 
far faster than the rate of 
country. In
Reimbursement rates vary widely across the 
1984, the average cost per claim ranged from $55 in 
Tennessee to $175 in northern California, with a mean of
$106. 
This inspection was conducted in response to concerns that 
Medicare may be paying unreasonably high amounts for ALS and 
routine short-distance BLS ambulance trips. In addition, 
rapid cost escalation has called into question the 
appropriateness of the reasonable charge methodology in 
determining ambulance reimbursement. 
The purpose of this inspection was to determine: 1) why 
rapidly; 
Medicare costs have grown so  2) how to control
costs; 
3) whether public entities can be expected to shift
addi tional costs to Medicare in the future; and 4) the 
impact of ALS coverage on Medicare costs.  The inspection was conducted in California, Flor 
ida, New 
York , Pennsyl vania, Michigan, Ohio, Texas and Massachusetts, 
where more than half of Medicare ' s total ambulance costs are
incurred. 
Contacts included 9 Medicare carriers, 15 State 
and local emergency medical services agencies, 51 ambulance
suppliers (ci ty f ire and rescue services, pr i vate companies, 
and volunteer fire departments), 50 purchasers of ambulance
transportation (VA hospitals, heal th maintenance organi za
tions and hospi tals), and the Amer ican Ambulance 
Association. 
-2
 ----
III. 
FINDINGS 
WHY HAVE AMBULANCE COSTS RISER SO DRATICALLY? 
Part B ambulance costs have risen at an average annual rate 
1974. 
of over 20 percent since  Data are not available on 
the extent to which the increase is attributable to 
increased utili zation. However, the inspection identif ied 
four other major factors which have contributed to the rapid 
rise in Medicare ambulance costs: 1) inability of the 
reasonable charge methodology to control increases in
supplier charges; 
2) higher EMS standards at every level, 
legislation; 
in large part a response to Federal  3) a shift 
of public provider costs for emergency ambulance services to
Medicare; 
. and 4) no inflationary cap on Medicare ambulance 
increases prior to October l, 1985. 
REASONABLE CHARGE METHODOLOGY HAS RESULTED IN

UNCONTROLLED RATE INCREASES

The Medicare Part B reasonable charge methodology is 
based upon the customary and prevailing charges of
suppliers wi thin a particular 10cality. The prevailing 
charge is intended to limit individual provider 
increases, but over a period of years, the reasonable 
charge methodology has resulted in nationwide annual 
increases in ambulance costs greater than increases in 
most other Part B services, and far in excess of the 
rate of inflation. The following chart shows estimated 
annual increases in Part B ambulance costs since 1974. 
MEDICARE PART B AMULANCE EXPENDITURES 
Estimated Cost 
Year  (in millions)  Percentaqe  Increase 
1974

1975  32.

1976  24.

1977  26.

1978  22.

1979  no est. available  56.

1980  136  (2-year period)

1981  165  21.

Ig82  188  13.

1983  231  22.

1984  248  . 7.

1985  305  23.

1986  385  26.

1987  435  13.

1988  495  13.

Source  F1gures for 1974-83 prov1ded by Bureau of Data 
Management Systems, HCFA, based on 5 percent carrier
sample of claims. Figures for 1984-85 based on HCFA 
Payment_ Record Tables, 100 percent samle. Estimates 
for 1986-88 provided by Office of the Actuary, HCFA. 
-3
 While these figures illustrate the dramatic rise in 
expen
ambulance costs, we believe that actual Part B 
di tures may have been underreported. Approximately $31
million in 
Part B expenditures made by one carrier in 
estimate. 
our sample were not included in the 1985 
tal-
In addition, EMS systems in some areas are hospi 
Medicare through 
based, with ambulance costs billed to 
the cost report. In three of our sample areas, we 
discovered over $4 mil1ion in ambulance costs reimbursed 
basis. 
other 
through cost reports on a reasonable cost 
ci ty or 
county EMS systems may also be claiming 
reports 
ambulance reimbursement through hospital cost 
which are not reflected in the chart above. 
FEDERAL LEGISLATION HAS RAISED COSTS AS WELL AS STANDARDS

direct 
Federal legislation and standards have had a 
services,
impact on the development of emergency medical 
incl uding 
ambulance services, throughout the United
States . 
The National Highway Safety Act of 1966, administered by 
supports State
the Department of Transportation, 
programs to reduce traff 
ic accidents, deaths and
injur ies. 
It has led to upgraded emergency medical 
purchase, 
services at the 10cal level, through ambulance 
training of ambulance attendants and drivers, and 
improved ambulance medical equipment. 
The Emergency Medical Services Systems Act of 1973 
provided a mechani sm for communi ties to establish 
Administered by the 
regular EMS delivery systems. 
Public Health Service, the Act required that federal1y

funded emergency care programs use a systems approach to 
care. 
providing emergency response and medical  The 
approach centered around 15 systems 
components, such as 
transportation,
manpower, training, communications and 
and seven cr i tical patient groups, including acute 
cardiac victims. Now a part of the Preventive Heal 

Services Block Grant, these funds are used by States for

planning, establishing and expanding their EMS systems.

The General Services Administration (GSA) has published

specifications for the design, performance, and 
agencies. 
equipping of ambulances used by Federal  About 
standards 
half of the States have adopted the GSA 
(Federal Specification KKK-A-1822A) as a requirement for

State licensure. Many others have established their own

vehicle standards. 
Today, every State has an EMS office and some type of

Thirty-seven States 
statewide EMS system.  have passed 
EMS laws. In addition to vehicle standards, many States

-4
 requirements. 
have adopted minimum personnel  Some 39 
States are divided into multiple EMS regions served by

local 
councils.. 
The actual delivery of emergency services is usually the

responsibili ty of 10cal governments, which may provide

services directly through fire or rescue departments or

contract with private ambulance companies for emergency

medical transport. In some areas, 10cal units of

government have the authority to set maximu rates for 
ambulance services. Where this has occurred, ambulance

rates tend to be somewhat lower than in areas where rate

effect. 
setting systems are not in 
Since passage of the EMS Services Act, every aspect of

emergency medical services has been upgraded and

improved. 
Emergency medical services are available in 
virtual1y every part of the U. S. Highly trained staff

using state of the art vehicles and equipment can

respond' to any type of medical emergency, providing on-

site treatment and stabilization, then rapid transport

to the hospital, following established medical protocols

and in constant radio communication with a physician

trained in emergency medicine. A new level of service, 
advanced life support (ALS), has been created to provide 
transit. 
emergency life-saving treatment during 
The rise in standards has not been limi ted to ALs 
emergency vehicles and personnel. Basic ambulances are 
constantly being improved and upgraded, and staffing 
qualifications are higher than ever before. 
Improved response times, better equipped vehicles, and 
highly trained staff have all resulted in improved
services to the public. 
They have also resulted in higher 
costs for public agencies, private suppliers, third 
party payers, and consumers. 
LOCAL GOVERNMENTS HAVE SHIFTED EMERGENCY AMULANCE 
COSTS TO MEDICARE 
Emergency ambulance services have tradi tional1y been 
provided . by local fire departments or volunteer fire and
rescue squads. Histor 
ically, these services were fully
financed by 10cal taxes and contributions. 
Declining 10cal revenues coupled with rising operational

costs have caused most public agencies to begin bil1ing

individuals and third party payers for emergency

ambulance transportation. Since public agencies are

largely supported by 10cal tax revenues, fees are 
usual1y set at a low rate designed to help defray costs, 
rather than to cover the actual cost of providing the
service. 
-5
 To save money, a growing number of cities and counties 
contract out their entire EMS systems to the private
sector. 
Several cities visited during this inspection 
had begun submitting bills in the last few years.
Contractors collect fees from individuals and all 
sources. In addition 
available third party  , local 
governments may provide subsidies to defray the cost of 
transporting uninsured individuals who are unable to pay
a fee. 
The inspection found that much of this shift has already
occurred. In  cities, 
a survey of the 100 largest U. S. 
86 indicated that Medicare is being charged for 
emergency ambulance services. Of the remaining 14 who 
do not charge, 3 are considering charging for transport 
in the near future. Some volunteer ambulance companies,
tradi tionally 
providing free ambulance transport, now 
service. 
charge for the  others can be expected to begin 
charging in the future. 
NEW REGULATION WILL LIMIT FUTURE REIMBURSEMENT INCREASES

Historically, reimbursement increases in nonphysician 
Part B services have been exempt from economic index

limi tat ions previously applied to physician services.
Over the years, increased ambulance supplier charges

were fully reflected in higher prevailing charge screens

established by carriers. 
In a f inal 
regulation which became effective October 
1985, such increases are limited by a new factor, the

"inflation-indexed charge, ft representing the reasonable 
charge from the preceding fee screen year pIus an

inflation adjustment factor. This regulation wil1 
control the rate of future increases for ambulance and 
services. 
other Part B nonphysician  However, it does 
not affect increases which took place in prior years. 
ARE MEDICARE AMULANCE COSTS REASONABLE? 
To determine 
the reasonableness of Medicare payments, we 
compared BLS base rates paid by Medicare, private hospitals

and Veterans Administration hospitals in the States we

visited. 
MEDICARE COMPARED WITH HOSPITALS

Under the Prospective Payment System (PPS), Part B no 
longer covers the transfer of a Medicare beneficiary 
between one hospital and another (for treatment or 
tests) if the patient remains an inpatient of the first 
hospi tal. These costs are included in the Part A 
hospi tal payment.  Hospitals have begun contracting with private ambulance

companies to transport these patients, often at a cost

substantially lower than the Medicare prevailing. Here

are several examples:

In a major southwestern city, a private company 
transports patients between a hospi tal and a 10cal
testing center for $35 each way. 
When that patient 
is discharged to home or nursing home, the supplier 
charges Medicare $110. 
In a major city in the northeast  an ambulance 
diagnostic tests 
company transports inpatients for 
under contract for $55 per trip.  The Medicare 
prevailing is $106. 
ci ty contracts 
A company in a west coast  with a 
hospital and an HMO for $64. 50 per trip. Medicare 
allows $ 90. 
These examples illustrate that at least in some areas,

Medicare is paying more for ambulance services than

other large purchasers that have been able to negotiate

contracts with ambulance companies.

ONE CARRIER' 5 EXPERIENCE

The Medicare Carriers Manual (HIM 5246) provides that 
when the use of customary and prevailing charge data 
"inherently
results in payment rates that are not 
reasonable, 
" the carrier should consider other factors
in determining payment. 
HIM 5246 cites several types of
si tuations 
where charges might not meet the inherent 
reasonableness standard. Among those which could apply
to ambulance services are 
charges in a particular 10cali 
ty may be 
substantially out of line with charges in other

I service areas, and the

localities or other carriers 
differences in prices cannot be justified solely on

the basis of economic factors;

sudden increases in charges that cannot be readily

explained by the normal rate of inflation or by

other economic factors or technology; and

charges do not reflect the influence of a
competitive marketplace, i. 
e., the market is 
suppliers. 
dominated" by one or a few 
Empire Blue Shield 
, the carrier serving greater New York 
Ci ty, has used its inherent reasonableness authority to 
services. 
limi t expenditures for ambulance 
-7
 The following chart summarizes the savings achieved by

Empire Blue Shield. A detailed breakdown of savings is

provided at Appendix B.

AMBULANCE SAVINGS BASED ON INHERENT REASONABLENESS 
ty) 
Empire Blue Shield (Greater New York c 
April 1984 - March 1985 
Number  Allowed  Amounts  Savin 
procedure  75th  Inherent  Allowed 
Services  Percentile  Reasonable. 
BLs Base  285, 472  $39, 150, 148  $32, 736, 713  $6, 413, 435  16. 
Rate 
ALs Base  788  260, 365  180, 325  80, 040 
Rate 
Mi leage  591, 437  959, 107  296, 880  662, 227  13. 
Oxygen  35, 793  1 , 145 , 970  966, 411  179, 559  15. 
Other  4, 725  111, 628  96, 193  15, 435  13. 
Services 
TOTALS  $46, 627, 218  $39, 276, 522  $7, 350, 696  15. 
In the one-year period ending March 31,  1985, Empire

Blue Shield saved $ 7. 
4 mil1ion in al10wed charges, and

$5. 9 mil1ion in actual payments for ambulance services.

This represents 15. 8 percent of what would have been

methodology.  Over $ 

paid under the reasonable charge 
million  (87. 2 percent) of the savings resul ted from

lower rates for BLs.

To arrive at an estimate of potential national savings

we applied the percentage of savings achieved by Empire

Blue Shield (15. 
8 percent) to the Office of the Actuary

estimate of Part B expenditures for FY 1987 ($435

calculations, potential

million) . Based on these 
nationwide annual savings of $69 million could be

realized if all carriers saved 15. 8 percent through use

i ty.

of their inherent reasonableness author 
We surveyed all other Medicare carriers to learn whether

they use any means other than the reasonable charge

allowances. Carrier

methodology to set ambulance 
following:

responses revealed the 
Empire Blue Shield is the only carrier which has 
used its inherent reasonableness authority to limi 
services. 
costs for ambulance 
-8 State, limits its 
One carrier, in a northwestern 
allowance for disposable supplies.

AIl other carriers use the reasonable charge
mthodology exclusi vely to determine ambulance 
reimbursement rates. 
Carriers are not aware of rates paid by the VA, 
hospi tals or other major purchasers of ambulance

transportation. 
It is apparent from the Empire Blue Shield experience

that a real opportunity exists for substantial program

savings through application of carriers' inherent

reasonableness authority. 
MEDICARE COMPARED WITH THE VETERANS ADMINISTRATION

Most Veterans Administration (VA) hospitals contract for 
BLs ambulan e services to transport non-ambulatory 
atients between their homes and the hospital for 
Medicare patients 
admission or discharge. As with  , VA
tr ips are  patients, 
usual1y scheduled in advance, and 
not at 
although in need of basic medical attention, are 
high risk.

The following chart sumarizes our findings for six

sample States  where VA hospitals contract with private 
companies and Medicare pays according to prevailing

charges. 
MEDICARE AND VETERANS ADMINISTRATION BASE RATES FOR BASIC LIFE SUPPORT

SIX SAMPLE STATES. FY 85

MEDICARE  VETERANS  Average  MEDICARE  POTENTIAL 
Allowed  Paid  ADMIN.  Savings  Total  ESTIMATED 
Per  Per  Negotiated  Per  Paid  SAVINGS 
STATE  Claim  Cla im  Base Rate  Claim  Claims  (d x e) 
(a)  (b)  (c)  (d)  (e)  Amunt 
California  $ 99.  $79.  $66.  $13.  284, 232  $ 3, 763, 232  16. 
Ohio  91.  72.  44.  28.  165, 661  638, 508  38. 
Texa s  82.  66.  53.  13.  84, 343  117, 545  20. 
Michigan  93.  74.  47.  26.  193, 241  155, 670  35. 
Penneyl vania  106.  85.  56.  28.  284, 752  078, 414  33. 
Massachusetts  119.  95.  85.  230, 614  255, 405  10. 
TOTAL POTENTIAL SAVINGS  $25, 009, 978  24. 
-9
 VA base rate payments ranged from an average of 10. 
percent to 38. 4 percent 10wer than Medicare payments for 
service. If 
the same  Medicare BLS base rates were the 
same as the YA, annual savings in these six States could 
amount to as much as $25 mil1ion for this one procedure. 
State by State comparisons of BLS base rates appear at 
Appendix C. 
The one exception identified was Florida, where VA rates 
approximate Medicare rates; this is because in Florida 
VA hospitals pay on the basis of reasonable and 
i. e., 
customary charges,  they use the Medicare approach. 
As discussed earlier  the one carrier which has used the

inherent reasonableness authority has demonstrated

overall savings of 15. 8 percent over what would have

been paid using the reasonable charge methodology. A

comparison of VA rates with the carrier' s savings based

on inherent reasonableness indicate that even greater

savings could be achieved through use of the VA

competitive bidding approach. 
4 percent in 
As shown below, Empire Blue Shield saved 16. 
inherent 
BLs base rate expenditures through using 
charge
reasonableness rather than the reasonable 
methodology. The rates obtained by VA hospi tals for BLS 
base rate services averaged 42. 5 percent lower than the 
Medicare reasonable charge rates, and 31. 3 percent lower 
inherent 
than the carrier paid through use of 
reasonableness. 
MEDICARE AND VETERANS ADMINISTRATION BASE RATES 
EMPIRE BLUE SHIELD, APRIL 1984 - MACH 1985 
MED ICARE  VETERANS 
REAS. CHARGE INHERENT REAS.  ADMIN. 
AVG. PAID 
PER CLAIM  $ 109. 71  $ 91.  $ 63. 
SAVINGS OVER  $ 17.  $ 46. 
REASONABLE  (16. 4%)  (42. 5%) 
CHARGE METHOD. 
SAVINGS OVER  $ 28. 
(31. 
INHERENT  3%) 
REASONABLENESS 
tional detail. 
See Appendix D for addi 
10
 . ,
We also compared mileage, oxygen and waiting time rates

aid by VA hospitals and Medicare in two sample States. 
The range of payment rates is summrized below, and 
shown in detail at Appendix 
MEDICARE AND VA RATES FOR MILEAGE, OXYGEN AND WAITING TIMES

CALIFORNIA AND TEXAS, FY 85

CALIFORNIA  TEXAS
Item  Medicare  Pays'l  VA Pays  Medicare  Pays  VA Pays 
Mileage  $ 4. 40-$ 5.  $1. 00-$  80-$ 2.  $1.10-$ 
Oxygen  $11 . 20 -$ 23 . 20  $0. 00-$  25.  $ 6. 40-$20.  $0. 00-$25. 
ting
Wai 
Time 
(Der hr.  $22. 40-$70.  $0. 00-$100.  $16. 00-$20.  $0. 00-$60. 
*80 percent of allowed amount

This chart illustrates the dramatic disparity in

payments, within and between two Federal programs, for

i terns and services 
which are essentially identical

across the country. 
The preceding data and discussion 
clearly demonstrate 
that Medicare could achieve annual savings of up to 25 
percent over current ambulance expenditures by adopting 
a competitive bidding approach for BLS transportation
similar to the VA system. Legislation would be required 
to provide carriers with the authority to negotiate
reimbursement rates with suppliers. 
COMPETITIVE BIDDING FOR EMERGENCY TRANSPORTATION

Emergency medical services (EMS) transportation has been 
contracted out through competitive bidding in a number 
of large cities around the country. 
The majority of large cities provide EMS through city

fire or rescue departments. As early as 1981, however,

18 of the nation' s most populous cities were contracting

wi th pr i va te ambulance companies to provide EMS

transportation or had established their EMS transpor

tation systems as "public utilities, " utilizing private

contractors as the primary provider of emergency

ambulance transportation.

11
 While operational details of these systems differ, they

are general1y characterized by centralized dispatch in

response to 911 calls, no call screening or refusals to 
Contract 
transport, and no on-scene collections. 
providers must be f inancially stable, meet State 
requirements for equipment, staffing and adherence to

medical protocols, as well as locally established

response times. 
Journal of Emergency Medical
AS 19e85r svurviecy bey sth e 
indicates that 18 of the nation I s most populous 
es still use private contractors to provide EMS
transportation. 
This would appear to indicate that EMS 
successfully, 
transportation can be contracted out 
wi thout a reduction in timeliness of response or the 
care. 
quality of patient 
WHAT HAS BEEN THE FISCAL IMPACT OF ALS?

In 1982, Medicare recognized Advanced Life Support (ALS) as

a new covered service. Carriers were instructed to 
establish separate prevailing charge screens for ALS and BLS 
base rates. ALS rates are higher than BLS rates, and the 
greatly. 
differences in rates vary 
In one area visited, where EMS is tax supported and rates 
the 
are set by 10cal government, the ALS rate was $90 and 
BLS base rate $70. In another, with no subsidies and no 
local rate setting, the ALS base rate is $275, compared with 
$115. 
a BLS base rate of 
In the States we visited, we identified severa 1 factors

which appear to affect billings for ALS services.

Most private ambulance suppliers provide BLS

transportation exclusi vely. 
Public and private suppliers who have the equipment

and staff needed to provide ALS transportation bil1

for ALS only when this level of service is actually

provided. 
A substantial portion of ALS services is provided 
local public agencies (usually fire and rescue
services). 
These agencies often set 10w rates which 
deliver 
represent only a portion of their costs to 
the service.

Some volunteer and public agencies which provide ALS

services do not bill for the service.

12
 We reviewed carrier data to determine the portion of 
as ALS. 
The 
Medicare Part B ambulance trips being billed 
following 
chart shows the percentage of trips and Medicare 
for which 
costs attributed to ALS for those carrier areas 
figures were readily available. 
ADVANCED LIFE SUPPORT TRIPS 
AS PERCENTAGE OF ALL AMULANCE TRIPS 
ALS as % of  ALS as % of 
Per iod  Total Trips Total Base Rate 
Area  Covered  Allowed  Dollars Paid 
Greater 
New York 
City  04/84-05/85 
Pennsylvania  01/84-12/84 
Flor ida  01/84-12/84  8% * 
Washington, 
C. and 
Arlington,
Virginia  01/84-12/84 
Iowa  10/84-12/84 
* Represents billed amounts.

finding that, 
These figures tend to confirm our field 
despi te higher ALs rates, the overall fiscal impact on 
small 
Medicare has been minor, because ALS represents only a 
services. 
portion of total Medicare ambulance 
OTHER OIG AC IVITIES 
Both other OIG components, the Office of Audit (OA) and the 
Off ice of Investigations (OI), have been involved in
activi ties  payments. 
related to Medicare ambulance 
Audit 
In a report issued in October 1985, the Office of  (OA) 
reimbursing 
found that one carrier had been improperly 
between 
ambulance suppliers for round-trip transportation 
centers. 
pa tients' homes and freestanding renal dialysis 
This is not a covered service. OA recommended that the 
carrier establish procedures to ensure denial of such 
claims. 
13
 In a separate review completed June 1986, OA found that 
based on one carrier' s experience, Medicare carriers can
increase the eff iciency and effectiveness of their ambulance 
claims processing by adopting a place-of-service coding

system. By requiring ambulance suppliers to annotate place-

of-service codes in the origin and destination blocks of

ambulance claims, carriers could use prepayment computer

edi t screens to determine whether each claim meets the

destination and level of service requirements of the

regulations. 
Since 1983, the Office of Investigations has pursued 46 
suppliers. 
investigations of ambulance  The two most 
prevalent abuses involved transporting patients in vans 
rather than ambulances and billing for medically unnecessary 
ambulance services. 
To date, convictions or pleas have been obtained in eight 
instances, and civil and administrative penalties in four
cases. 
Twenty-two ambulance suppliers and their owners have 
been excluded from Medicare participation. Of the remaining 
24 cases, 7 are before Grand Juries, indictments have been 
returned in 2, and 4 civil monetary penalty actions are in
process. 
Appendix G provides further detail on the 
investigations in process at this time. 
14
 IV.  RECOJIIIA l' IONS 
ISSUE: 
Carr ier use of the reasonable charge methodology to 
rate 
determine ambulance reimbursement rates has allowed 
inflation. 
increases far in excess of the rate of  Medicare 
payments are substantially higher than the amounts paid by 
other purchasers for comparable services. One Medicare 
carr ier , which has applied its inherent reasonableness 
author i ty to ambulance expenditures , has achieved annual 
savings of 15. 8 percent as compared with rates determined by
the reasonable charge methodology. The Veterans 
Administration, through competitive bidding, has obtained 
BLS rates averaging 25 percent 10wer than Medicare allowed 
States. 
harges in six sample 
RECOMMNDATIONS: 
Require carriers to use their inherent reasonableness

author i ty to limi t excessive charges for ambulance

services. 
Seek legislative authority to allow carriers to 
establish ambulance reimbursement rates through 
bidding (the 
competi tive  VA approach) for BLS ambulance 
transporta tion. 
3,.	 Consider the feasibility of seeking a legislative change 
to allow competitive bidding for ALS ambulance
transportation. 
ESTIMATED SAVINGS

Recommendation	 Potential Saving 
reasonableness 
Apply inherent  $69 million 
Legislative change to allow	 $513 million

competitive bidding to	 ( $102 . 5 m. x 5 yr s ) 
establish 10wer BLs rates

Legislative change to al10w  No Estimate 
biddi ng to 
competi ti ve 
rates. 
establishing lower ALS 
-15
 COMMNTS RECEIVED AND OIG RESPONSE 
Health 
Comments on the draft report were received from the 
Care Financing Administration (HCFA) and the American 
Ambulance Association (AA). 
the 
Both respondents recognize that changes are needed in 
reimbursed. While generally 
way ambulance services are 
supportive of the concept of inherent reasonableness, they

are concerned about the specific method and factors which

should be applied to determine the reasonableness of

ambulance charges. In addition, the Department is actively 
considering the use of inherent reasonableness for physician 
the 
services under Part B, fol10wing guidance provided in 
Act. The AA has offered to assist 
Omnibus Reconciliation 
should be 
HCFA in determining the specific factors which 
reasonable. 
applied to insure that charges will, in fact, be 
The OIG strongly supports HCFA' s decision to review

ambulance reimbursement methodologies, and urgesc rHiCteFAri a
 . 
take action to develop inherent reasonableness 
AA agreed with our second 
Nei ther HCFA nor the 
legislative 
recommendation, which called for HCFA to seek 
authority to permit competitive bidding for ambulance
services. 
Both respondents indicated that while this 
approach would be appropriate for non-emergency BLS 
reduce 
transportation, competitive bidding by Medicare might 
the timeliness, availabili ty  provided to 
and quali ty of care 
Medicare beneficiaries in emergency situations. 
While the OIG is aware of at least 18 major American cities 
which provide 911 emergency ambulance transportation through 
competitively awarded contracts with private companies, we 
recognize that more research may be needed to insure
continued high quali ty and timeliness of emergency medical 
transportation received by Medicare beneficiaries. 
Therefore, we have revised this recommendation to include 
seeking competitive bidding authority for BLS
transportation 
, followed by consideration of a similar 
transportation. 
approach for ALS 
-16
 APPENDICES 
TITLE  APPENDIX 
Levels of Medical Transportation

Ambulance Savings Based on Inherent

Reasonableness, Empire Blue Shield

April 84 - March 85

State, 
potential Estimated Savings by 
BLS Base Rates (Medicare payments 
compared to VA Rates, FY 85) 
Sumary Page  C-l 
State by State comparisons

California  C-2 
Ohio  C-3 
Texas  C-4 
Michigan  C-5 
Pennsyl vania  C-6 
Massachusetts 
Florida 
Comparison of Medicare and Veterans

Administration Rates, Empire Blue Shield

April 84 - March 85

Medicare and Veterans Administration

Mileage, Oxygen and Waiting Time

Rates, FY 85.

California 
Texa s  E-2 
ALS and BLS Base Rate Prevailings by

Carrier Area, FY 84

Active Investigations of 
Ambulance Suppliers
 APPENDIX A

LEVELS OF MEDICAL TRANSPORTATION

Advanced Life Support (ALS) 
An ALs ambulance has complex speciali zed life sustaining
equipment and radio contact with a physician or hospi tal. 
ALS ambulances are mobile intensive care units, used in true 
emergencies for life-threa tening conditions. These 
ambulances are staffed with paramedics equipped to provide 
intravenous therapy, anti-shock trousers, airway main
tenance, defibrillation of the heart, and other advanced 
ing. 
procedures such as cardiac (EKG) moni tor  ALS 
transportation represents only a small portion of Medicare 
ambulance expenditures. 
Basic Life Support (BLS) 
A BLs ambulance provides transportation pIus equipment and 
staff for such basic services as control of bleeding, 
splinting fractures, treatment for shock, and cardio
(CPR). 
pulmonary resuscitation  Medicare patients are 
typically transported in BLS ambulances for scheduled 
therapy, 
hospital admission or discharge, outpatient 
transfers between hospi tals, and to or from a home or
nursing home. 
BLS ambulances are staffed with emergency 
medical technicians. Most Medicare ambulance expenditures 
are for BLS ambulances. 
Wheelchair Van

The third level of transportation, litter or wheelchair 
vans, provides non-emergency medical transportation for
medically stable individuals with severe 
mobility problems. 
These vehicles are not equipped with medical equipment or
personnel. Typically, 
patients are transported to medical 
therapy. 
appointments or physical  Medicare does not cover 
service. 
this level of  '(j'(j
t

n 
rce 5.
 0.
 4.
 6.   0  3. 5.  8. 3.
 3. 5. 
e 1 2 1 1 - 1 1 3 4 1 1
P
5  6  1  6  0  2  2  2  0  7  8  0  7  7 
Saving.
Paid  $ 2, 616, 64 703, 15 760, 88 2 50,06 $ 5 130.  - 0 - 28, 87 35, 16 64. 03 529, 78 37 143. 64 47 50 77 $ 5, 880. 55
8
Allowed  3, 270, 806  128, 946  951, 101  62,5 413.  - 0 - 36, 087  43, 953  80, 040  662, 227  212  179, 559  348  875  857 221  7. 350. 696 
$    $ 
2
S 
S   2
REASONABLENEYork City
 g a.onablene..Allowed  543, 414  17,  368, 794  693, 283  1,2131,   32.13  316, 980  429, 548  433, 797  180. 325  296, 880  78, 456  966, 411  15, 252  485  276, 522  39. 
E N 85
 nRe $    $   $
Re9   0
INHEAE SAVINGS BASED ON Greater Nre Blue Shield April 1984 - March 1 h Percenti1e Inherentpreva Allowe  814, 220 $ 118. $ 20, York City)
 102. 497, 10, 740  York City)
 127. l48644, 384 in New York City)
0 1, 804 114.193,ide New York City)
 180. 316, 980 York City, day or night)  465, 203. 635  New York City)
 477, 227. 750  260, 365  959, 107	 82, 668 19 . 00  27. 145, 970  24, 600 31 . 00  70522. 360  $ 6 216. 627. 218 $ 46,
Lp	   w h9s   e
UE. 5t ew Ne it2ut ew id
M N   w o N s
A 7va  0. in  7. ide 8. ng 0.ng  0. in  0. out 0.  0.  2.  0.  0. 
e 4h 2s 4i i 8h 2  5 2 3 5 4
r 1t 1t 1t2t 1t 2g 2
p  i u a a i n
$w o n1n w i
    i i   t
g g g g g a
f   in in ri3ri in in
Nu.ber oServ ices 148, 673 originat 82, 047 originat 44, 829  trips o920 9, trips o T  761 originat 116 ips orig 911  591, 437  124  35, 793  492 ant)
 109 
Procedure Code  BASIC LIFE SUPPORT
 W0630 " W0640 (Base Rate, trips  AOOlO " A0022 (Base Rate, trips  W0540 " W0550 (Base Rate, night, W0560 " W057(Base rate, night, Subtotals 	 ADANCED LIFE SUPPOR Ao220 " W0590 (Base rate, trips  W0600	(bay base rate, tr W061 0 ht base ALS Subtotals  MI SCELLEOUS  A0020 ( Hi 1eage)  A0060	(Waiting Time)
 A0070	( Oxygen)  W0620	(Additional attend W0625 ( EKG )  Mhce11aneou8	btota1s  GRAD TOTAL	 APPENDIX C
POTENTIAL ESTIMATED SAVINGS BY STATE  BLS BASE RATES

(Medicare payments compared to VA rates, FY 85)

ESTIMATED  ESTIMATE  POTENTIAL 
STATE  MEDICARE PAYMENT  PAYMNT  ESTIMATED SAVINGS* 
(80% of  USING 
Allowed Amount)  VA RATES  Amount  Percent 
Cal i fornia  $ 22, 611, 804  $18, 847, 423  $ 3, 764, 381  16. 
Ohio  12, 063, 156  424, 926  638, 230  38. 
Texas  589, 132  471, 866  117, 266  20. 
Michigan  14, 377, 130  221, 461  155, 669  35. 
Pennsyl vania  24, 217, 484  16, 139, 743  077, 741  33. 
Massachusetts  22, 008, 780  19, 752, 089  256, 691  10. 
TOTALS  100, 867, 486  75, 857, 508  25, 009, 978  24. 
savings 
Slight discrepancies between potential estimated 
on this page and individual State calculation pages are 
due to rounding. 
sumary 
Florida is not included in  because VA hospitals 
in that State have not negotiated any contracts for 
for 
ambulance services, and pay more than Medicare pays 
this service. 
New York City is not included because the Medicare 
carrier already uses inherent reasroantaeblse.n ess authority 
to limi t ambulance reimbursement  (Detail on New 
York City rates appears at Appendix D).  APPENDIX C-2

STATE:  CALIFORNIA 
VETERANS ADMINISTRATION HOSPITAL BASE RATES FOR AMULANCE SERVICES 
(a)  (b)  (c)  (d)  (e) 
VA HOSPITAL  CONTRACT  EST. t TRIPS  AVERAGE BLS  TOTAL PAID 
FY 1985  BASE RATE  ( ESTIMATE ) 
Los Angeles  YES  800  162, 400 
Martinez  YES  437  75*  32, 775 
Palo Al  YES  871  58*  108, 518 
San Diego  YES  320  40, 920 
San Francisco  YES  300  90*  207, 000 
Sepul veda  YES  382  26, 358 
Loma Li nda  YES  800  72, 000 
Long Beach  YES  300  60*  18, 000 
Fresno  YES  900  150*  135  000 
TOTAL  12, 110  802, 971 
WE IGHTED  AVERAGE  BASE RATE ((e) divided by (c) J = $66. 
* includes mileage wi thin defined 10cal  area. 
MEDICARE ALLOWABLES, FSY 1985 
II. 
(a) (b)  (c)  (d) 
CAIER AREA  BLS BASE RATE  t TRIPS  TOTAL $ 
PREVAILING  PAID  ALLOWED 
BLUE SHIELD OF CALIFORNIA 
$ 105.  27, 713  909, 865 
115.  54, 851  307, 865 
115.  34, 186  931, 390 
87.  23, 495  055, 813 
TRNSAMR ICA-OCC I DENTAL 
$ 106.  312  669, 072 
90.  94, 459  501, 310 
90.  216  889, 440 
TOTAL  284, 232  $ 28, 264, 755 
((d) divided by (c) J = $99.

AVERAGE ALLOWED PER CLAIM 
AVERAGE PAID PER CLAIM (80% of $99. 44) = $79.

POTENTIAL SAVINGS PER CLAIM IF MEDICARE PAID SAM RATE AS THE

VETERANS ADMINISTRATION ($79. 55 minus $66. 31) = $13. 24 or 16. 6%. 
POTENTIAL ANNAL SAVINGS ($13. 24 per trip x 284, 232 trips) = 
$ 3, 763 , 232  APPENDIX C-3

STATE::  OHIO 
VETERANS ADMINISTRATION HOSPITAL BASE RATES FOR AMBULANCE SERVICES

(a)	 (b)  (c)  (d)  (e) 
VA HOSPITAL  CONTRACT  EST. t TRIPS  AVERAGE BLs  TOTAL $ PAID 
es or no)  FY 1985  BASE RATE  (ESTIMATE)
nnat  YES  125  625 
Dayton  YES  500  60, 000 
Cleveland  YES  116  281  336 
TOTAL  741	 $ 346, 961 
WEIGHTED AVERAGE BASE RATE  = $44.

((e) divided by 	 (c)) 
MEDICARE ALLOWABLES, FSY 1985

II. 
(a)  (b)  (c)  (d) 
AREA  BLS BASE RATE  t TRIPS  TOTAL $ 
PREVAILING	 PAID  ALLOWED 
13, 960  512, 800 
21, 469  502, 830 
39, 164  524, 760 
12, 761  020, 880 
096  304, 800 
914  319, 410 
513  201, 040 
862  263, 790 
100  256  725, 600 
17, 551  579, 500 
145  12, 473  808, 585 
268  212, 420 
970  358, 200 
109  186, 540 
295  557  700 
TOTAL  165, 661  15, 078, 945 
AVERAGE ALLOWED PER CLAIM ((d) divided by (c)) = $91.

AVEAGE PAID PER CLAIM (80% of $ 91. 02) = $72. 
POTENTIAL SAVINGS PER CLAIM IF MEDICARE PAID SAM RATE AS THE VETERANS 
ADM.INIsTRATION ($72. 82 minus $44. 82) = $28. 00 or 38. 5%. 
POTENTIAL ANNAL SAVINGS ($28. 00 per trip x 165, 661 trips) =
$4, 638, 508.  APPENDIX C-4

STATE::  TEXAS 
VETERANS ADMINISTRATION HOSPITAL BASE RATES FOR AMULANCE SERVICES 
(a)  (b)  (c)  (d)  (e) 
VA HOSPITAL  CONTRACT  EST. i TRIPS  AVERAGE BLS  TOTAL $ PAID 
es or no)  FY 1985  BASE RATE  (ESTIMATE) 
g Spr  YES  550  38, 500
Dalla s  YES  400  122, 400 
San Antonio  YES  700  148, 500 
Marlin  YES  312  12, 480 
Temple  YES  999  34, 965 
Hous ton  YES  750  105, 000 
(No contracts in remaining  areas of the State) 
TOTAL  711	 $ 461, 845 
WEIGHTED AVERAGE BASE RATE ((e) divided by (c)) = $53.

MEDICARE ALLOWABLEs, FSY 1985 
II. 
(a)  (b)  (c)  ( d) 
AREA  BLS BASE RATE  t TRIPS  TOTAL $ 
PREVAILING	 PAID  ALLOWED 
15, 664  018, 160 
995  779, 675 
13, l71  987, 825 
16, OS 2  043, 380 
505  412, 875 
125  956  744, 500 
TOTAL  84, 343  986, 415 
AVEGE ALLOWED PER CLAIM ((d) divided by (c)) = $82. 
AVEGE 
PAID PER CLAIM (80\ of $ 82. 83) = $66. 
POTENTIAL SAVINGS PER CLAIM IF MEDICARE PAID SAM RATE AS THE VETERANS 
ADMINISTRATION ($66. 27 minus $53. 02) = $13. 25 or 20. 0\. 
POTENTIAL ANNAL SAVINGS ($13. 25 per trip x 84, 343 trips) = $1, 117, 545.  APPENDIX C-5

STATE :  MICHIGAN 
VETERANS ADMINISTRATION HOSPITAL BASE RATES FOR AMULANCE SERVICES 
(a)  (b)  (c)  (d)  (e) 
VA HOSPITAL  CONTRACT  EST. t TRIPS  AVERAGE BLS  TOTAL $ PAID 
(yes or no)  FY 1985  BASE RATE  (ESTIMATE) 
Allen Park  YES  850  $ 49  $ 41, 650 
Ann Arbor  YES  100  000 
inaw  YES  300  000 
TOTAL  250  59, 650 
WEIGHTED AVERAGE BASE RATE ((e) divided by (c)) = $47.

MEDICARE ALLOWABLES, FSY 1985
II. 
(a)  (b)  (c)  (d) 
AREA  BLS BASE RATE  t TRI P  TOTAL $ 
PREVAILING  PAID  ALLOWED 
Statewide  $ 93  193, 241  $ 17, 971  413 
TOTAL  193, 241  17, 971, 413 
AVEGE ALLOWED PER CLAIM I (d) divided by (c)) = $93. 
AVEGE PAID PER CLAIM (80% of $ 93. 00) = $74. 
POTENTIAL SAVINGS PER CLAIM IF MEDICARE PAID SAM RATE AS THE VETERANS 
ADMINISTRATION ($74. 40 minus $47. 72) = $26. 68 or 35. 9%. 
POTENTIAL ANNAL SAVINGS ($26. 68 per trip x 193, 241 trips) = 
$5, 155, 670.  APPENDIX C-6

STATE:  PENNSYLVANIA 
VETERANS  ISTRATION HOSPITAL BASE RATES FOR AMBULANCE SERVICES 
ADM"' 
(a)	 (b)  (c)  (d)  (e) 
VA HOSPITAL  CONTRACT  EST. t TRIPS  AVERAGE BLS  TOTAL $ PAID 
(yes or no)  FY 1985  BASE RATE  (ESTIMATE) 
ttsburgh
Pi  YES  100  $ 55  $ 60, 500 
Philadelphia  YES  400  81, 200 
(No contracts in remaining areas of the State)

TOTAL  500	 141, 700 
(( e) divided 
WEIGHTED AVERAGE BASE RATE  by (c)) = $56. 
MEDICARE ALLOWABLES, FSY 1985 
II -

(a)  (b)  (c)  (d) 
AREA  BLs BASE RATE  t TRIPS  TOTAL $ 
PREVAILING	 PAID  ALLOWED 
120  802  856, 240 
106  188, 786  20, 011, 316 
32, 714  453, 550 
135  450  950  750 
TOTAL  284, 752  30, 271, 856 
AVEGE ALLOWED PER CLAIM ((d) divided by (c)) = $106. 
AVEGE PAID PER CLAIM (80% of $106. 31) = $85. 
POTENTIAL SAVINGS PER CLAIM IF MEDICARE PAID SAM RATE AS THE VETERANS 
ADMINISTRATION ($85. 05 minus $56. 68) = $28. 37 or 33. 4%. 
POTENTIAL ANNUAL SAVINGS ($28. 37 per trip x 284, 752 trips) =
$8, 078, 414  APPENDIX C-7

STATE:  MASSACHUSETTS 
VETERANS ADMINISTRATION HOSPITAL BASE RATES FOR AMULANCE SERVICES 
(a)  (b)  (c)  (d)  (e) 
VA HOSPITAL  CONTRACT  EST. i TRIPS  AVERAGE BLs  TOTAL $ PAID 
es or no)  FY 1985  BASE RATE  (ESTIMATE) 
Jamaica Plains  YES  725  $ 141,450 
West Roxbury YES  200  81, 600 
Brockton  YES  800  120  000 
TOTAL  725  319, 050 
WEIGHTED AVERAGE BASE RATE ((e) divided by (c)) = $85.

MEDICARE ALLOWABLE 5 , FSY 1985 
II. 
(a)  (b)  (c)  (d) 
AREA  BLS BASE RATE  i TRIPS  TOTAL $ 
PREVAILING  PAID  ALLOWED 
Urban  $ 125  177, 983  $ 22, 247, 875 
Suburban  100  631  263  100 
TOTAL  230, 614  27, 510, 975 
AVEGE ALLOWED PER CLAIM r (d) divided  = $119. 
by  (c)) 
AVEGE PAID PER CLAIM (80% of $119. 29) = $95. 
POTENTIAL SAVINGS PER CLAIM IF MEDICARE PAID SAM RATE AS THE VETERANS 
ADMINISTRATION ($95. 43 minus $85. 65) = $9. 78 or 10. 
POTENTIAL ANNUAL SAVINGS ($9. 78 per trip x 230, 614 trips) = $2, 255, 405  APPENDIX C-8

STATE:  FLORIDA 
AMULANCE SERVICES 
VETERANS ADMINISTRATION HOSPITAL BASE RATES FOR 
(a)  (b)  (c)  (d)  (e) 
VA HOSPITAL  CONTRACT  EST. t TRIPS  AVERAGE BLS  TOTAL $ PAID 
FY 1985  BASE RATE  (ESTIMATE) 
Bay pines  200  92, 400 
Gainesville  000  140, 000 
Lake Ci ty  300  17, 100 
Miami  700  66, 500 
Tampa  500  120, 000 
TOTAL  700  436, 000 
WEIGHTED AVERAGE BASE RATE ((e) divided by (c)) = $ 76.

MEDICARE ALLOWABLES, FSY 1985
II. 
(a)  (b)  (c)  (d) 
AREA  BLS BASE RATE  t TRIPS  TOTAL $ 
PREVAILING  PAID  ALLOWED 
70.  16, 766  173, 620 
70.  77, 953  456, 710 
82.  42, 405  498, 413 
75.  068  330  100 
TOTAL  168, 192  $ 12,458, 843 
AVEAGE ALLOWED PER CLAIM ((d) divided by (c)) = $ 74. 
AVEGE PAID PER CLAIM (80% of $ 74. 08) = $ 59. 
services. 
Flor ida VA hospi tals do not have contracts for ambulance 
Instead, the full amount billed by an ambulance company is paid from

funds. 
VA medical administration 
The VA paid an average BLS base rate of $17. 23 more per trip than

Medicare. If 
the VA had paid the same as Medicare, BLS base rate 
savings could have amounted to as much as $98,211 during FY 1985.
 -----
APPENDIX D 
COMPARISON OF MEDICARE AND VETERANS ADMINISTRATION BASE RATES 
EMPIRE BLUE SHIELD, APRIL 1984 - MACH 1985 
MEDICARE ALLOWABLES BASED ON REASONALE CHARGE METHODOLOGY 
TOTAL PAID  AVERAGE BLS  TOTAL $  TOTAL $ PAID  PAID PER 
SERVICES  BASE RATE  ALLOWED  (ESTIMATE)  CLAIM 
285  472  137.  150  148  $ 31, 320, 118  109. 
II. 
MEDICARE ALLOWABLES BASED ON INHERENT REASONABLENESS

TOTAL PAID  AVERAGE BLS  TOTAL $  TOTAL $ PAID  PAID PER 
SERVICES  BASE RATE  ALLOWED  (ESTIMATE)  CLAIM 
285  472  114.  $ 32, 736, 713  189  370  91. 
I I I. VETERANS ADMINISTRATION HOSPITAL BASE RATES FOR AMULANCE SERVICES 
(a)  (b)  (c)  (d)  (e) 
VA HOSPITAL  CONTRACT  EST. t TRIPS  AVERAGE BLS  TOTAL $ PAID 
es or no)  FY 1985  BASE RATE  (ESTIMATE) 
Manhattan  YES  000  $ 62.  $ 248,000 
Bronx  YES  600  65.  39, 000 
Lon  Island  YES  293  73.  579 
893  308, 579 
TOTAL 
WEIGHTED AVERAGE BASE RATE ((e) divided by (c)) = $63.

IV.  RATE COMPARISON 
MEDICARE  VETERANS 
REAS.  CHARGE  INHERENT  REAS.  ADMINI STRATION 
AVERAGE PAID

PER CLAIM  $ 109. 71  $ 91.  $ 63.

SAVINGS OVER  $ 17.  $ 46.

REASONABLE  (16. 4%)  (42. 5%) 
CHARGE METHOD.

SAVINGS OVER  $ 28.

(3l. 
3%) 
INHERENT 
REASONABLENESS  APPENDIX E
MEDICARE AND VETERANS ADMINISTRATION

MILEAGE , OXYGEN AND WAITING TIME RATES

STATE OF CALIFORNIA, FY 85

VETERANS  ADMINISTRATION 
Hos  i tal  Milea  Wai tin  Time 
Included In  Rate  (per hour) 
Base Rate  Per Mile 
$1.  $25  $ 90 
San Diego 
Long Beach  city limits

Sepul veda 
West Los

Angeles 
Loma Linda

Fresno 
Palo  AI to 
San Francisco  100 
Martinez  10cal area 
II. 
MEDICARE 
Area  Milea  Wai tin  Time 
Included In  Rate  (per hour) 
Base Rate  Per Mile 
Northern 
California  40-5. 20*  $16. 00- $48. 00-$70. 
$20.

Southern

California  $11. 20

$22. 40-$48 

$23. 
allowable. 
*All figures are 80% of Medicare  APPENDIX E-2 
MEDICARE AND VETERANS ADMINISTRATION 
MILEAGE , OXYGEN AND WAITING TIME RATES 
STATE OF TEXAS, FY 85 
VETERANS ADMINISTRATION

Hos  i tal *  Milea  Wai tin  Time 
(per hour) 
San Antonio  $1. 25-$2.  $5. 00-$25.  up to  $60. 
Marlin 
Kerrville 
Temple  $10 
Houston  $60 
Dallas 
Big  Spr ing  $30 
*Two hospi tals  do not  have contracts  and are not i ncl uded. 
II. MEDICARE	 Mileage  Oxygen  Wai ting Time 
(per hour) 
$0. 80-$2. 80*  $6. 40-$20.  $16. 00-$20. 
*All  f igures are 80% of Medicare allowable.  APPENDIX F 
ALS AND BLS BASE RATE PREVAILINGS 
BY CARRIER AREA, FY 84 
carrier Area  ALS Prevailin  BLS Prevailin 
Arkansas  $102  $65 
Cali fornia 
50-$115. 
Northern  $275  $ 87. 
00-$113. 
Southern  $210  $ 70. 
Connecticut  $142. 60-$146.  $ 87. 60- $  91. 
00-$  75. 
Flor ida  $ 90  $ 68. 
$130. 00-$234.  $107. 00-$208. 
Hawai i 
Illinois  $120. 00-$150.  $ 50. 00-$  96. 
Indiana  $140. 00-$150.  $ 60. 00-$  85. 
Michigan  $140  $97. 
North  Dakota  $180  $95 
00-$180. 
Ohio  $265  $ 40. 
South  Dakota  $120  $60 
Washington  $245  $125  APPENDIX G

ACTIVE INVSTIGATIONS OF AMBULANCE SUPPLIERS

(as of October 1986)

NUMBER OF 
ACTIVE 
NATURE OF ACTIVITY
 INVSTIGATIONS 
Transporting benef iciar ies absent medical 
necessi ty and overstating the medical need 
payment. 
of the beneficiary to obtain 
Transporting beneficiaries to and from

non-covered locations and concealing the true

origin and destination of the trips to obtain

payment. 
provided, 
Claiming payment for services not 
supplies. 
e.g., actual trips, medical 
provided, 
Overstating the level of service 
g., van service provided; BLS ambulance 
claimed. 
service provided, ALS 
Overstating actual miles traveled and 
waiting time to obtain payment. 
Misrepresenting the true 10cation of the

business to take advantage of higher

reimbursement rates at a fictitious address.

Submi tting claims for service in an area 
other than the place of service 
to obtain 
higher payment.

agreements. 
Violating assignment 
Transporting mul tiple patients and submitting 
trips. 
claims for singular 
Knowingly providing noncovered service and

bribing carrier employees to authorize

care. 
payment for the noncovered