Department of Health and Human Services

FICE OF

OF' 
INSPECTOR GENERAL

Comparison of Ambulance Payments

Between Selected Canadian Provinces

and the United States

SERVICEs. 
JU 
GffBS BROWN 
Inspector General 
1-
1t"".  MARCH 1999 
OEI-09-95-00414  OFFICE OF INSPECTOR GENERA

The mission of the Offce of Inspector General (DIG), as mandated by Public Law 95-452, is to 
protect the integrty of the Deparent of Health and Human Servces programs as well as the 
health and welfare of beneficiares served by them. Ths statutory mission is cared out though 
a nationwide program of audits, investigations, inpections, sanctions, and fraud alerts. The 
Inspector Gen ral inorms the Secreta of program and management problems and recommends 
legislative, reguatory, and operational approaches to correct them. 
Office of Evaluation and Inspections 
The Offce of Evaluation and Inpections (DEI) is one of severa components of the Office of 
progr 
Inpector General. It conducts short-tesrm m.ana gement and  evaluations (called 
inspections) that focus on issues of concern to the Deparent, the Congress, and the public. The 
inspection reports provide fidigs and recommendations on the effciency, vulnerabilty, and 
effectiveness of deparenta progr 
OEI's San Francisco Regional Offce prepared ths report under the diection ofKaye D. Kidwell 
Regional Inspector General, and Paul A. Gottlober, Deputy Regional Inpector General. 
Pricipal OEI staff included: 
GION 
Deborah  Project Leader  Tricia Davis Program Specialist 
Harey, 
Robert Gibbons  Linda Moscoe 
Cyntha Lemesh 
Brian Ritchie 
Donald Loeb  Barbara Tedesco 
Stuar Wright 
To obtain copies of ths report, please call the San Francisco Regional Offce at 415-437-7900.

Reports are also available on the World Wide Web at our home page address:

htt://ww .dhs.gov/progorgloei  Department of Health and Human Services

OFFICE OF

INSPECTOR GENERAL

Comparison of Ambulance Payments

Between Selected 
Canadian Provinces

and the United States

+t-\',  SERVICE
JU 
GffBS BROWN 
Inspector General 
'0 
1t",,:W  MARCH 1999 
OEI-09-95-00414  DEPARTMENT OF HEALTH &. HUMAN SERVICES	 Offce of Inspector General 
Washington, D.C. 20201 
MAR I I 1999 
Fortey Pete Stak 
The Honorable 
House of Representatives 
Washigton, DC 20515 
Dea Mr. Stak: 
Than you for your contiued support of our work to promote effciencies and effectveness in 
deparenta program and parcularly to identi area of potential overpayments in the Medcare 
program. As you commente in your December 1, 1997 letr about the Offce of Inpectr 
General' s work plan a signcat dierence may exst in ambulce payments beteen Canad and 
the United States. As par of an ongoing study compar Medcae ambulance payments with those 
of other payers, we obtaed ambulance rates for Britih Columbia, Onto, and Quebec and 
compared the Canadian rates to the average Medcae payments for neaby States. 
As you speculated, we found that the Medcae progra pays up to 70 percent more for ambulance 
servces than two of the thee sampled provices. We believe tht the lower Candian costs 
generally may be explaied by two facttohrs : (1) Medcae s payment is based on the traditional 
reasonable charge metodology rather  actual cost, and (2) Canda s labor cost are lower 
because personnel who staff ambulances are par-tie and comparable to basic and intennediate 
emergency medcal techncian in the United States. These factors are explaied in more detal in 
ths report.

st 
If-you have any questons, pleae contact me or have your  contact Helen Albert, Director 
External Afairs, at (202) 260-8610. 
June Gibbs Brown

Inspector General

Enclosure 
cc:	 Nancy-An Min DeParle

Administrator

Health Care Financing Admstration

Melissa Skolfield

Assistat Secreta for

Public Affairs

Richard J. Tarplin 
Assistat Secretary

for Legislation  COMPARISON OF AMBULANCE PAYMENTS

BETWEEN SELECTED CANADIAN PROVINCES AND THE UNITED STATES 
Medicare Par B payments for ambulance services have increased rapidly. Medicare s allowed 
charges for ambulance services more than trpled between 1987 and 1996, when Medicare 
carers, the contractors that process Par B claims, allowed an "estimated $2 bilion for 
ambulance servces in 1996. In a 1997 report, the Office of Inspector General found that 
Medicare payments for ambulance servces often appeared inconsistent and ilogical. The report 
cited many examples, includig cases where Medicare paid more for nonemergency basic life 
support transport than for emergency advanced life support transport. 
As par of an ongoing study on the comparson of ambulance payments between Medicare and 
non-Medicare payers, we contacted three Canadian provinces to gather ambulance rates. We 
compared the average payments for ambulance services in British Columbia, Ontaro, and 
maintai 
Quebec to the average payments for nearby States. We used the nearby States to 
geographical comparsons to the provices. 
Medicare Pays up to 70 Percent More than Two of the Three Sampled Provinces 
Like Medicare, Canada s national health care system covers medically necessar 
ambulance transportation. Payment for ambulance services in Canada is based on the 
average cost of providing services, and both the province and the patient pay a share of 
the cost (except in Quebec where the province pays the entire cost for patients aged 65 
and over). In fact, patients in Canada are responsible for the entie ambulance bil if the 
trp is deemed medically unecessar. Although Canada does not distiguish between 
advanced life support and basic life support, most of the ambulance transports in the 
sampled provices are comparable to basic life support transport in the United States. 
Medicare uses a reasonable charge methodology to pay for ambulance services. 
Medicare pays 80 percent ofthe reasonable, i.  , allowed, charge, and the beneficiar is 
responsible for the remaining 20 percent. Reasonable charge is the traditional payment 
method that Medicare has used since the program s inception. Under ths methodology, 
payment is based on the bil from ambulance suppliers. Carers, the contractors that 
process Par B claims, develop separate base rates for basic life support and advanced life 
support ambulances that reflect customar and prevailing charges  in an area as well as 
separate rates for ambulance suppliers ' other charges , including mileage and supplies. 
For example, the maximum reasonable charge for mileage is the lowest of (1) the 
Office ofInspector General  November 1997
Medicare Ambulance Payments, 

(OEI-05-95-00300). 
is the amount that a supplier  prevailing charge 
The  customary charge  tyically charges. The 
refers to a charge that falls within a range of charges submitted by suppliers in a 
partcular geographic 
area.  supplier s actual charge, (2) the supplier s customar charge for mileage, or (3) the 
prevailing charge for mileage in the area. The Health Care Financing Admstration 
authorizes carers to raise or lower the reasonable charge based on the concept of 
inherent reasonableness." For example, if eharges are inated because oflack of 
competition or the charges are signficantly higher than acquisition costs, carers may 
lower payment. 
The table below compares rates in thee Canadian provinces to Medicare s allowed 
amounts in areas of the United States that are nearby or comparable in size to the thee 
provinces. Because Canada does not base rates on the  , we averaged 
tye of vehicle
Medicare allowed amounts for advanced life support and basic life support in the 
followig char. Medicare pays considerably more than British Columbia and Ontaro 
but slightly less than Quebec. 
Rate Comparison between Three Canadian Provinces and Medicare 
Canadian  Average  Average Medicare  Difference from 
Province  Canadian charge  allowed amount**  Canadian charge 
British Columbia  $186  $317  70.4% 
Ontaro  $163  $246  50. 
Quebec  $299  $291 
Note: 
We converted the rates for Canadian residents to U.s. curency. The conversion factor was 
$1 Canadian = $0.68032 U.S. (rate on Apri2l , 1998) 
U.S. jursdictions near the Canadian provinces or comparable in size include the State of 
Washigton for comparson to the province of British Columbia; the States of Michigan 
Wisconsin, Minesota, and New York for comparson to Ontao; and the States ofVennont, 
Maine, New Hampshie, Massachusett, Connecticut, Rhode Island, and New York for 
comparson to Quebec. 
Source: Offce of Evaluation and Inspections analysis, 1998. 
Lower Canadian Costs May Be Explained by Different Staffng Requirements 
Labor costs are the largest par of ambulance fixed costs. In British Columbia, for 
example, approximately 55 percent of the personnel on ambulances are par-time and 
comparable to basic and intermediate emergency medical techncians in the United 
States. Less than 5 percent of the full-time Canadian staff are comparable to a paramedic 
the highest-trained level of prehospital personnel. In the United States, ambulances  staffed with one emergency medical techncian and a paramedic, and most 
tyically are 
ambulance suppliers in urban areas employ two paramedics, thereby increasing personnel 
costs. 
In Canada, the mileage payment is bundled into the base rate, while most ambulance 
suppliers in the United States  base rate, mileage, and supplies. 
bil separately for the 
Since Medicare does not reimburse suppliers at a standard national mileage rate, payment 
vares widely across the countr. 
0ffice ofInspector General Medicare Ambulance Payments November 1997 
(OEl-05-95-00300).