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Department of Health and Human Services


OFFICE OF 

INSPECTOR GENERAL 

MEDICARE PAYMENTS FOR


AMBULANCE TRANSPORTS


Daniel R. Levinson 


Inspector General 


January 2006


OEI-05-02-00590

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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-todate 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 OIG’s 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. 
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Δ EXECUTIVE SUMMAR Y 

OBJECTIVE 

To evaluate whether ambulance transports met Medicare’s 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 beneficiary’s 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 

Medicare’s 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 Medicare’s coverage 

requirements. A 1998 report found that two-thirds of sampled 

ambulance transports did not meet Medicare’s 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 

Medicare’s 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 patient’s 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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EXE CUTIVE S U MMAR Y

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 Medicare’s 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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EXE CUTIVE S U MMAR 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 Medicare’s 

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 

CMS’s 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 

physician’s 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 Medicare’s 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. 

CMS’s comments did not warrant any revisions to the results of our 

review or our recommendations. 

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i 

Δ T ABLE OF CONTENTS 

EXECUTIVE SUMMARY ....................................

INTR O D U C T I ON ........................................... 1

FINDI NGS ................................................ 14

Twenty-five percent of ambulance transports paid in error ..... 14

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

RECOM M E NDATI O NS ..................................... 24

ENDN OTE S ............................................... 27

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

A: Confidence Intervals for Selected Statistics ............... 30

B: Significance Tests for Selected Statistics ................. 31

C: Coverage Determinations by Documentation Level......... 32

D: Agency Comments................................... 33

ACKN O W LEDGMENTS .................................... 36
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Δ INTRODU C TION 

OBJECTIVE 

To determine whether ambulance transports met Medicare’s 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 

Medicare’s 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 twothirds 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 

Medicare’s 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 patient’s 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 patient’s illness 

or injury) must be met. 

Medicare Coverage of Ambulance Transports 

Medicare pays for emergency and nonemergency ambulance services 

when a beneficiary’s 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 

beneficiary’s medical condition).4 Medicare does not cover means of 

transport other than ambulance. 

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INTROD UCT ION 

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 patient’s 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 patient’s condition, regardless of bedconfinement, 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, bedconfinement alone is neither sufficient nor necessary to determine the 

coverage for Medicare’s 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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INTROD UCT ION 

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 supplier’s 

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 patient’s 

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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INTROD UCT ION 

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 patient’s 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 hospitalbased 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 provider’s 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 patient’s 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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INTROD UCT ION 

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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INTROD UCT ION 

CMS’s 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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INTROD UCT ION

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 

CMS’s 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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INTROD UCT ION 

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 

Number 

Population Original 

Sample 

Size 

Excluded 

Claims 

Revised 

Sample 

Size 

 Undocumented 

Claims 

Documented 

Claims 

Dialysis 

Nonemergency 

Emergency 

1 

2 

3 

866,379 

2,870,482 

4,992,322 

240 

240 

240 

38 

17 

14 

202 

223

226

12 

14 

9 

190 

209 

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 Medicare’s 

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 

Medicare Contractors Ambulance Suppliers Dialysis Facilities Hospitals 

Nursing 

Facilities 

-CMS 1500/UB 82 

or printout 

of electronic claim 

-Ambulance supplier 

contact information 

-Trip report 

-Dispatch record 

-Physician certification 

statement 

-CMS 1500/UB 82 or 

printout of electronic 

claim 

-Treatment record 

-Social worker notes 

-Any documents 

containing 

information about 

patient’s condition at 

the time of transport 

-Admit/discharge 

records 

-Order sheet(s) 

-Patient history & 

physical exam 

-Rx/treatment 

records 

-Nurse notes 

-Progress notes 

-Consultation notes 

-Therapy notes 

-Dialysis records 

-Behavioral 

management 

monitoring records 

-Admit/discharge 

records 

-Order sheet(s) 

-Most recent care 

plans 

-Most recent 

patient history & 

physical exam 

-Rx/treatment 

records 

-Nurse notes 

-Consultation or 

ancillary notes 

-Behavioral 

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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INTROD UCT ION

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 Medicare’s program requirements. 

Reviewers had several years of nursing, quality management, or claims 

review experience. They also had prior experience applying CMS’s 

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 thirdparty 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 

Number 

Claims Analyzed 

Dialysis Transports 

Nonemergency Transports 

Emergency Transports 

1 

2 

3 

158 

194 

195 

Subtotal of Claims 

Undocumented Claims (Automatic Errors) 

547 

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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INTROD UCT ION

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 Medicare’s 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 

Type of Contractor 

Number of Contractors 

Interviewed 

Carrier - Process Medicare Part B Claims 

Fiscal Intermediary – Process Medicare Part A 

Claims 

Carrier and Fiscal Intermediary Process Both 

Medicare Part A and B Claims 

7 

5 

11 

 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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INTROD UCT ION 

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 CMS’s 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, OIG’s 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 CMS’s 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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INTROD UCT ION 

Our review was conducted in accordance with the “Quality Standards 

for Inspections” issued by the President’s Council on Integrity and 

Efficiency and the Executive Council on Integrity and Efficiency. 

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Δ FINDINGS 

Twenty-five percent of ambulance transports did 

not meet Medicare program requirements, 

resulting in an estimated $402 million 

of improper payments 

We found that one in four 

ambulance transports in CY 2002 

did not meet Medicare program 

requirements. There were three 

types of errors: (1) transports that 

did not meet Medicare’s 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 

Type of Error Claims 

Allowed 

Amounts 

Claims 

(Proportion) 

Allowed 

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 Medicare’s coverage 

criteria, resulting in an estimated $220 million in improper payments 

More than one in eight claims did not meet Medicare’s coverage criteria 

for ambulance transport. In these instances, failure to meet coverage 

criteria means that the patient’s 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 individual’s health 

(whether or not such other transportation is actually available), no 

payment may be made for ambulance service. 

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F I NDING S 

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 

(Percent in Error) 

Point Estimate 

(Dollars in Error in 

Millions) 

Dialysis Transports (N=158 claims) 

Nonemergency Transports (N=194 claims) 

Emergency Transports (N=195 claims) 

27.22 % 

19.59 % 

 6.67 % 

$ 47.93 

$101.33 

$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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F I NDING S 

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 Medicare’s 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 patient’s 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 thirdparty 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 Medicare’s 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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F I NDING S 

Of all transports that met Medicare’s 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 

identify and prevent improper payments for 

ambulance transports 

Despite prior OIG 

recommendations to address 

ambulance program safeguard 

issues, Medicare mandates very 

few specific safeguards to prevent improper ambulance payments. 

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F I NDING S 

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 

physician’s office, dialysis facility to emergency room, all 

dialysis transports) 

37 

Mileage 27 

Other (e.g., all ALS transports, all nonemergency transports, 

certain modifiers, condition codes, valid contracts between 

ambulance suppliers and hospitals) 

19 

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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F I NDING S 

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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F I NDING S 

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: 

Medical Review 

Determinations by 

Level of 

Documentation 

Reviewed. 

0% 

10% 

20% 

30% 

40% 

50% 

60% 

70% 

80% 

90% 

100% 

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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F I NDING S 

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 Medicare’s 

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 patient’s 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 physician’s 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. Medicare’s 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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Δ RECOMME NDA TIONS 

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 Medicare’s 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 

physician’s 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 Medicare’s 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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R E C O MMENDA T I O N S 

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 

CMS’s 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 

physician’s 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 Medicare’s 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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CMS’s comments did not warrant any revisions to the results of our 

review or our recommendations. 

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Δ ENDNOTE 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 Program—Pay 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 

Benefit—Statutory 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. 

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26 CMS Publication 100-04—Medicare Claims Processing. Transmittal 

459, February 4, 2005. 

27 Norwich Ambulance Company Pleads Guilty to Federal Health Care 

Fraud Charge. Press Release: United States Attorney’s Office, 

District of Connecticut, October 19, 2004. 

28 Norwich Ambulance Company Sentenced on Federal Health Care 

Fraud Case. Press Release: United States Attorney’s 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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Δ APPENDIX ~ A 

Confidence Intervals for Selected Statistics 

 Confidence Intervals for All Errors by Type of Transport 

Transport Type 

Error Estimates Dollar Estimates 

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 

Transport Type 

Coverage Error Estimates Dollar Estimates 

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 

Transport Type 

Level of Service Error Estimates Dollar Estimates 

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 Type 

Documentation Error Estimates Dollar Estimates 

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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Δ APPENDIX B 

Significance Tests for Selected Statistics 

 Comparison of Coverage Error Rates by Type of Transport (N=582) 

Transport Type 

Error Rates 

P value 

Target Comparison Chi-Square 

Target Transport Type 

Point Estimate 

Comparison Transport Type 

Point Estimate 

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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Δ APPENDIX ~ C 

Medical Reviewer Coverage Determinations by Documentation Level 

All Transports 

Coverage Determination Level 3 Documentation 

(N=547) 

Level 2 Documentation 

(N=616) 

Level 1 Documentation 

(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 

(N=158) 

Level 2 Documentation 

(N=190) 

Level 1 Documentation 

(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 

(N=194) 

Level 2 Documentation 

(N=209) 

Level 1 Documentation 

(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 

(N=195) 

Level 2 Documentation 

(N=217) 

Level 1 Documentation 

(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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Δ APPENDIX ~ D 

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APP E N D I X ~ D 

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APP E N D I X ~ D 

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Δ ACKNOWLEDGMENTS 

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 

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