AMBULANCE 

PROVIDERS

Costs and Medicare 

Margins Varied 

Widely; Transports of 

Beneficiaries Have 

Increased

Report to Congressional Committees

October 2012

GAO-13-6

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United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-13-6, a report to 

congressional committees

October 2012

AMBULANCE PROVIDERS

Costs and Medicare Margins Varied Widely; 

Transports of Beneficiaries Have Increased

Why GAO Did This Study

Since 2004, Congress has authorized 

supplemental temporary payments, 

called “add-on” payments, to augment 

Medicare fee schedule payments to 

ambulance providers. The add-on 

payments increased payments for 

transports in urban, rural, and superrural (the least densely populated) 

areas by $175 million in calendar year 

2011, according to the Medicare 

Payment Advisory Commission. In 

2007, GAO reported a decline in 

transports by beneficiaries in superrural areas and recommended that the 

Centers for Medicare & Medicaid 

Services (CMS) monitor beneficiary 

use of ambulance transports to ensure 

access to services, particularly in 

super-rural areas. The Middle Class 

Tax Relief and Job Creation Act of 

2012 required GAO to update the 2007 

report. GAO examined, for 2010 (the 

most recent year complete data were 

available when GAO began the study),

(1) ground ambulance provider costs 

for transports, (2) the relationship 

between Medicare payments and 

provider costs, and (3) beneficiary use 

of ground ambulance transports. To do 

this work, GAO sent a survey to a 

sample of eligible providers based on 

the 2007 report sample asking for 

provider costs and characteristics. The 

sample is representative of all ground 

ambulance providers that billed 

Medicare in 2003 and 2010, were 

operational in 2012, and did not share 

costs with nonambulance services or 

air ambulance services. GAO also 

performed a regression analysis to 

examine factors that affect costs, 

analyzed Medicare claims and 

enrollment data, and interviewed 

representatives of ambulance provider 

organizations. CMS reviewed a draft of 

this report and had no comments.

What GAO Found

Ground ambulance providers’ costs per transport for 2010 varied widely. The 

median cost per transport for the providers in GAO’s sample was $429, ranging 

from $224 to $2,204 per transport. Provider characteristics that affected cost per 

transport were volume of transports (including both Medicare and non-Medicare 

transports), intensity of transports (the proportion of Medicare transports that 

were nonemergency), and the extent to which providers received government 

subsidies. Higher volume of transports, higher proportions of nonemergency 

transports, and lower government subsidies were associated with lower costs per 

transport. Providers reported that personnel cost was the largest cost component 

in their 2010 total costs and the biggest contributor to increases in their total 

costs from 2009 to 2010.

The median Medicare margin, including add-on payments, was about +2 percent 

in 2010 (meaning that providers' Medicare payments per transport exceeded 

their overall costs per transport) for the providers in GAO’s sample, but Medicare 

margins varied widely for those providers. When GAO removed the add-on 

payments, payments decreased for the providers in the sample, resulting in a 

lower median Medicare margin of -1 percent. Due to the wide variability of 

Medicare margins for providers in the sample, GAO cannot determine whether 

the median provider among the providers in the population that the sample 

represents had a negative or positive margin. The median Medicare margin with 

add-on payments ranged from about -2 percent to +9 percent, while the median 

Medicare margin without add-on payments ranged from about -8 percent to 

+5 percent.

Ground ambulance transports for all Medicare fee-for-service beneficiaries grew 

33 percent from 2004 to 2010. Transports by beneficiaries nationwide grew the 

most in super-rural areas (41 percent) relative to urban and rural areas. The 

increase overall is attributable primarily to an increase of 59 percent over this 

period in basic life support (BLS) nonemergency transports, which include 

noninvasive interventions, such as administering oxygen. In comparing this 

growth by service area, BLS nonemergency transports in super-rural areas grew 

the most—by 82 percent. Representatives from an ambulance provider 

organization suggested the increase in transports may be from increased billing 

by local governments. Some local governments that used to provide Medicare 

transports free of charge may bill Medicare now because of increased budgetary 

pressures. The Department of Health and Human Services Office of Inspector 

General has cited improper payments—which can be the result of billing 

mistakes—as one potential cause for increases in Medicare ambulance 

utilization and has stated that the Medicare ambulance transport benefit is highly 

vulnerable to abuse, with some payments for transports not meeting program 

requirements.

View GAO-13-6. For more information, contact 

James C. Cosgrove, (202) 512-7114 or 

cosgrovej@gao.gov.
Page i GAO-13-6 Ambulance Providers’ Costs and Margins

Letter 1 

Background 6

Providers’ 2010 Costs per Transport Varied Widely, Reflecting 

Differences in Certain Characteristics, and Personnel 

Constituted the Largest Cost Category 10

Median Medicare Margin for Providers in Sample Was about 2 

Percent in 2010, but Medicare Margins Varied Widely across 

Providers 18

Ambulance Transports Increased from 2004 to 2010, with the 

Largest Growth Occurring in Super-Rural Areas 22

Agency and Industry Comments and Our Evaluation 24

Appendix I Data and Methods 27

Appendix II GAO Contact and Staff Acknowledgments 40

Related GAO Products 41

Tables

Table 1: Ambulance Providers’ 2010 Median Costs per Transport, 

by Predominant Service Area 12

Table 2: Ambulance Providers’ 2010 Median Medicare Margins, by 

Predominant Service Area 19

Table 3: Ambulance Providers’ Estimated Range of 2010 Median 

Medicare Margins, by Predominant Service Area 22

Table 4: Ambulance Transports per 1,000 Beneficiaries in Urban, 

Rural, and Super-Rural Areas 23

Table 5: Provider Characteristics Included in Analysis of Total Cost 

and Cost per Transport, 2010 32

Table 6: Results for Ambulance Costs Regression—Estimated 

Effects of Selected Provider and Local Area 

Characteristics on the Total Cost of Providing Ground 

Ambulance Transports 33

Contents
Page ii GAO-13-6 Ambulance Providers’ Costs and Margins

Figures

Figure 1: Ambulance Providers’ Distribution of 2010 Costs per 

Transport 11

Figure 2: Illustrated Relationship between 2010 Cost per Transport 

and Volume of Transports for Ambulance Providers with 

20,000 or Fewer Transports, Based on Regression Model 14

Figure 3: Average Percentage of Ambulance Providers’ Total Cost 

Accounted for by Certain Cost Components 16

Figure 4: Ambulance Providers’ Distribution of 2010 Medicare 

Margins, by Predominant Service Area 20

Figure 5: Medicare Ambulance Payment Formula 36

Abbreviations

AAA American Ambulance Association

ALS advanced life support

BLS basic life support

CMS Centers for Medicare & Medicaid Services

EMS emergency medical services

GPCI geographic practice cost index

HHS Department of Health and Human Services

MSA metropolitan statistical area

NASEMSO National Association of State EMS Officials

NPI National Provider Identifier

OIG Office of Inspector General

PTAN Provider Transaction Access Number

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Page 1 GAO-13-6 Ambulance Providers’ Costs and Margins

United States Government Accountability Office

Washington, DC 20548

October 1, 2012

The Honorable Max Baucus

Chairman

The Honorable Orrin G. Hatch

Ranking Member

Committee on Finance

United States Senate

The Honorable Fred Upton

Chairman

The Honorable Henry Waxman

Ranking Member

Committee on Energy and Commerce

House of Representatives

The Honorable Dave Camp

Chairman

The Honorable Sander Levin

Ranking Member

Committee on Ways and Means

House of Representatives

Since 2004, Medicare payments to ambulance providers have been 

augmented by supplemental temporary payments. These supplemental 

payments, called “add-on” payments, increased payments for ground 

ambulance transports by $175 million for calendar year 2011, according 

to estimates from the Medicare Payment Advisory Commission. In 

calendar year 2010, the most recent year for which complete data were 

available when we began this study, ambulance providers furnished 

almost 16.6 million ground ambulance transports for approximately 

5.1 million Medicare fee-for-service beneficiaries. The Centers for 

Medicare & Medicaid Services (CMS), which administers the Medicare 

program, paid ground ambulance providers approximately $5.2 billion for 

these transports, which includes the add-on payments.

 
Page 2 GAO-13-6 Ambulance Providers’ Costs and Margins

We reported in 2007 that the costs of providing ground ambulance 

transports varied greatly across providers, as did Medicare margins (the 

relationship between the cost of providing a transport and the Medicare 

payment for a transport).1 This variation reflected differences in provider 

and community characteristics, such as the provider’s volume of 

transports and the service area it predominantly serves. We also found 

that in super-rural areas (where the population density is the lowest of the 

rural areas), the number of ground transports per 1,000 Medicare 

beneficiaries declined from 2001 to 2004. We recommended that CMS 

monitor the utilization of ambulance transports to ensure that 

beneficiaries had access to services, particularly in super-rural areas. 

Subsequently, Congress increased payments for urban and rural 

transports.2

Because Congress would like information about the adequacy of 

Medicare payments to ambulance providers and the need to continue 

authorizing the add-on payments, the Middle Class Tax Relief and Job 

Creation Act of 2012 required us to update the information in our 2007 

report.3

 

1

GAO, Ambulance Providers: Costs and Expected Medicare Margins Vary Greatly, 

We examined (1) 2010 ground ambulance providers’ costs for 

furnishing transports, (2) the relationship between 2010 Medicare 

payments and ground ambulance providers’ costs, and (3) Medicare 

beneficiaries’ use of ground ambulance transports in 2010.

GAO-07-383 (Washington, D.C.: May 23, 2007). CMS defines urban transports as those 

that originate within metropolitan statistical areas (MSA) and New England county 

metropolitan areas. It defines rural transports as those that originate in areas that are 

outside of MSAs and New England county metropolitan areas, as well as transports that 

originate from certain areas that are within MSAs and New England county metropolitan 

areas but that are isolated from central areas by distance or other features, such as 

mountains. CMS defines super-rural transports as those that originate in the bottom 

25 percent of rural areas as defined by population density. For purposes of the add-on 

payment policies, super-rural transports are a type of rural transport.

2

Medicare Improvements for Patients and Providers Act of 2008, Pub. L. No. 110-275, 

§ 146, 122 Stat. 2494, 2548 (amending Social Security Act § 1834(l)(13)).

3

Pub. L. No. 112-96, § 3007(d), 126 Stat. 156, 190. In addition, the act directed the 

Medicare Payment Advisory Commission to study Medicare ambulance payments, 

including the appropriateness and effects of the add-on payments, and provide 

recommendations for reforming the ambulance fee schedule, as appropriate. Pub. L. 

No. 112-96, § 3007(e), 126 Stat. 190.
Page 3 GAO-13-6 Ambulance Providers’ Costs and Margins

To examine 2010 ground ambulance providers’ costs for transports,4 in 

April 2012, we sent a web-based survey to a random sample of 294 

eligible ambulance providers to collect data on their costs, revenues, 

transports, and organizational characteristics in 2010.5 We received 

completed surveys from 154 providers, for a response rate of 52 percent.6

Our sample was based on our 2007 report’s sampling frame, which was 

representative of all ground ambulance providers that billed Medicare in 

2003.7 Because we found previously that cost data from ambulance 

providers that shared operational costs with other services, such as those 

provided by fire departments or air ambulance services, were unreliable, 

we excluded these providers from our current sample, as was done in the 

2007 report; however, unlike the sample for the 2007 report, we also 

excluded providers that shared operational costs with a hospital.8

 

4

In our 2007 report and for this report, we limited our review to ground ambulance 

providers and transports. For purposes of this report, we distinguished an ambulance 

provider and its service location(s) by the unique combination(s) of its Medicare National 

Provider Identifier(s) (NPI) and Provider Transaction Access Number(s) (PTAN), which 

are used by providers to bill Medicare.

5

Because 2010 was the most recent year for which complete Medicare claims data were 

available from CMS when we began this study, we asked providers to report cost and 

transport data for 2010 in the survey. Most providers in our sample submitted relevant 

information regarding one service location; however, some providers submitted relevant 

information regarding multiple service locations. See app. I for more information on how 

we accounted for multiple service locations in our analysis.

6

We received surveys from 172 providers; however, 11 of these providers were excluded 

because they reported in their surveys that they shared costs with nonambulance 

services. We also excluded 3 providers that were not able to provide total cost or total 

transports information and 1 provider that was not confident in the total cost amount 

provided. We also excluded 3 providers with costs per transport that were outliers—more 

than three standard deviations from the mean of the lognormal distribution. We did not 

obtain complete information for all survey respondents. Therefore, some analyses do not 

include all 154 respondents.

7

While CMS uses the term “ambulance providers” to refer to institution-based 

organizations and the term “ambulance suppliers” to refer to non-institution-based or 

freestanding organizations, for purposes of this report, we will refer to all organizations 

that provide ambulance services as ambulance providers.

8

In the 2007 report, certain providers, including hospital-based providers, were included in 

the analysis if they said they were able to report costs separately from other services; 

however, all fire departments were excluded. We found the costs reported by these and 

other providers with shared costs may reflect inconsistent methods for separating staff 

time and other resources across different services, raising questions about the reliability of 

data from providers with shared costs. Because the populations represented by the 

samples we used for our current report and our 2007 report differ, the results of the two 

reports are not directly comparable.
Page 4 GAO-13-6 Ambulance Providers’ Costs and Margins

Therefore, our sample is representative of the population of 

approximately 2,900 ground ambulance providers that billed Medicare in 

2003 and in 2010, were still operational in 2012, and did not share costs 

with nonambulance services or air ambulance services (an estimated 

26 percent of the ambulance industry in 2010). We selected these 

providers because they do not have to estimate costs across multiple 

business lines and represent mature organizations, void of potentially 

expensive start-up costs.

Using the survey data, we calculated providers’ costs per transport and 

examined how costs per transport varied across providers.9 We also 

determined which of the following cost components most contributed to 

providers’ total cost, as well as to increases in total cost: personnel; 

vehicle;10 fuel; medical supplies, equipment, and communications; 

building or facility; overhead and administration; or other.11 We performed 

a regression analysis to investigate the relationship between providers’ 

total cost and characteristics such as service area (urban, rural, or superrural), volume of transports, mix and intensity of Medicare transports,12

level of government subsidies received, use of volunteer staff,13

To ensure the reliability of the survey data, we incorporated internal data 

checks in the survey instrument, contacted providers that submitted 

inconsistent or incomplete data, and excluded three providers with 

and type 

of ownership. We divided predicted total cost by total transports to derive 

cost per transport.

 

9

Because providers do not generally track their costs by Medicare and non-Medicare, we 

obtained information for providers’ total costs. For the providers in our sample, we 

calculated providers’ costs per transport for all of their transports and assumed that this 

cost was similar for Medicare cost per transport and non-Medicare cost per transport. 

10Vehicle costs included lease and maintenance.

11This list of cost components was included in the survey, and providers indicated the 

percentage that each component contributed to their total cost.

12The mix of transports refers to the proportion of Medicare advanced life support (ALS) 

transports provided (as opposed to basic life support [BLS] transports), while the intensity 

of transports refers to the proportion of Medicare nonemergency transports provided (as 

opposed to emergency transports). We used Medicare claims data to determine the mix 

and intensity of transports covered by Medicare.

13For purposes of this report, volunteer staff refers to staff who respond to emergencies 

and staff ambulance transports (e.g., field staff) but who are not paid or are paid a nominal 

stipend.
Page 5 GAO-13-6 Ambulance Providers’ Costs and Margins

reported costs per transport that were more than three standard 

deviations from the mean of the lognormal distribution for survey 

respondents. Using Medicare claims data for all survey recipients, we 

were able to test for potential nonresponse bias for the characteristics 

contained in the claims data. The nonresponse analysis did not find any 

statistically measurable bias that would affect our analyses of providers’ 

costs. 

The survey data had some important limitations. We assumed that 

providers’ total cost per transport was equivalent to their Medicare cost 

per transport. This may introduce some bias since the mix and intensity of 

ambulance services used by Medicare beneficiaries may be different than 

those used by non-Medicare beneficiaries, and this could affect providers’ 

Medicare cost per transport. Similarly, providers generally do not track 

costs by urban, rural, or super-rural transports. Therefore, we classified 

providers by their predominant service area and there is likely to be some 

measurement error in identifying the full effect of service area on costs.14

Cost data reported in the survey are subject to some variability depending 

on the accounting methodology used by ambulance providers.15

To provide context for the factors associated with the costs of providing 

ambulance services, we reviewed wage and workers’ compensation 

insurance data from the Bureau of Labor Statistics, health insurance data 

In 

addition, the survey data were self-reported. Also, the small sample size 

and variability of self-reported costs limit the precision with which we can 

generalize our results.

 

14As we did in the 2007 report, we classified providers as super-rural if 60 percent or more 

of their Medicare transports in 2010 originated in a super-rural zip code. We classified 

providers as rural if they did not meet the super-rural definition and 60 percent or more of 

their Medicare transports in 2010 originated in rural or super-rural zip codes. We classified 

providers as urban if they did not meet the rural or super-rural classifications.

15Providers that use cash-basis accounting record receipts and outlays when cash is 

received or paid, without regard to when the activity occurs that results in revenue being 

earned, resources consumed, or liabilities increased. Providers that use accrual-basis 

accounting record receipts and outlays during the period in which resources are 

consumed or liabilities are increased, rather than when obligations are made or cash flows 

occur. For example, a provider that uses cash basis accounting would likely record the full 

cost of purchasing a new ambulance at the time it was purchased, whereas a provider that 

uses accrual basis accounting would likely spread the cost of purchasing the ambulance 

over a number of years. According to the American Ambulance Association (AAA), many 

private (for-profit and nonprofit) providers use accrual basis accounting, while government 

providers vary in the accounting method they use.
Page 6 GAO-13-6 Ambulance Providers’ Costs and Margins

from the Kaiser Family Foundation, and fuel data from the Department of 

Energy, and interviewed an official of the National Association of State 

EMS Officials (NASEMSO).

To determine the relationship of 2010 Medicare payments to ground 

ambulance providers’ costs, we used Medicare claims data to calculate 

Medicare payments in 2010 for the providers in our sample, and we 

calculated Medicare margins—the percentage difference between the 

Medicare payment per transport and cost per transport. Using the 

Medicare ambulance fee schedule and claims data, we calculated each 

provider’s Medicare payment per transport with and without the add-on 

payments. We then calculated the Medicare margin for each provider by 

subtracting its cost per transport (as calculated in the methodology for 

objective 1) from its Medicare payment per transport and dividing this 

amount by its Medicare payment per transport.

To examine Medicare fee-for-service beneficiaries’ use of ground 

ambulance transports in 2010, we analyzed 2010 Medicare claims and 

beneficiary enrollment data to calculate the number of transports per 

1,000 beneficiaries. We also analyzed 2004 Medicare claims and 

beneficiary enrollment data to determine the change in beneficiaries’ use 

of ground ambulance transports from 2004 to 2010. In addition, we 

interviewed officials of the American Ambulance Association (AAA). We 

assessed the reliability of Medicare claims and enrollment data and found 

these data sufficiently reliable for our purposes. (See app. I for additional 

details about our scope and methodology.)

We conducted this performance audit from April 2012 to September 2012 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

Ground ambulance services are provided by a wide range of 

organizations that differ in organizational structure, staffing types, types of 

transports offered, and revenue sources. Medicare payments for

ambulance services are made up of two components: a service-level 

payment for the type of transport provided and a mileage payment.

Background 
Page 7 GAO-13-6 Ambulance Providers’ Costs and Margins

Providers may be affiliated with an institution (such as a hospital or a fire 

department) and share resources and operational costs, or they may be 

independent and freestanding. In addition, providers may be for-profit, 

nonprofit, or government-based. Providers may rely heavily on 

volunteers, use both volunteers and paid staff, or use only paid staff. 

Providers may specialize in nonemergency transports, or offer both 

nonemergency and emergency (those responding to a 911 call) 

transports. Also, some providers offer only basic life support (BLS) 

services, while others offer advanced life support (ALS) services. ALS 

services require the skills of a medical technician who is more specialized 

and trained, such as a paramedic, than the technician who can provide 

BLS services.16

Revenue sources depend on the resources available in communities and 

communities’ choices about funding ambulance services. They may 

include community tax support, charitable donations, in-kind 

contributions, state and federal grants, subscription programs,17 and 

payments from Medicare or Medicaid and private health insurance 

companies (including patient copayments or coinsurance). The mix and 

amount of revenues available may vary. Communities differ by the level 

of tax support for specific services, such as ensuring a minimum level of 

service in remote areas, sophistication of transport vehicles, and the 

training level of the staff.

Medicare pays ambulance providers through a national fee schedule. 

(See fig. 5 in app. I for an overview of the Medicare ambulance payment 

formula.) Payments have two components:

 

16BLS services include basic, noninvasive interventions, such as administering oxygen; 

ALS services involve invasive or specialized care, such as administering drugs 

intravenously.

17A subscription program is an arrangement in which an ambulance provider is paid an 

annual fee for providing emergency transportation for a community.

Diversity of the Ambulance 

Industry 

Medicare Ambulance 

Payment Policy
Page 8 GAO-13-6 Ambulance Providers’ Costs and Margins

1. service-level payment: for the type of transport provided, such as an 

ALS Level 1 transport;18

2. mileage payment.

and

19

Currently included in Medicare’s payments to ground ambulance 

providers are different levels of add-on payments for urban, rural, and 

super-rural transports. The add-on payments increase payments for 

urban and rural transports by 2 and 3 percent, respectively. There is also 

an add-on payment applicable to super-rural transports, consisting of the 

3 percent rural amount and an additional increase of 22.6 percent for a 

portion of the super-rural payment.20

 

18The service-level payment is determined by a base rate that is adjusted to account for 

the mix and intensity of the service using a constant multiplier called the relative value 

unit. The service-specific amount is then adjusted by an estimate of the different costs of 

operating ambulance services in different regions of the country. Under the Medicare 

program, there are seven levels of ambulance transports: (1) BLS nonemergency 

transports, (2) BLS emergency transports, (3) ALS Level 1 nonemergency transports, 

(4) ALS Level 1 emergency transports, (5) ALS Level 2 transports, (6) specialty care 

transports, and (7) paramedic intercepts. Paramedic intercepts are when ambulance 

providers perform ALS services but do not transport the patient. Throughout this report we 

use the term BLS to refer to BLS nonemergency transports and BLS emergency 

transports. We use the term ALS to refer to transports that are ALS or higher, including 

ALS Level 1 nonemergency transports, ALS Level 1 emergency transports, ALS Level 2 

transports, specialty care transports, and paramedic intercepts.

The add-on payments were 

originally implemented under the Medicare Prescription Drug, 

19The mileage payment is determined by the number of miles traveled with a patient 

during an ambulance transport and the mileage base rate. Since 2002, CMS has 

increased the rural mileage rate (which also applies to super-rural transports) by 

50 percent for miles 1 through 17. See 67 Fed. Reg. 9100 (Feb. 27, 2002) (adding subpart 

H to 42 C.F.R. part 414); 42 C.F.R. § 414.610(c)(5)(i)(2011) (this mileage rate increase is 

not set to expire). Also see fig. 5 in app. I for an overview of the Medicare ambulance 

payment formula.

20The urban and rural add-on payment rates apply to the service-level and mileage 

payments, whereas, for super-rural transports, the 3 percent increase applies to the 

service-level and mileage payments and the 22.6 percent increase applies only to the 

service-level payment. For purposes of this report, we refer to all of these increases as 

add-on payments.
Page 9 GAO-13-6 Ambulance Providers’ Costs and Margins

Improvement, and Modernization Act of 2003,21 temporarily extended by 

subsequent acts,22 and most recently extended through the end of 2012 

by the Middle Class Tax Relief and Job Creation Act of 2012.23

Providers paid under a fee schedule generally have an incentive to keep 

their costs to deliver services at or below the fee schedule rate. Some 

providers rely heavily on Medicare revenues, and adequate Medicare 

margins for these providers may help ensure that beneficiaries have 

access to ambulance services. In our 2007 report, we found that 

providers with lower transport volumes generally had higher costs per 

transport than providers with greater transport volumes.24 Because of 

high fixed costs for maintaining readiness—the availability of an 

ambulance and crew for immediate emergency responses—providers 

with low volumes, which still need to maintain readiness, tended to have 

higher costs per transport. Other significant factors that affected cost per 

transport included level of volunteer staff hours, percentage of Medicare 

transports that are BLS, percentage of Medicare transports that are 

super-rural, and level of community tax support.

 

21Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. 

No. 108-173, § 414(c), 117 Stat. 2066, 2279 (adding paragraphs (12) and (13) to Social 

Security Act § 1834(l)).

22The Medicare Improvements for Patients and Providers Act of 2008, Patient Protection 

and Affordable Care Act of 2010, Medicare and Medicaid Extenders Act of 2010, and 

Temporary Payroll Tax Cut Continuation Act of 2011 all extended and, in some instances, 

further increased these payments after the provisions in the Medicare Prescription Drug, 

Improvement, and Modernization Act of 2003 for urban and rural services and for superrural services expired at the end of 2006 and 2009, respectively. Medicare Improvements 

for Patients and Providers Act of 2008, Pub. L. No. 110-275, § 146(a), 122 Stat. 2548; 

Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, § 3105(a) and 

(c), 124 Stat. 119, 417, 418; Medicare and Medicaid Extenders Act of 2010, Pub. L. 

No. 111-309, § 106(a) and (c), 124 Stat. 3285, 3287; and Temporary Payroll Tax Cut 

Continuation Act of 2011, Pub. L. No. 112-78, § 306(a) and (c), 125 Stat. 1280, 1285.

23Pub. L. No. 112-96, § 3007(a) and (c), 126 Stat. 190.

24This affirmed findings from our 2003 report that volume of transports was a primary 

driver of cost per transport. See GAO, Ambulance Services: Medicare Payments Can Be 

Better Targeted to Trips in Less Densely Populated Rural Areas, GAO-03-986

(Washington, D.C.: Sept. 19, 2003).

Providers’ Costs and 

Medicare Margins
Page 10 GAO-13-6 Ambulance Providers’ Costs and Margins

Providers’ costs for providing ground ambulance transports were highly 

variable in 2010, ranging from a low of $224 per transport to a high of 

$2,204, with a median cost per transport of $429. The variability of costs 

per transport reflected differences in certain provider characteristics, such 

as volume of transports, intensity of Medicare transports, and level of 

government subsidies received. Providers reported that personnel costs 

accounted for the largest percentage of their total costs in 2010 and 

contributed the most to increases in total costs between 2009 and 2010.

The median cost per ground ambulance transport for providers in our 

sample was $429 in 2010, but providers’ costs per transport ranged from 

a low of $224 to a high of $2,204. Five percent of providers had costs per 

transport that were less than $253, and 5 percent had costs per transport 

that were more than $924. Figure 1 shows the distribution of 2010 costs 

per transport for providers in our sample.

Providers’ 2010 Costs 

per Transport Varied 

Widely, Reflecting 

Differences in Certain 

Characteristics, and 

Personnel Constituted 

the Largest Cost 

Category 

Median Cost per Transport 

in 2010 Was $429, but 

Costs per Transport Varied 

Widely across All 

Providers
Page 11 GAO-13-6 Ambulance Providers’ Costs and Margins

Figure 1: Ambulance Providers’ Distribution of 2010 Costs per Transport

Notes: Data were from the 2012 GAO Survey of Ambulance Services. Data represent a sample of 

154 ground ambulance providers in the United States that billed Medicare in 2003 and 2010, were 

still operational in 2012, and did not share costs with nonambulance services or air ambulance 

services.

a

The median cost per transport was $429.

Among the population of providers from which our sample was drawn, the 

estimated median cost per transport ranged from $401 to $475, which 

represents the 95 percent statistical confidence interval around the 

median and is the range within which we expect the population median 

cost per transport to fall in 95 percent of the samples we could have 

drawn.

25

 

25Because our cost per transport information is estimated from a sample of providers, we 

report all costs per transport with confidence intervals. The range of the confidence 

interval is affected by the variability of the data we collected from our sample and the size 

of our sample. See app. I for a full discussion of our sample, methods, and calculations.
Page 12 GAO-13-6 Ambulance Providers’ Costs and Margins

Super-rural providers had estimated median costs per transport that were 

significantly higher than urban providers (see table 1).26 The variability 

associated with our survey data did not allow us to conclude that rural 

providers’ estimated median costs per transport were significantly 

different from super-rural or urban providers. As will be discussed later, 

when we controlled for other provider characteristics that affected cost 

per transport using regression analysis, differences in cost per transport 

by service area were not significant.27

Table 1: Ambulance Providers’ 2010 Median Costs per Transport, by Predominant 

Service Area

This could mean that provider 

characteristics other than service area were more important in explaining 

the variation in cost per transport.

Providers’ predominant 

service area

Sample median 

cost per transport

(dollars) a

Estimated range of median 

cost per transportb

Urban 

(dollars)

$397 $374 to 410

Rural 469 404 to 550

Super-rural 545 445 to 639

Source: GAO analysis of GAO and CMS data.

Notes: The table shows median costs per transport for providers in our sample and the 95 percent 

confidence interval of the median costs per transport for the population of providers represented by 

our sample. Cost data were from the 2012 GAO Survey of Ambulance Services and data on 

providers’ predominant service area were from 2010 Medicare claims. Results are based on a sample 

of 153 ground ambulance providers, representing approximately 2,900 providers in the United States 

that billed Medicare in 2003 and 2010, were still operational in 2012, and did not share costs with 

nonambulance services or air ambulance services. The sample included 70 urban providers, 57 rural 

providers, and 26 super-rural providers. One provider that was included in the survey data analysis 

was excluded here because we could not identify complete relevant Medicare claims data.

a

We classified providers as super-rural if 60 percent or more of their Medicare transports in 2010 

originated in a super-rural zip code. We classified providers as rural if they did not meet the superrural definition and 60 percent or more of their Medicare transports in 2010 originated in rural or 

super-rural zip codes. We classified providers as urban if they did not meet the rural or super-rural 

classifications.

b

 

26The difference between these medians is statistically significant at the 0.05 level.

The range is the 95 percent confidence interval—the interval that would contain the actual population 

value for 95 percent of the samples we could have drawn. The range of the confidence interval is 

affected by the variability of the cost data we collected from our sample and the size of our sample.

27For our regression analysis, we used measures of service area that reflected the 

percentages of a provider’s transports that originated in urban, rural, and super-rural zip 

codes. This was different from our measure of a provider’s predominant service area and 

enabled us to include more information about a provider’s service area in the regression 

analysis. 
Page 13 GAO-13-6 Ambulance Providers’ Costs and Margins

The variability of costs per transport among providers reflected 

differences in certain provider characteristics. On the basis of our 

regression analysis, the provider characteristics that contributed to 

statistically significant differences in total cost, and therefore cost per 

transport—after holding other characteristics constant—were volume of 

transports,28 intensity of Medicare transports,29 and the level of 

government subsidies received.30 Because some ambulance costs are 

fixed, and therefore do not increase significantly when a provider 

completes more transports, it is expected that as the number of transports 

provided increases, associated costs per transport will be somewhat 

lower. Figure 2 illustrates the relationship between cost per transport and 

volume of transports, based on our regression analysis. At approximately 

600 transports, the decline in cost per transport becomes less 

pronounced.31

 

28Total transport volume includes all of a provider’s transports, not only those covered by 

Medicare.

29In our previous report, we found that the intensity of transports—that is, the proportion of 

emergency transports provided as opposed to nonemergency transports—did not 

contribute to significant differences in costs per transport. See GAO-07-383. 

30We performed a regression analysis to investigate the relationship between providers’ 

total cost and characteristics such as service area (urban, rural, or super-rural), volume of 

transports, mix and intensity of Medicare transports, level of government subsidies 

received, use of volunteer staff, and type of ownership. We divided predicted total cost by 

total transports to derive cost per transport. See table 6 in app. I for additional details 

about this analysis.

31After 600 transports, each increase of 10 transports results in a decrease in cost per 

transport of less than 0.10 percent.

Volume of Transports and 

Other Provider 

Characteristics 

Contributed to Differences 

in Costs per Transport
Page 14 GAO-13-6 Ambulance Providers’ Costs and Margins

Figure 2: Illustrated Relationship between 2010 Cost per Transport and Volume of Transports for Ambulance Providers with 

20,000 or Fewer Transports, Based on Regression Model

Notes: The curve illustrates the cost per transport at different volumes of transports, based on our 

regression analysis of total costs. The regression analysis included 11 variables, of which 3 were 

found to be statistically significant in explaining the variation in providers’ total costs: transport 

volume, intensity of Medicare transport (emergency vs. nonemergency), and receipt of government 

subsidies. Total transport volume includes all of a provider’s transports, not only those covered by 

Medicare. Data were from the 2012 GAO Survey of Ambulance Services, 2010 Medicare claims, and 

the Medicare Ambulance Fee Schedule Public Use File. The figure represents providers with 20,000 

or fewer transports, approximately 85 percent of our sample.

Our regression analysis found two other provider characteristics to be 

statistically significant in explaining the variation in providers’ total costs—

the intensity of Medicare transports (that is, the proportion of Medicare 

nonemergency transports provided) and the level of government 

subsidies received. With these results, we determined for our sample that 

when the percentage of Medicare nonemergency transports decreases, 

the predicted cost per transport increases.32

 

32We did this by comparing predicted cost per transport calculated for different values for 

these variables while holding the values of other variables at their regression sample 

mean. See app. I for a more-detailed discussion of this methodology.

For example, when the 
Page 15 GAO-13-6 Ambulance Providers’ Costs and Margins

percentage of Medicare nonemergency transports decreases from the 

average of about 26 percent to about 19 percent, the predicted cost per 

transport increases by about 3 percent. This increase in predicted cost 

per transport results from a higher volume of emergency transports, 

which are more costly. In contrast, when providers’ percentage of 

revenues accounted for by government subsidies decreases, their 

predicted cost per transport also decreases. For example, when the level 

of government subsidies decreases from the average of about 9 percent 

to about 7 percent, the predicted cost per transport decreases by about 

2 percent. Ambulance providers with fewer resources may have more 

financial pressure to restrain their costs. The Medicare Payment Advisory 

Commission has found this to be the case in the hospital industry.33

Characteristics that did not contribute significantly to differences in costs 

per transport, after holding other characteristics constant, included 

service area, the mix of Medicare transports, the use of volunteer staff, 

and type of ownership.34 Although we found that costs per transport for 

super-rural providers were significantly higher than costs per transport for 

urban providers (see table 1), these estimates were based on providers’ 

reported cost data. After holding other characteristics constant using 

regression analysis, we found that service area did not contribute to 

significant differences in costs per transport.

Providers in our sample reported that personnel costs accounted for the 

largest percentage of their total cost in 2010 and contributed the most to 

increases in total cost between 2009 and 2010. Of the 143 providers that 

reported the percentage of their total cost accounted for by certain cost 

components, 136 reported that personnel costs accounted for the 

greatest percentage of their total cost in 2010. On average, personnel 

costs accounted for over 60 percent of these providers’ total cost in 2010 

 

33See Medicare Payment Advisory Commission, Report to the Congress: Medicare 

Payment Policy (Washington, D.C.: March 2011).

34In our previous report, we found that the providers’ service area and the mix of Medicare 

transports—that is, the proportion of Medicare ALS or higher transports provided as 

opposed to BLS transports—contributed to significant differences in costs per transport. 

Providers that offered only super-rural transports had estimated average costs per 

transport that were higher than providers that offered only urban transports. Similarly, 

providers that offered only ALS or more intensive transports had estimated average costs 

per transport that were higher than providers that offered only BLS transports. See 

GAO-07-383. 

Providers Reported That 

Personnel Cost Was the 

Dominant Factor in 2010 

Total Cost and Growth 

between 2009 and 2010
Page 16 GAO-13-6 Ambulance Providers’ Costs and Margins

(see fig. 3). Overall, the percentage of total cost accounted for by various 

cost components was fairly consistent across urban, rural, and superrural providers in our sample. One exception was that super-rural 

providers reported higher proportions of their costs being devoted to 

medical supplies, equipment, and communication compared to urban 

providers. A potential explanation for this difference could be that superrural providers in our sample tended to have higher proportions of 

Medicare ALS transports, which require the use of more sophisticated 

supplies and equipment.

Figure 3: Average Percentage of Ambulance Providers’ Total Cost Accounted for by 

Certain Cost Components

Notes: Data were from the 2012 GAO Survey of Ambulance Services. Percentages are based on 

reported data from a sample of 154 ground ambulance providers in the United States that billed 

Medicare in 2003 and 2010, were still operational in 2012, and did not share costs with 

nonambulance services or air ambulance services. Analysis excludes 11 providers that could not 

determine cost component percentages. “Other” category includes percentages for cost components 

not specified in the survey, such as insurance (including workers’ compensation, liability, and building 

insurance), billing services, bad debt, and depreciation.

In addition, 118 of the 154 providers in our sample reported an increase 

in their total cost from 2009 to 2010. Of providers that reported an 

increase, the majority cited personnel costs and fuel costs (100 providers 
Page 17 GAO-13-6 Ambulance Providers’ Costs and Margins

and 81 providers, respectively) as contributing to the increase in total 

cost.35 According to the Bureau of Labor Statistics, average hourly wages 

for the ambulance industry remained fairly stable between 2009 and 

2010.36

Consistent with what providers reported, we found national data sources 

that supported increases in providers’ health insurance costs, education 

and training requirements, and fuel costs between 2009 and 2010. 

According to the Kaiser Family Foundation, the average annual health 

insurance premium for family coverage increased 3 percent between 

2009 and 2010.

However, some providers reported that increases in the cost of 

health insurance and workers’ compensation insurance as well as 

increases in education and training requirements, among other things, 

contributed to increases in personnel costs.

37 Additionally, according to a NASEMSO official, many 

providers experienced increases in education and training costs as a 

result of transitioning to updated national emergency medical service 

standards (known as the National Emergency Medical Services [EMS] 

Education Standards) issued by the Department of Transportation in 

2009.38 Although the standards are not required, the vast majority of 

states adopt them, according to the NASEMSO official. Also, according to 

the Department of Energy, average fuel costs increased from roughly 

$2.50 a gallon in 2009 to $3.00 a gallon in 2010 (2012 dollars).39

 

35Providers were asked to list up to three cost components, in rank order, that contributed 

to the increase in total cost. Of the 118 providers that reported an increase in total cost, 75 

providers ranked personnel costs first as contributing to the increase.

In terms 

36See U.S. Bureau of Labor Statistics, Occupational Employment and Wage Estimates: 

National 5-digit NAICS Industry-Specific Estimates for the Ambulance Services Industry 

(Washington, D.C.: 2009 and 2010). The wage estimate from the Bureau of Labor 

Statistics is a composite of various occupations that participate in the ambulance industry, 

including management occupations, business and financial operations occupations, health 

care practitioners and technical occupations, and office and administrative support 

occupations.

37See The Kaiser Family Foundation and Health Research & Educational Trust, Employer 

Health Benefits: 2011 Annual Survey (Menlo Park, Calif., and Chicago, Ill.: 2011).

38These standards define the competencies, clinical behaviors, and judgments that must 

be met by entry-level EMS personnel to meet practice guidelines defined in the National 

EMS Scope of Practice Model. According to a NASEMSO official, to the extent that the 

updated standards include new medical practice techniques, including the use of new 

medications and equipment, EMS personnel who were trained using the previous 

standards will need to be trained in these new techniques.

39These estimates refer to both retail gasoline and diesel prices.
Page 18 GAO-13-6 Ambulance Providers’ Costs and Margins

of workers compensation insurance, our survey respondents reported 

trends that were not substantiated by national data, though it is possible 

that national data are not generally representative of the ambulance 

industry. According to the Bureau of Labor Statistics, the average amount 

that employers paid for workers’ compensation insurance decreased 

slightly between 2009 and 2010, from $0.44 to $0.43 per hour worked by 

an employee.40

The median Medicare margin, including add-on payments, was about 

positive 2 percent in 2010 for the 153 providers in our sample.41 When we 

removed the add-on payments, we found that payments decreased for 

the providers in our sample, resulting in a lower median Medicare margin 

of negative 1 percent for those providers. See table 2.

 

40See U.S. Bureau of Labor Statistics, Employer Costs for Employee Compensation – 

December 2009 (Washington, D.C.: March 2010) and U.S. Bureau of Labor Statistics, 

Employer Costs for Employee Compensation – December 2010 (Washington, D.C.: March 

2011). These estimates are for all civilian workers, which include private industry and state 

and local government workers.

41One provider that was included in the survey data analysis was excluded here because 

we could not identify complete relevant Medicare claims data.

Median Medicare 

Margin for Providers 

in Sample Was about 

2 Percent in 2010, but 

Medicare Margins 

Varied Widely across 

Providers 
Page 19 GAO-13-6 Ambulance Providers’ Costs and Margins

Table 2: Ambulance Providers’ 2010 Median Medicare Margins, by Predominant Service Area

Providers’ 

predominant 

service area

Median Medicare 

payment per transport 

with add-on payments

(dollars) a

Median cost 

per transport

(dollars)

Median Medicare margin 

with add-on payments

(percentage)

Median Medicare margin 

without add-on payments 

(percentage)

Urban $404 $397 1.6% -0.5%

Rural 517 469 2.9 0.1

Super-rural 620 545 0.3 -14.3

All providers $464 $429 1.7% -1.0%

Source: GAO analysis of GAO and CMS data.

Notes: All payments and costs were expressed in 2010 dollars. Payment data and data on providers’ 

predominant service area were from 2010 Medicare claims, and the payment data assumed that 

providers charged the maximum allowed amount under the ambulance fee schedule. Cost data were 

from the 2012 GAO Survey of Ambulance Services. Margins were calculated from 2010 Medicare 

claims and the 2012 GAO Survey of Ambulance Services. The results represent a sample of 153 

ground ambulance providers in the United States that billed Medicare in 2003 and 2010, were still 

operational in 2012, and did not share costs with nonambulance services or air ambulance services. 

The sample included 70 urban providers, 57 rural providers, and 26 super-rural providers. One 

provider that was included in the survey data analysis was excluded here because we could not 

identify complete relevant Medicare claims data.

a

We classified providers as super-rural if 60 percent or more of their Medicare transports in 2010 

originated in a super-rural zip code. We classified providers as rural if they did not meet the superrural definition and 60 percent or more of their Medicare transports in 2010 originated in rural or 

super-rural zip codes. We classified providers as urban if they did not meet the rural or super-rural 

classifications.

There was wide variability in Medicare margins for all providers, 

irrespective of their predominant service areas. See figure 4 for the 

distribution of 2010 Medicare margins with and without add-on payments 

for the providers in our sample, by predominant service area.42

 

42A Medicare margin of 0 percent indicates that an ambulance provider broke even on its 

Medicare transports, that is, its Medicare payment per transport equaled its cost per 

transport.
Page 20 GAO-13-6 Ambulance Providers’ Costs and Margins

Figure 4: Ambulance Providers’ Distribution of 2010 Medicare Margins, by Predominant Service Area
Page 21 GAO-13-6 Ambulance Providers’ Costs and Margins

Notes: Payment data and data on providers’ predominant service area were from 2010 Medicare 

claims, and the payment data assumed that providers charged the maximum allowed amount under 

the ambulance fee schedule. Cost data were from the 2012 GAO Survey of Ambulance Services. 

Margins were calculated from 2010 Medicare claims and the 2012 GAO Survey of Ambulance 

Services. The results represent a sample of 153 ground ambulance providers in the United States 

that billed Medicare in 2003 and 2010, were still operational in 2012, and did not share costs with 

nonambulance services or air ambulance services. The sample included 70 urban providers, 57 rural 

providers, and 26 super-rural providers. One provider that was included in the survey data analysis 

was excluded here because we could not identify complete relevant Medicare claims data. We 

classified providers as super-rural if 60 percent or more of their Medicare transports in 2010 

originated in a super-rural zip code. We classified providers as rural if they did not meet the superrural definition and 60 percent or more of their Medicare transports in 2010 originated in rural or 

super-rural zip codes. We classified providers as urban if they did not meet the rural or super-rural 

classifications.

We could not assess whether the median provider in the population 

represented by our sample had a positive or negative Medicare margin 

because the range of the 95 percent confidence interval for the median 

Medicare margin—both with and without add-on payments—included 

both positive and negative margins. (See table 3.) The range of the 

confidence interval is affected by variability in the size of Medicare 

payments allowed under the fee schedule, variability in the cost data we 

collected from our sample, and the size of our sample. As a result, we 

could not determine the extent of the effect of adding or removing the 

add-on payments on the median Medicare margin. Similarly, we could not 

find any significant differences in the median Medicare margins between 

providers with predominantly urban, rural, or super-rural service areas.
Page 22 GAO-13-6 Ambulance Providers’ Costs and Margins

Table 3: Ambulance Providers’ Estimated Range of 2010 Median Medicare Margins, by Predominant Service Area

Providers’ 

predominant 

service area

Medicare payment 

per transport with 

add-on payments

(dollars) a

Median cost 

per transport

(dollars)

Median Medicare margin 

with add-on payments

(percentage)

Median Medicare margin 

without add-on payments 

(percentage)

Urban $382 to 420 $374 to 410 -5.3 to 5.2% -7.5 to 3.3%

Rural 488 to 546 404 to 550 -17.1 to 17.9 -20.6 to 15.3

Super-rural 605 to 648 445 to 639 -6.3 to 24.2 -25.5 to 10.7

All providers $434 to 493 $401 to 480 -2.3 to 9.3% -8.4 to 5.3%

Source: GAO analysis of GAO and CMS data.

Notes: All payments and costs were expressed in 2010 dollars. Payment data and data on providers’ 

predominant service area were from 2010 Medicare claims, and the payment data assumed that 

providers charged the maximum allowed amount under the ambulance fee schedule. Cost data were 

from the 2012 GAO Survey of Ambulance Services. Margins were calculated from 2010 Medicare 

claims and the 2012 GAO Survey of Ambulance Services. The table shows the range of the 

95 percent confidence intervals for the population of providers; the range of the confidence interval 

was affected by variability in the size of Medicare payments allowed under the fee schedule, the 

variability of the cost data we collected from our sample, and the size of our sample. The results were 

based on a sample of 153 ground ambulance providers, representing approximately 2,900 providers 

in the United States that billed Medicare in 2003 and 2010, were still operational in 2012, and did not 

share costs with nonambulance services or air ambulance services. The sample included 70 urban 

providers, 57 rural providers, and 26 super-rural providers. One provider that was included in the 

survey data analysis was excluded here because we could not identify complete relevant Medicare 

claims data.

a

We classified providers as super-rural if 60 percent or more of their Medicare transports in 2010 

originated in a super-rural zip code. We classified providers as rural if they did not meet the superrural definition and 60 percent or more of their Medicare transports in 2010 originated in rural or 

super-rural zip codes. We classified providers as urban if they did not meet the rural or super-rural 

classifications.

Ambulance transports for all Medicare fee-for-service beneficiaries in the 

nation increased by 33 percent from 2004 to 2010. All three service 

areas—urban, rural, and super-rural—experienced growth. Transports 

per 1,000 beneficiaries in super-rural areas grew the most, by 41 percent, 

and transports per 1,000 beneficiaries in rural and urban areas increased 

by 35 percent and 32 percent, respectively.43 (See table 4.)

 

43To make our 2004 and 2010 calculations of transports per 1,000 beneficiaries 

comparable, we updated and revised our 2004 calculations from GAO-07-383 to include 

all beneficiaries who are dually eligible for Medicare fee-for-service and Medicaid.

Ambulance 

Transports Increased 

from 2004 to 2010, 

with the Largest 

Growth Occurring in 

Super-Rural Areas
Page 23 GAO-13-6 Ambulance Providers’ Costs and Margins

Table 4: Ambulance Transports per 1,000 Beneficiaries in Urban, Rural, and SuperRural Areas

Area Transports, 2004 Transports, 2010

Percentage change,

2004-2010

Urban 348 459 32%

Rural 305 412 35

Super-rural 188 265 41

All 328 436 33%

Source: GAO analysis of CMS data.

The increase in ambulance transports from 2004 to 2010 is attributable 

primarily to an increase in BLS nonemergency transports, which rose by 

59 percent from 2004 to 2010. Super-rural areas experienced the largest 

increase in BLS nonemergency transports (82 percent). The increase in 

Medicare beneficiaries’ use of ambulance services did not appear to be 

caused by changes in the demographic characteristics of beneficiaries. 

For example, factors such as age, race, and sex remained stable from 

2004 to 2010 in urban, rural, and super-rural areas.

Representatives we spoke with from one ambulance provider 

organization suggested that some of the increase in ambulance 

transports was attributable to increased billing for Medicare ambulance 

services at the local-government level. Some local governments that 

provided ambulance transports free of charge had been reluctant in the 

past to bill insurers such as Medicare because patients would then be 

financially responsible for out-of-pocket insurance costs, such as 

deductibles and copayments. The increased out-of-pocket costs for 

patients had the potential to result in less community support of 

ambulance providers through fewer charitable contributions and fewer 

volunteers. However, these local governments have begun to bill 

Medicare as well as other insurers because of increased budgetary 

pressures. Representatives we spoke with also added that the 

introduction of the national fee schedule in 2002 may have contributed to 

increased billing because it allowed providers to better anticipate the 

amount of revenue they could receive from Medicare.
Page 24 GAO-13-6 Ambulance Providers’ Costs and Margins

The Department of Health and Human Services (HHS) Office of Inspector 

General (OIG) has explored increases in ambulance utilization and has 

cited improper payments as one potential cause.44 For example, HHS 

OIG found that nonemergency transports, including BLS nonemergency 

transports, made up the majority of improper payments for ambulance 

services, and particularly transports for dialysis services.45 HHS OIG also 

found that Medicare’s ambulance transport benefit is highly vulnerable to 

abuse and found that many ambulance transports paid for by Medicare 

did not meet Medicare program requirements, including transports that 

were not medically necessary.

We provided a draft of this report to HHS and invited representatives of 

AAA to review the draft. HHS had no general or technical comments on 

behalf of CMS. The AAA representatives provided oral comments and 

generally agreed with our findings; however, AAA had some questions 

regarding our methodology and conclusions, which we clarified in the 

report where appropriate and discuss below. In addition, AAA provided 

technical comments, which we incorporated as appropriate.

AAA representatives questioned whether the Medicare margin results 

were comparable to those of the 2007 report and were concerned that 

readers would conclude that providers’ Medicare margins have increased 

over time. We clarified in the report that we do not consider the results 

reported in 2007 and in the current report to be directly comparable 

because the samples examined in each report were different and we 

reported median Medicare margins in the current report whereas in 2007 

we reported average Medicare margins. AAA representatives noted that 

our sample contains providers that have been in business since at least 

2003 and that the cost data from this sample may not be representative of 

all ambulance providers. We agree that the providers in our sample 

 

44Improper payments can be the result of billing mistakes on the part of ambulance 

providers as well as fraud and abuse. Fraud generally involves intentional acts of 

deception or representation to deceive with knowledge that the action or representation 

could result in gain, while abuse typically involves actions that are inconsistent with sound 

fiscal, business, or medical practices and result in unnecessary cost. See GAO, Medicare: 

Improvements Needed to Address Improper Payments in Home Health, GAO-09-185

(Washington, D.C.: Feb. 27, 2009).

45See HHS OIG, Medicare Payments for Ambulance Transports (Washington, D.C.: 2006) 

and HHS OIG, Medical Necessity of Medicare Ambulance Services (Washington, D.C.: 

1998).

Agency and Industry 

Comments and Our 

Evaluation 
Page 25 GAO-13-6 Ambulance Providers’ Costs and Margins

represent mature and well-established organizations—an advantage 

because this approach avoids start-up organizations with potentially high 

start-up costs, as described in our scope and methodology. Despite the 

differences in the samples and the type of measure used for reporting 

Medicare margins, both of these studies showed wide variation in costs 

per transport and Medicare margins.

AAA representatives had some questions about the results of our 

regression analysis. For example, the regression results suggest that 

ambulance providers that receive a greater proportion of government 

subsidies tend to have higher costs. The representatives theorized that 

providers with higher costs seek additional government support and did 

not think this finding was consistent with how their industry operates. As 

described in the report, the Medicare Payment Advisory Commission 

found an association between increased resources and increased costs 

in the hospital industry and theorizes that such hospitals face less 

pressure to control costs. We found an association in the ambulance 

industry but determining causality was beyond the scope of our work. 

AAA representatives also questioned the regression analysis results that 

indicated that providers’ use of volunteer staff did not significantly 

contribute to differences in providers’ total costs, because our survey data 

indicated that personnel costs were, on average, 61 percent of providers’ 

total costs. The results may be a consequence of the relatively small 

sample size and, in addition, a small proportion of providers in our sample

using volunteer staff (21 percent). 

Finally, the AAA representatives commented that ground ambulance 

providers’ current Medicare payments are lower than those we calculated 

for 2010 because of the expiration of a required temporary increase in 

Medicare payments for certain geographic areas,46 the implementation of 

a policy for reporting fractional mileage,47

 

46A required increase in the practice expense portion of the geographic practice cost index 

(GPCI) for certain areas expired at the end of 2011, resulting in payment reductions for 

those areas. See Pub. L. No. 111-148, § 3102(b)(2),124 Stat. 416.

and the introduction of a 

productivity adjustment relative to the annual inflation adjustment of the 

47Starting in 2011, for payment purposes, CMS required that providers specify the number 

of miles traveled during a transport rounded up to the nearest tenth of a mile (up to 

100 miles). Previously, providers reported the number of miles rounded up to the nearest 

whole number. See 75 Fed Reg. 73170 (Nov. 29, 2010) (discussion of policy contained in 

section VII.B. of preamble).
Page 26 GAO-13-6 Ambulance Providers’ Costs and Margins

fee schedule.48 In addition, AAA noted that the cost of fuel has increased 

since 2010. We acknowledge that these factors likely lowered Medicare 

payments and increased costs for some providers after 2010,49 the most 

recent year for which data were available when we began our study. 

We are sending copies of this report to other congressional committees 

and the Administrator of CMS. In addition, the report is available at no 

charge on the GAO website at http://www.gao.gov. 

If you or your staffs have any questions about this report, please contact 

me at (202) 512-7114 or cosgrovej@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of the report. GAO staff who made major contributions to 

this report are listed in appendix II.

James C. Cosgrove

Director, Health Care

 

48CMS increases fee schedule rates each year for inflation. However, starting in 2011, the 

amount of the increase for inflation was reduced by a measure of overall productivity in 

the economy. See Pub. L. No. 111-148, § 3401(a), 124 Stat. 480.

49However, for some providers, Medicare payment rates increased after 2010. 

Specifically, beginning in 2011, CMS increased the practice expense portion of the GPCI 

for states meeting certain criteria, deemed as "frontier" states. In 2011, those states were 

Montana, Nevada, North Dakota, South Dakota, and Wyoming. See Pub. L. No. 111-148, 

§ 10324(c), 124 Stat. 960.
Appendix I: Data and Methods

Page 27 GAO-13-6 Ambulance Providers’ Costs and Margins

This appendix describes the data and methods we used to respond to our 

research objectives. We conducted a survey of ambulance providers to 

collect data on their costs and other characteristics. We relied on these 

survey data for much of our analyses and supplemented our survey 

results with information from other sources, including Medicare claims 

data, as appropriate. We also analyzed Medicare claims data to 

determine payments to ambulance providers as well as to determine the 

number of Medicare ambulance transports. We tested the internal 

consistency and reliability of the data from our survey and the Medicare 

claims data and determined that all data sources were adequate for our 

purposes. We conducted our work from April 2012 through September

2012 in accordance with generally accepted government auditing 

standards.

To collect data on ground ambulance providers’ costs, revenues, 

transports, and organizational characteristics for calendar year 2010, or 

for the fiscal year that corresponded to all or the majority of a provider’s 

calendar year 2010 data, we sent a web-based survey to a random, 

nationally representative sample of 294 eligible ambulance providers.1

We obtained data from 154 providers for a response rate of 52 percent, 

after excluding cost outliers and surveys with unreliable data.2 We 

determined that our sample was nationally representative of the 

approximately 2,900 ambulance providers that billed Medicare in 2003 

and 2010, were still operational in 2012, and did not share costs with 

nonambulance services or air ambulance services.3

 

1

See the section titled “Sample Design” within this appendix for more information on 

eligible providers.

However, the small 

2

We obtained survey data from 172 providers; however, 11 of these providers were 

excluded because they reported in their surveys that they shared costs with 

nonambulance services. We also excluded 3 providers that were unable to provide total 

cost or total transports information and 1 provider that was not confident in the total cost 

amount provided. We also excluded 3 outliers with a cost per transport more than three 

standard deviations from the mean of the lognormal distribution. We did not obtain 

complete information for all survey respondents. Therefore, some analyses do not include 

all 154 respondents.

3

We excluded providers that shared operational costs with nonambulance services 

because, in our 2007 report, we found costs reported by these types of providers to be 

highly variable and unreliable. See GAO, Ambulance Providers: Costs and Expected 

Medicare Margins Vary Greatly, GAO-07-383 (Washington, D.C.: May 23, 2007). Because 

the populations represented by the samples we used for our current report and our 2007 

report differ, the results of the two reports are not directly comparable.

Appendix I: Data and Methods

National Survey of 

Ground Ambulance 

Providers’ Costs 
Appendix I: Data and Methods

Page 28 GAO-13-6 Ambulance Providers’ Costs and Margins

sample size and the variability of reported costs reduced the precision of 

our estimates.

We drew potentially eligible providers for our survey from an existing 

sample, originally developed for our 2007 report, of 900 non-hospitalbased ground ambulance providers that billed Medicare in 2003.4

Through Internet searches and phone contacts to ambulance providers, 

we excluded any providers that (1) were no longer in business; (2) shared 

costs with nonambulance services, such as those providers affiliated with 

a fire department; or (3) we were otherwise not able to contact.5 As we 

did for the 2007 report, we excluded ground ambulance providers that 

also provided air ambulance services. After all exclusions, we had 294 

eligible providers for potential survey participation. On the basis of the 

number of providers that were eligible for our sample and the number of 

providers that responded to our survey, we calculated sample weights to 

estimate how many Medicare ambulance providers our sample 

represented.

To develop our survey instrument, we modified the survey instrument 

used for our 2007 report, which was mailed to ambulance providers, to 

tailor it to our current objectives and format it for use as a web-based 

survey.6

 

4

For our 2007 report, we generated a nationally representative list of 900 non-hospitalbased ambulance providers from information maintained by the Centers for Medicare & 

Medicaid Services, the agency that oversees the Medicare program, and the agency’s 

contractors that process Medicare claims. This list was developed from 2003 claims data 

and was stratified based on the predominant service area of providers (urban, rural, 

super-rural) and the nine U.S. census divisions.

We retained questions about ambulance providers’ costs, 

revenues, and transports, as well as questions to identify organizational 

characteristics that might affect ambulance providers’ costs, such as the 

5

We obtained contact information for some of these providers from the American 

Ambulance Association (AAA). We made up to three phone calls to attempt to contact a 

provider before we excluded it from our survey sample.

6

To develop the survey instrument for the 2007 report, we reviewed other survey 

instruments and analyses of ambulance cost data, consulted with experts in survey 

methods and the ambulance industry, and tested the survey instrument with ambulance 

providers.

Sample Design

Survey Instrument 

Development
Appendix I: Data and Methods

Page 29 GAO-13-6 Ambulance Providers’ Costs and Margins

use of volunteer staff.7 We added questions related to changes in total 

cost (increases or decreases) from 2009 to 2010 and the cost 

components that most contributed to the changes. We also asked 

providers for their National Provider Identifier (NPI), which providers use 

to bill Medicare, and their Provider Transaction Access Number (PTAN). 

These numbers enabled us to identify and analyze Medicare claims for 

the providers we surveyed.8

We sought feedback on our survey instrument from both internal and 

external sources. It was reviewed by internal survey experts and 

pretested on seven ambulance providers. We also consulted with the 

American Ambulance Association (AAA), an industry group that 

represents ambulance providers. On the basis of the feedback we 

received, we modified the survey instrument as appropriate.

We needed these current identifiers to link 

the providers in our sample to Medicare claims data because our sample 

was based on the sampling frame of our 2007 report, and Medicare has 

implemented a new identification system since then.

We sent our survey by e-mail to 294 eligible ambulance providers on 

April 12, 2012.9

 

7

For purposes of this report, volunteer staff refers to staff who respond to emergencies 

and staff ambulance transports (e.g., field staff) but who are not paid or are paid a nominal 

stipend.

We asked providers to complete the survey within 

2 weeks of receipt. We later extended this deadline 2 weeks to give 

providers more time to complete the survey. Providers were encouraged 

to contact us by e-mail or a toll-free number so that we could resolve any 

questions or problems. We sent three reminder e-mails to providers that 

had not yet completed the survey (6, 14, and 21 days after sending the 

survey to providers) and made two rounds of reminder telephone calls to 

8

An NPI is a unique national identification number for covered health care providers as 

established under the Health Insurance Portability and Accountability Act of 1996. See

Pub. L. No. 104-191, § 262, 110 Stat. 1936, 2021 (adding Social Security Act § 1173). A 

PTAN is a Medicare-only number issued by Medicare contractors to providers when they 

enroll in the Medicare program. For various reasons, such as multiple service locations, 

some providers have more than one NPI-PTAN combination, and providers submitted the 

NPI-PTAN combination or combinations that corresponded with the service location(s) we 

surveyed.

9

Approximately 2 weeks before sending the survey instrument to providers, we sent an email to the ambulance providers in our sample to notify them about the survey and to 

verify that we had accurate e-mail addresses.

Survey Administration
Appendix I: Data and Methods

Page 30 GAO-13-6 Ambulance Providers’ Costs and Margins

encourage participation. AAA and the National Association of Emergency 

Medical Technicians encouraged providers to participate in the survey. 

When providers returned surveys that were incomplete, invalid, or 

resulted in conflicting responses to key items, we conducted follow-up by 

phone and e-mail.

We took steps to ensure that the data reported in the survey were valid 

and reliable. First, we included in the survey instrument questions 

intended to validate the reported cost data. For example, we asked 

providers whether certain cost components (such as personnel costs) 

were included in the total cost amount submitted, and we asked how 

confident providers were about the total cost amount submitted. As a 

result, we excluded from our analyses one provider that was not confident 

in the total cost amount. Second, we conducted analyses to identify any 

incomplete data or inconsistencies in responses. If we found such data, 

we contacted the provider to try to obtain complete or corrected data. We 

excluded three providers that were not able to provide complete data on 

total cost or total transports. Third, we used a lognormal distribution to 

exclude outliers with a cost per transport more than three standard 

deviations from the mean. We excluded three providers with costs per 

transport that were outliers. All computer programs we used for our 

analyses were peer reviewed to verify that they were written correctly and 

executed properly. On the basis of our efforts to validate the data, 

including computer testing and corrections, we concluded that the data 

were sufficiently valid and reliable for our purposes.

All sample surveys are subject to sampling error—that is, the extent to 

which the survey results differ from what would have been obtained from 

the population instead of the sample. The sample is only one of a number 

of samples that we might have drawn. As a result, we reported the results 

of our analyses with their 95 percent confidence intervals. The 95 percent 

confidence interval refers to the range of values within which we would 

expect the true population value to fall in 95 percent of the samples we 

could have drawn.

10

 

10The range of the confidence interval is affected by the variability of the responses within 

the sample and the size of the sample.

Survey Data Validity and 

Reliability

Interpretation of 

Confidence Intervals and 

Analysis of 

Nonrespondents 
Appendix I: Data and Methods

Page 31 GAO-13-6 Ambulance Providers’ Costs and Margins

We analyzed 2010 Medicare claims data for the survey nonrespondents 

and compared this information with similar claims data for providers in our 

sample.11 Using Medicare claims data for all survey recipients, we were 

able to test for potential nonresponse bias for the characteristics 

contained in the claims data. The nonresponse analysis did not find any 

statistically measurable bias that would affect our analyses of providers’ 

costs. 

We used regression analysis to investigate the relationship between 

providers’ total cost and provider characteristics that may have affected 

their costs. We opted for a total cost model using a logarithmic functional 

form because it is well grounded in microeconomic theory. Although we 

considered using a similar model of the same functional form with cost 

per transport as the dependent variable, we determined that the 

parameter estimates of such a model would be similar to the total cost 

model. Provider characteristics included in our model were: (1) volume of 

transports, (2) cost of doing business, (3) mix of Medicare transports, 

(4) intensity of Medicare transports, (5) service area, (6) use of volunteer 

staff, (7) receipt of government subsidies, and (8) ownership type. We 

used those results to produce a graph illustrating the relationship between 

cost per transport and volume of transports. We also used the results of 

the regression analysis to estimate the effect on providers’ cost per 

transport of reducing the value of each of two variables that were 

significant in the regression. See table 5 for the characteristics included in 

the model, how each characteristic was measured, and the data source 

for each characteristic.

 

11We were able to identify NPIs and PTANs for approximately 92 percent of our 

nonrespondents. We were unable to identify NPIs and PTANs for the remainder despite 

attempting to match available contact information for nonrespondents with the Centers for 

Medicare & Medicaid Services’ (CMS) NPI registry and Medicare claims data.

Modeling Ambulance 

Costs 
Appendix I: Data and Methods

Page 32 GAO-13-6 Ambulance Providers’ Costs and Margins

Table 5: Provider Characteristics Included in Analysis of Total Cost and Cost per Transport, 2010

Characteristic Measure Source of data

Volume of transports Number of transports (Medicare and other) provided GAO Survey of Ambulance Services

Cost of doing business Geographic practice cost index (GPCI) for the provider’s zip 

code

Medicare Ambulance Fee Schedule 

Public Use File a

Mix of transports Percentage of Medicare transports that are ALS Medicare claims

Intensity of transports Percentage of Medicare transports that are nonemergency Medicare claims

Service area Percentage of Medicare transports that are rural b Medicare claims

Percentage of Medicare transports that are super-rural Medicare claims

Use of volunteer staff Indicator variables for percentage of field staff hours that are 

volunteer: greater than or equal to 20 percent and less than 

20 percent but greater than 0

c GAO Survey of Ambulance Services

Receipt of government subsidies Percentage of total revenues from government subsidies GAO Survey of Ambulance Services

Ownership type Indicator variables for ownership type: nonprofit and local 

government

d GAO Survey of Ambulance Services

Sources: GAO and CMS.

a

The practice expense portion of the GPCI in the physician fee schedule is used to adjust payments 

in the ambulance national fee schedule to account for the different costs of operating ambulance 

services in different regions of the country.

b

The excluded category was the percentage of Medicare transports that are urban. To estimate the 

regression, one of the service area categories had to be excluded.

c

The excluded category was no use of volunteer staff. To estimate the regression, one of the 

volunteer categories had to be excluded.

d

The excluded category was for-profit ownership type. To estimate the regression, one of the 

ownership type categories had to be excluded.

Our regression analysis modeled total cost at the provider level as a 

function of the provider characteristics described above. We used 

ordinary least squares to model the log of total costs for a provider.12

 

12Ordinary least squares is a standard method of regression analysis.

The 

model was specified in log-log form to conform to standard 

microeconomic theory regarding cost functions. The two continuous 

independent variables—transport volume and geographic practice cost 

index (GPCI)—were entered in log form. The remaining variables were

not entered in log form because they were either indicator variables 

(value of 0 or 1) or percentage variables (values ranging from 0 to 1.00). 

Three of the explanatory variables in the regression were statistically 

significant at the 1 percent or better level in explaining the variation in 

providers’ total costs: total transports, percentage of revenues from 

Cost Regression 

Analysis—Methods and 

Results 
Appendix I: Data and Methods

Page 33 GAO-13-6 Ambulance Providers’ Costs and Margins

government subsidies, and percentage of Medicare transports that were 

nonemergency.13

Table 6: Results for Ambulance Costs Regression—Estimated Effects of Selected Provider and Local Area Characteristics on 

the Total Cost of Providing Ground Ambulance Transports

Table 6 shows the regression results.

Characteristic

Variable used to measure 

characteristic

Parameter 

estimate

Standard 

Error t-Value Prob < |t| 

Volume of transports Log of total transports 0.94 0.03 32.25 <.0001

Cost of doing business Log of GPCI 0.83 0.61 1.37 0.17

Mix of transports Percentage of Medicare transports 

that are ALS

0.09 0.15 0.64 0.53

Intensity of transports Percentage of Medicare transports 

that are nonemergency

-0.47 0.18 -2.65 0.01

Service area Percentage of Medicare transports 

that are rural

a 0.02 0.09 0.22 0.82

Percentage of Medicare transports 

that are super-rural

0.14 0.11 1.27 0.21

Use of volunteer staff Use volunteer staff for 20% or more 

of field staff hours

b -0.04 0.10 -0.35 0.73

Use volunteer staff for less than 20% 

of field staff hours but more than 0%

0.18 0.12 1.46 0.15

Receipt of government subsidies Percentage of total revenues from 

government subsidies

0.83 0.18 4.73 <.0001

Ownership type Nonprofit c -0.13 0.09 -1.49 0.14

Local government -0.09 0.08 -1.03 0.30

Intercept 6.68 0.29 23.00 <.0001

Adjusted R-square 0.94

Observations 144 

Sources: GAO analysis of GAO and CMS data.

Note: Data were from the 2012 GAO Survey of Ambulance Services, 2010 Medicare claims, and the 

Medicare Ambulance Fee Schedule Public Use File.

a

The excluded category was the percentage of Medicare transports that are urban. To estimate the 

regression, one of the service area categories had to be excluded.

b

The excluded category was no use of volunteer staff. To estimate the regression, one of the 

volunteer categories had to be excluded.

c

 

13We tested the model for heteroscedasticity and determined that this did not affect our 

results.

The excluded category was for-profit ownership type. To estimate the regression, one of the 

ownership type categories had to be excluded.
Appendix I: Data and Methods

Page 34 GAO-13-6 Ambulance Providers’ Costs and Margins

We used the regression results to predict the log of total cost and then 

converted it to total cost by taking the antilog. We applied an adjustment 

to the resulting prediction of total cost to account for the fact that our 

regression was for log total cost rather than total cost.14 We then divided 

total cost by total transports to derive cost per transport. We used this 

method to produce predictions of cost per transport for the range of 1 to 

20,000 transports shown in figure 2 of the report.15

We also used the regression results to estimate the effect on cost per 

transport of a reduced percentage of revenues from government 

subsidies and a reduced percentage of nonemergency transports. In each 

case, we held the other variables in the regression model at their 

regression sample mean and calculated cost per transport for the sample 

two ways: one with the value of the variable of interest set at its sample 

average and another with it set at a value 25 percent less. We reported 

the difference between these two values for each variable.

To examine the relationship between Medicare payments and providers’ 

costs, we used Medicare claims data to calculate Medicare payments in 

2010 for the providers in our sample, and we calculated Medicare 

margins—the percentage difference between providers’ Medicare 

payments per transport and their costs per transport. To examine 

ambulance transports per 1,000 Medicare beneficiaries, we used 

Medicare claims data and Centers for Medicare & Medicaid Services 

(CMS) 2010 Medicare enrollment data. We found CMS’s claims and 

enrollment data to be sufficiently reliable for the purposes of this report.

 

14W. G. Manning and J. Mullahy, “Estimating Log Models: To Transform or Not To 

Transform,” Journal of Health Economics, vol. 20, no. 4 (2001). See section 2.1 for a 

description of the adjustment necessary for converting the predicted log of the dependent 

variable to its unlogged value.

15We examined our data for potentially influential observations using four standard tests. 

Three of the four tests failed to identify any observations that should be deleted on the 

basis of their influence on the regression results. We had previously excluded three 

outliers and also had verified that the data for other potential outliers were correct.

Calculating Medicare 

Ambulance Payments 

and Use of Transports 

with Claims Data
Appendix I: Data and Methods

Page 35 GAO-13-6 Ambulance Providers’ Costs and Margins

We calculated 2010 Medicare payments for the providers in our sample 

using Medicare carrier claims data. We identified relevant ambulance 

claims for 153 providers by using the NPIs (which providers use to bill 

Medicare) and PTANs reported by providers on the survey.16

See figure 5 for the payment formulas specified in the Medicare 

ambulance fee schedule.

We 

excluded any Medicare claims without either service-level or mileage 

payments and any claims with service-level payments that were more 

than three standard deviations from the mean of the log distribution for all 

such claims. We also excluded any claims for transports with multiple 

patients because the calculations for these payments require additional 

information not available on Medicare claims.

 

16One provider that was included in the survey data analysis was excluded in the payment 

and margin analyses because we could not identify complete relevant Medicare claims 

data.

Medicare Payment 

Calculations 
Appendix I: Data and Methods

Page 36 GAO-13-6 Ambulance Providers’ Costs and Margins

Figure 5: Medicare Ambulance Payment Formula

a

The relative value unit is a constant multiplier that adjusts the service-level base rate to account for 

the mix and intensity of the service.
Appendix I: Data and Methods

Page 37 GAO-13-6 Ambulance Providers’ Costs and Margins

b

The practice expense portion of the GPCI in the physician fee schedule is used to account for the 

different costs of operating ambulance services in different regions of the country. Of the service-level 

payment without add-on payments (which is the product of the relative value unit and the servicelevel base rate), 70 percent is adjusted by the GPCI and the other 30 percent is not adjusted by the 

GPCI. For example, in the hypothetical example for an urban transport, the full formula for the 

service-level payment without add-on payments is (0.70 x [1.90 x $209.65] x 1.218) + (0.30 x [1.90 x 

$209.65]).

c

Since 2002, CMS has provided a 50 percent increase to the mileage payment rate for miles 1 

through 17 of transports originating in rural or super-rural zip codes. See 67 Fed. Reg. 9100 (Feb. 27, 

2002) (adding subpart H to 42 C.F.R. part 414); 42 C.F.R. § 414.610(c)(5)(i) (2011) (this mileage rate 

increase is not set to expire).

d

In 2010, temporary add-on payment policies included a 2 percent increase to service-level and 

mileage payment rates for transports originating in urban zip codes, a 3 percent increase to servicelevel and mileage payment rates for transports originating in rural zip codes, and a 22.6 percent 

increase to rural service-level payment rate for transports originating in super-rural zip codes.

To calculate service-level payments, we used the type of transport 

identified on the claim to determine the associated relative value unit, 

which is a constant multiplier that adjusts the service-level base rate to 

account for the mix and intensity of the service, and we used the 2010 

service-level base rate of $209.65. We used the zip code where the 

transport originated to determine the adjustment from the geographic 

practice cost index (GPCI), which is used to account for the different 

costs of operating ambulance services in different regions of the 

country.17

The total fee schedule payment for each transport is the sum of the 

service-level and mileage payments. We calculated payments with and 

without the applicable add-on payment rates, and we assumed that 

providers charged the maximum allowed amount under the ambulance 

In accordance with CMS’s payment methodology, we adjusted 

70 percent of the service-level payment by the GPCI, and we did not 

adjust the other 30 percent by the GPCI. We also used the zip code 

where the transport originated to determine the applicable urban, rural, or 

super-rural add-on payment rate. To calculate mileage payments, we 

used the number of miles reported on the claim and the 2010 mileage 

base rate of $6.74. We used the zip code where the transport originated 

to determine the applicability of the permanent mileage increase for miles 

1 through 17 for rural and super-rural transports and to determine the 

applicable urban, rural, or super-rural add-on payment rate.

 

17We used the GPCIs that were in effect for 2010, which included a required temporary 

increase in the practice expense portion of the GPCI for certain areas; this increase

expired at the end of 2011. See Pub. L. No. 111-148, § 3102(b)(2), 124 Stat. 416.
Appendix I: Data and Methods

Page 38 GAO-13-6 Ambulance Providers’ Costs and Margins

fee schedule.18

For the providers in our sample, we reported the median of providers’ 

Medicare payment per transport by predominant service area (urban, 

rural, or super-rural) and for all providers.

All payments are expressed in 2010 dollars. To ensure 

that our payment calculations were comparable to actual payments made 

based on the claims, we compared the payments we calculated with addons to the payment amounts on the claims for a random sample of 6,000 

urban, rural, and super-rural claims, and we found the difference in the 

amounts to be less than 1 percent.

19 To calculate each provider’s 

Medicare payment per transport, we divided the sum of the provider’s 

Medicare payments by the sum of its Medicare transports.

To calculate each provider’s Medicare margin, we used the provider’s 

cost per transport, as calculated from the survey responses, and its 

Medicare payment per transport, described in the previous section. We 

subtracted the provider’s cost per transport from its Medicare payment 

per transport, and we divided this amount by the provider’s Medicare 

payment per transport. For the providers in our sample, we reported the 

median Medicare margin and the distribution of providers’ Medicare 

margins by predominant service area (urban, rural, or super-rural) and for 

all providers.

To calculate ambulance transports per 1,000 Medicare beneficiaries, we 

used Medicare carrier and outpatient claims data, and CMS enrollment 

data—used for purposes of determining Medicare eligibility for covered 

services—from 2004 and 2010. To calculate the number of transports, we 

counted any Medicare claims for ground transports in these years for 

which there was both a service-level and a mileage payment. We 

 

18In some cases, communities may limit the amount their ambulance providers charge 

Medicare; however, according to NASEMSO, this is not a common practice.

19As we did in the 2007 report, we classified providers as super-rural if 60 percent or more 

of their Medicare transports in 2010 originated in a super-rural zip code. We classified 

providers as rural if they did not meet the super-rural definition and 60 percent or more of 

their Medicare transports in 2010 originated in rural or super-rural zip codes. We classified 

providers as urban if they did not meet the rural or super-rural classifications. Since some 

providers furnish transports in more than one area, there is likely to be some 

measurement error in identifying the full effect of service area on costs.

Medicare Margin 

Calculations 

Calculating Number of 

Ambulance Transports per 

1,000 Medicare 

Beneficiaries
Appendix I: Data and Methods

Page 39 GAO-13-6 Ambulance Providers’ Costs and Margins

excluded claims with service-level payments outside of three standard 

deviations from the mean of the log distribution for all such claims for 

each of these years. We counted Medicare beneficiaries as the number of 

months beneficiaries were enrolled in Medicare Part A or B in 2010 

divided by 12. We then divided the number of transports by the number of 

enrolled Medicare beneficiaries and multiplied the quotient by 1,000. We 

also examined the change in transports per 1,000 Medicare beneficiaries 

from 2004 to 2010.

Medicare claims data, which are used by the Medicare program as a 

record of payments made to health care providers, are closely monitored 

by both CMS and Medicare Administrative Contractors—contractors that 

process, review, and pay claims for Medicare Part B–covered services, 

including ambulance services. The data are subject to various internal 

controls, including checks and edits performed by the contractors before 

claims are submitted to CMS for payment approval. Although we did not 

review these internal controls, we assessed the reliability of Medicare 

claims data by reviewing related CMS documentation, interviewing 

agency officials about the data, and comparing payments in a sample of 

claims to expected payments based on Medicare’s published ambulance 

fee schedule. We determined that the Medicare claims data were 

sufficiently reliable for the purposes of this report. In addition, we 

assessed the reliability of CMS’s enrollment data by reviewing related 

CMS documentation and comparing the enrollment data to published 

sources. We determined that Medicare enrollment data were sufficiently 

reliable for the purposes of this report.

Medicare Data Reliability
Appendix I: Data and Methods

Page 40 GAO-13-6 Ambulance Providers’ Costs and Margins

James C. Cosgrove, (202) 512-7114 or cosgrovej@gao.gov

In addition to the contact named above, Christine Brudevold, 

Assistant Director; Ramsey Asaly; Carl S. Barden; Stella Chiang; 

Carolyn Fitzgerald; Leslie V. Gordon; Corissa Kiyan; Rich Lipinski; 

Elizabeth T. Morrison; Aubrey Naffis; and Eric Wedum made key 

contributions to this report.

Appendix II: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 
Appendix I: Data and Methods

Page 41 GAO-13-6 Ambulance Providers’ Costs and Margins

Ambulance Providers: Costs and Expected Medicare Margins Vary 

Greatly. GAO-07-383. Washington, D.C.: May 23, 2007.

Ambulance Services: Medicare Payments Can Be Better Targeted to 

Trips in Less Densely Populated Areas. GAO-03-986. Washington, D.C.: 

September 19, 2003.

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