Department of Health and Human Services


OF' FICE OF


INSPECTOR GENERAL


Comparison of Ambulance Payments


Between Selected Canadian Provinces


and the United States


SERVICEs. 

JU GffBS BROWN 

Inspector General 

1-

1t"". MARCH 1999 

OEI-09-95-00414 
OFFICE OF INSPECTOR GENERA


The mission of the Offce of Inspector General (DIG), as mandated by Public Law 95-452, is to 

protect the integrty of the Deparent of Health and Human Servces programs as well as the 

health and welfare of beneficiares served by them. Ths statutory mission is cared out though 

a nationwide program of audits, investigations, inpections, sanctions, and fraud alerts. The 

Inspector Gen ral inorms the Secreta of program and management problems and recommends 

legislative, reguatory, and operational approaches to correct them. 

Office of Evaluation and Inspections 

The Offce of Evaluation and Inpections (DEI) is one of severa components of the Office of 

Inpector General. It conducts short-term management and progr evaluations (called 

inspections) that focus on issues of concern to the Deparent, the Congress, and the public. The 

inspection reports provide fidigs and recommendations on the effciency, vulnerabilty, and 

effectiveness of deparenta progr s. 

OEI's San Francisco Regional Offce prepared ths report under the diection ofKaye D. Kidwell 

Regional Inspector General, and Paul A. Gottlober, Deputy Regional Inpector General. 

Pricipal OEI staff included: 

GION 

Deborah Harey, Project Leader Tricia Davis Program Specialist 

Robert Gibbons Linda Moscoe 

Cyntha Lemesh Brian Ritchie 

Donald Loeb Barbara Tedesco 

Stuar Wright 

To obtain copies of ths report, please call the San Francisco Regional Offce at 415-437-7900.


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


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


OFFICE OF


INSPECTOR GENERAL


Comparison of Ambulance Payments


Between Selected Canadian Provinces


and the United States


, SERVICE +t-\' 

JU GffBS BROWN 

'0 

Inspector General 

1t",,:W MARCH 1999 

OEI-09-95-00414 
DEPARTMENT OF HEALTH &. HUMAN SERVICES	 Offce of Inspector General 

Washington, D.C. 20201 

MAR I I 1999 

The Honorable Fortey Pete Stak 

House of Representatives 

Washigton, DC 20515 

Dea Mr. Stak: 

Than you for your contiued support of our work to promote effciencies and effectveness in 

deparenta program and parcularly to identi area of potential overpayments in the Medcare 

program. As you commente in your December 1, 1997 letr about the Offce of Inpectr 

General' s work plan a signcat dierence may exst in ambulce payments beteen Canad and 

the United States. As par of an ongoing study compar Medcae ambulance payments with those 

of other payers, we obtaed ambulance rates for Britih Columbia, Onto, and Quebec and 

compared the Canadian rates to the average Medcae payments for neaby States. 

As you speculated, we found that the Medcae progra pays up to 70 percent more for ambulance 

servces than two of the thee sampled provices. We believe tht the lower Candian costs 

generally may be explaied by two factors: (1) Medcae s payment is based on the traditional 

reasonable charge metodology rather th actual cost, and (2) Canda s labor cost are lower 

because personnel who staff ambulances are par-tie and comparable to basic and intennediate 

emergency medcal techncian in the United States. These factors are explaied in more detal in 

ths report.


If-you have any questons, pleae contact me or have your st contact Helen Albert, Director 

External Afairs, at (202) 260-8610. 

June Gibbs Brown


Inspector General


Enclosure 

cc:	 Nancy-An Min DeParle


Administrator


Health Care Financing Admstration


Melissa Skolfield


Assistat Secreta for


Public Affairs


Richard J. Tarplin 

Assistat Secretary


for Legislation 
COMPARISON OF AMBULANCE PAYMENTS


BETWEEN SELECTED CANADIAN PROVINCES AND THE UNITED STATES 

Medicare Par B payments for ambulance services have increased rapidly. Medicare s allowed 

charges for ambulance services more than trpled between 1987 and 1996, when Medicare 

carers, the contractors that process Par B claims, allowed an "estimated $2 bilion for 

ambulance servces in 1996. In a 1997 report, the Office of Inspector General found that 

Medicare payments for ambulance servces often appeared inconsistent and ilogical. The report 

cited many examples, includig cases where Medicare paid more for nonemergency basic life 

support transport than for emergency advanced life support transport. 

As par of an ongoing study on the comparson of ambulance payments between Medicare and 

non-Medicare payers, we contacted three Canadian provinces to gather ambulance rates. We 

compared the average payments for ambulance services in British Columbia, Ontaro, and 

Quebec to the average payments for nearby States. We used the nearby States to maintai 

geographical comparsons to the provices. 

Medicare Pays up to 70 Percent More than Two of the Three Sampled Provinces 

Like Medicare, Canada s national health care system covers medically necessar 

ambulance transportation. Payment for ambulance services in Canada is based on the 

average cost of providing services, and both the province and the patient pay a share of 

the cost (except in Quebec where the province pays the entire cost for patients aged 65 

and over). In fact, patients in Canada are responsible for the entie ambulance bil if the 

trp is deemed medically unecessar. Although Canada does not distiguish between 

advanced life support and basic life support, most of the ambulance transports in the 

sampled provices are comparable to basic life support transport in the United States. 

Medicare uses a reasonable charge methodology to pay for ambulance services. 

Medicare pays 80 percent ofthe reasonable, i. , allowed, charge, and the beneficiar is 

responsible for the remaining 20 percent. Reasonable charge is the traditional payment 

method that Medicare has used since the program s inception. Under ths methodology, 

payment is based on the bil from ambulance suppliers. Carers, the contractors that 

process Par B claims, develop separate base rates for basic life support and advanced life 

support ambulances that reflect customar and prevailing charges in an area as well as 

separate rates for ambulance suppliers ' other charges , including mileage and supplies. 

For example, the maximum reasonable charge for mileage is the lowest of (1) the 

Office ofInspector General Medicare Ambulance Payments, 
 November 1997

(OEI-05-95-00300). 

The customary charge is the amount that a supplier tyically charges. The prevailing charge 

refers to a charge that falls within a range of charges submitted by suppliers in a partcular geographic 

area. 
supplier s actual charge, (2) the supplier s customar charge for mileage, or (3) the 

prevailing charge for mileage in the area. The Health Care Financing Admstration 

authorizes carers to raise or lower the reasonable charge based on the concept of 

inherent reasonableness." For example, if eharges are inated because oflack of 

competition or the charges are signficantly higher than acquisition costs, carers may 

lower payment. 

The table below compares rates in thee Canadian provinces to Medicare s allowed 

amounts in areas of the United States that are nearby or comparable in size to the thee 

provinces. Because Canada does not base rates on the tye of vehicle, we averaged 

Medicare allowed amounts for advanced life support and basic life support in the 

followig char. Medicare pays considerably more than British Columbia and Ontaro 

but slightly less than Quebec. 

Rate Comparison between Three Canadian Provinces and Medicare 

Canadian Average Average Medicare Difference from 

Province Canadian charge allowed amount** Canadian charge 

British Columbia $186 $317 70.4% 

Ontaro $163 $246 50. 

Quebec $299 $291 

Note: 

We converted the rates for Canadian residents to U.s. curency. The conversion factor was 

$1 Canadian = $0.68032 U.S. (rate on Apri2l , 1998) 

U.S. jursdictions near the Canadian provinces or comparable in size include the State of 

Washigton for comparson to the province of British Columbia; the States of Michigan 

Wisconsin, Minesota, and New York for comparson to Ontao; and the States ofVennont, 

Maine, New Hampshie, Massachusett, Connecticut, Rhode Island, and New York for 

comparson to Quebec. 

Source: Offce of Evaluation and Inspections analysis, 1998. 

Lower Canadian Costs May Be Explained by Different Staffng Requirements 

Labor costs are the largest par of ambulance fixed costs. In British Columbia, for 

example, approximately 55 percent of the personnel on ambulances are par-time and 

comparable to basic and intermediate emergency medical techncians in the United 

States. Less than 5 percent of the full-time Canadian staff are comparable to a paramedic 

the highest-trained level of prehospital personnel. In the United States, ambulances 
tyically are staffed with one emergency medical techncian and a paramedic, and most 

ambulance suppliers in urban areas employ two paramedics, thereby increasing personnel 

costs. 

In Canada, the mileage payment is bundled into the base rate, while most ambulance 

suppliers in the United States bil separately for the base rate, mileage, and supplies. 

Since Medicare does not reimburse suppliers at a standard national mileage rate, payment 

vares widely across the countr. 

0ffice ofInspector General Medicare Ambulance Payments November 1997 

(OEl-05-95-00300).