Department of Health and Human Services 

OFFICE OF


NSPECTOR GENERAL


AMBUIANCE SERVICES FOR


MEDICARE END-STAGE RENAL


DISEASE BENEFICIARIES:


PAYMENT PRACTICES


MARCH 1994

OFFICE OF INSPECTOR GENERAL 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 

amended, is to protect the integrity of the Department of Health and Human Services’ (HHS) 

programs as well as the health and welfare of beneficiaries served by those programs. This 

statutory mission is carried out through a nationwide network of audits, investigations, and 

inspections conducted by three OIG operating components: the Office of Audit Services, the 

Office of Investigations, and the Office of Evaluation and Inspections. The OIG also informs 

the Secretary of HHS of program and management problems and recommends courses to 

correct them. 

OFFICE OF AUDIT SERVICES 

The OIG’S Office of Audit Semites (OAS) provides all auditing services for HHS, either by 

conducting audits with its own audit resources or by overseeing audit work done by others. 

Audits examine the performance of HHS programs and/or its grantees and contractors in 

carrying out their respective responsibilities and are intended to provide independent 

assessments of HHS programs and operations in order to reduce waste, abuse, and 

mismanagement and to promote economy and efficiency throughout the Department. 

OFFICE OF INVESTIGATIONS 

The OIGS Office of Investigations (01) conducts criminal, civil, and administrative 

investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries and of 

unjust enrichment by providers. The investigative efforts of 01 lead to criminal convictions, 

administrative sanctions, or civil money penalties. The 01 also oversees State Medicaid fraud 

control units which investigate and prosecute fraud and patient abuse in the Medicaid program. 

OFFICE OF EVALUATION AND INSPECI’IONS 

The OIGS Office of Evaluation and Inspections (OEI) conducts short-term management and


program evaluations (called inspections) that focus on issues of concern to the Department,


the Congress, and the public. The findings and recommendations contained in these inspection


reports generate rapid, accurate, and up-to-date information on the efficiency, vulnerability,


and effectiveness of departmental programs.


This report was prepared in the Philadelphia regional office under the direction of Joy Quill,


Regional Inspector General and Robert A Vito, Deputy Regional Inspector General. Project


staftl


Isabelle Buonocore, Project Leader Wm. Mark Krushat, MPH, SCD


Nancy J. Molyneaux, Lead Analyst Brian Ritchie


Ahalya Nava, Intern Hugh Hetzer


For additional copies of this report, please contact the Philadelphia regional office at (215)


596-0606.

Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

AMBULANCE SERVICES FOR


MEDICARE END-STAGE RENAL


DISESE BENEFICIARIES:


PAYMENT PRACTICES


MARCH 1994 OEI-03-90-02131


! 
EXECUTIVE SUMMARY


PURPOSE 

This report describes growth in Medicare expenditures for Part B ambulance services 

for persons with end-stage renal disease (ESRD) and problems with the coding and 

payments systems for this semice. 

BACKGROUND 

Persons with ESRDare entitled to Medicare coverage under 1972 amendments to the 

Social Security Act. In 1991, there were 193,883 ESRD beneficiaries with Medicare 

Part B claims. 

Medicare Part B covers ambulance semices under certain conditions. Ambulance 

transport must be reasonable and medically necessary. Other coverage requirements 

are that the vehicle and crew meet certain criteria and the ambulance trip be within 

distance and destination limits. 

Some ESRD beneficiaries need ambulance transport to hospital-based facilities for 

dialysis therapy. Generally, ESRD patients require dialysis three times a week. Both 

the dialysis treatment and ambulance transport are scheduled in advance. 

In 1991, Part B claims representing $101 million in total ambulance allowances for 

ESRD beneficiaries were handled by insurance carriers under contract with the Health 

Care Financing Administration (HCFA). Ambulance company services and charges 

are represented by alphanumeric codes which the Medicare program uses to analyze 

utilization and payments. 

We reviewed 1991 and 1988 Part B claims data for ESRD beneficiaries in HCFA’S 

databases and interviewed carriers regarding coding and payment issues. We reviewed 

ambulance studies conducted within the Department between 1986 and 1993. We also 

performed probability tests to determine future Medicare expenses for ESRD 

beneficiaries needing scheduled ambulance transport, and we estimated potential 

savings on scheduled transports. A future report will address coverage issues. 

FINDINGS 

Less than 2 percent of ESRD benejiciati accounted for 75 pement ($76 millwn) of total 

ESRD ambulance allbwanizs. 

While total ESRD arnbukmce allowances more than doubkd from 1988 to 1991, cetia~ 

utiuah”on patk?rns remained the same. 

High volume users can be identi! prospective~.
Cam-en do not use ambulance codes unijorndy. 

l%e payment system does not take into account the row predictable nature of 

scheduled ambuhmce transport. 

� Ambulance payments are based on an outmoded payment system. 

�	 The payment system does not take advantage of the lower costs associated with 

high-volume scheduled transports. 

RECOMMENDATIONS 

We believe coding changes will result in greater accuracy in monitoring and analysis of 

Medicare-covered ambulance services. Therefore, we recommend that HCFA: 

. Establish a code for scheduled transports. 

� Require uniform use of national ambulance codes. 

We also offer optional strategies to ensure fairer payment for services rendered.


While these options may require legislation and start-up costs, implementation of one


or more options could result in $11.4 to $34.1 million in savings annually ($57 to $170


million over a 5-year period) as shown in Appendix E. The HCFA may consider


combining two or more of the following strategies and establishing demonstration


projects in particular geographic areas.


�	 Establish a payment schedule for ambulance transport to maintenance dialysis, 

and set the fee lower than what is paid for unscheduled, emergency transports. 

�	 Negotiate preferred provider agreements with ambulance companies to provide 

scheduled transportation for ESRD beneficiaries. 

�	 Undertake competitive bidding to establish a price for scheduled transports for 

ESRD beneficiaries or to select companies who agree to provide such services. 

�	 Establish a rebate program for companies that routinely transport ESRD 

beneficiaries. 

�	 Provide an add-on to the composite rate Medicare pays dialysis facilities to 

cover the cost of transportation for these beneficiaries, allowing the facility to 

negotiate agreements with ambulance companies rather than the program. 

We are continuing our work to determine whether payments for 1991 Part B 

ambulance transportation for ESRD beneficiaries met Medicare coverage guidelines. 

Such information will also help HCFA in its continuing efforts to assess payment 

policies for this semice. 

ii 
COMMENTS 

The HCFA commented on the draft of this report. They concur with our 

recommendation to make coding changes, and they concur with the intent of our 

recommendation to ensure fairer payment for services rendered. The HCFA is 

“exploring the feasibility of revising the coding system” and is “engaged in a 

comprehensive effort to improve overall coverage and payment policies... including 

those involving payment for non-emergency transport services.” The full text of this 

agency’s comments are in Appendix F. 

... 

111 
TABLE OF CONTENTS


EXECUTIVE SUMMARY 

INTRODUCI’ION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..o. o*o1 

FINDINGS


Ambulance allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..”o-””04


Growth and utilization pattern. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..”” ”.”5


Identifying high-volume users.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..””.6


Ambulance code problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..””*o6


Payment systemproblems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..”””7


RECOMMENDATIONS AND AGENCY COMMENTS . . . . . . . . . . . . . . . . . ...9


ENDNOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...11


APPENDICES


Ambulance Code Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1


Carriers Interviewed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...”” B-1


Comparison of Carriers (1991 - 1988).... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . c-1


Identificationof High-Volume Ambulance Users . . . . . . . . . . . . . . . . . . . . . . . . . D-1


Potential Savings on Scheduled Transports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1


Comments from the Health Care Financimz Administration . . . . . . . . . . . . . . . . . F-1

INTRODUCTION 

PURPOSE 

This report describes growth in Medicare expenditures for 

for beneficiaries with end-stage renal disease (ESRD) and 

and payment systems for this service. 

BACKGROUND 

Part B ambulance sewices 

problems with the coding 

Medicare coverage was extended to persons with ESRD under the 1972 amendments 

to the Social Security Act. Persons with ESRD require dialysis therapy at least three 

times a week, or a kidney transplant in order to sumive. There were 193,883 ESRD 

beneficiaries with Medicare Part B claims in 1991. 

Under Medicare Part B, ambulance transports are a covered service. However, 

transports must be reasonable and medically necessary. Medical necessity is indicated 

when any means of transportation other than an ambulance would endanger the 

beneficiary’s health. Other coverage requirements are that the vehicle and crew meet 

certain criteria and the ambulance trip be within distance and destination limits. 

In calendar year 1991, carriers processed Part B ambulance claims totaling $101 

million in allowances for ESRD beneficiaries. Carriers are the insurance companies 

under contract with the Health Care Financing Administration (HCFA) to process and 

pay Medicare Part B claims. 

While the Medicare reimbursement is 80 percent of the allowed payment for service 

rendered to the beneficiary, the carrier determines the payment allowance. The 

ambulance company providing the service receives 80 percent of the payment 

allowance from the carrier and the remaining 20 percent from the beneficiary. 

An alphanumeric coding system is used by HCF~ carriers, and ambulance companies 

to represent the type of ambulance service provided. These codes explain what 

ambulance companies billed for and what services Medicare carriers paid for. Some 

codes are national and defined by HCFA under its health care procedure code system. 

Other codes are established and defined locally. (Currently, there is a movement away 

from the use of local codes.) 

Codes signify several things. For example, certain ones signify mileage charges, while 

others signify a base charge for ambulance transport. The codes also indicate whether 

the level of service was basic life support (BLS) or advanced life support (AI-S), and 

whether the transport was an emergency or non-emergency. (See Appendix A for 

definitions of eight national ambulance codes.) 
The HCFA is responsible for administration of the ESRD and Medicare programs. It 

maintains data on ESRD Program enrollees, Part B ambulance claims, and payment 

allowances at its headquarters. The HCFA regional offices monitor and evaluate the 

carrier’s handling of Part B claims. 

This report is based on our on-going national study of ambulance transportation for 

ESRD beneficiaries. A future report will deal with whether 1991 Part B ambulance 

claims for ESRD beneficiaries met Medicare coverage requirements. 

SCOPE AND METHODOLOGY 

Our primary sources of information were HCFA’S Common Working File (CWF) and 

Part B Medicare Annual Data (B-MAD) file (which was replaced by the CWF after 

1989), and structured interviews with carrier staff. We also reviewed ambulance 

studies conducted within the Department between 1986 and 1993, and met with 

HCFA staff and representatives of the American Ambulance Association (MA). The 

data was collected and analyzed between November 1992 and June 1993. 

We selected a sample of 1991 ambulance claims for ESRD beneficiaries as follows: 

�	 Using the Medicare Status Code, we identified all ESRD beneficiaries with 

1991 CWF Part B claims. Then all 1991 CWF ambulance claims were selected 

for these beneficiaries based on eight national ambulance codes (the eight 

codes are in Appendix A). 

�	 These ambulance claims were then summarized by Part B carrier, and we 

arrayed the 56 jurisdictions of all 36 carriers by total allowed payments. Two 

carriers were then excluded: Maryland Blue Shield (because of a number of 

active investigations) and the Railroad Retirement Board (because of the large 

geographical area that it covers). 

From the remaining 54 carrier jurisdictions, we identified the top 16, 

representing 87 percent of the total ESRD ambulance allowances for 1991 

($85.3 of $97.3 millionl). From the top 16 we randomly selected a sample of 8 

(see Appendix B for sample carriers). 

�	 Finally, a simple random sample of 35 ESRD ambulance claims was selected 

from each of these 8 carriers. These 280 claims represented 277 beneficiaries. 

We conducted structured interviews with carriers in our sample regarding coverage of


ambulance codes, claims processing, identification of non-covered claims, and


detection of overpayments. The carriers sent us documents to support their interview


responses, copies of the claims in our sample, and profiles of the ambulance


companies that submitted the claims.


2

Using HCFA’S 1991 CWF claims data and 1988 B-MAD claims data,2 we compared: 

(1) total allowed ambulance payments for ESRD beneficiaries, and (2) carriers with 

beneficiaries who had over $10,000 in ambulance allowances (see Appendix C). 

We conducted a probability analysis using the number of submitted ambulance claims 

per ESRD beneficiary (in 1991) in order to identify high volume ambulance users (see 

Appendix D). We used the percentages of beneficiaries requiring the largest amount 

of ambulance allowances to predict future trends in carrier payments. 

We also estimated potential savings on scheduled ambulance transports for ESRD 

beneficiaries (see Appendix E). 

We met with HCFA staff and AAA representatives to determine the availability of 

data and to clarify issues. We reviewed past ambulance studies to determine what 

work had already been done. 

This study was conducted in accordance with the Quality Standards for Inspections 

issued by the President’s Council on Integrity and Efficiency. 

3

FINDINGS


LESS THAN2PERCENT OF THE ESRDBENEFICIARIES ACCOUNTED FOR 

75 PERCENT ($76 MILLION) OF TOTAL ESRD AMBULANCE ALLOWANCES. 

As shown in the shaded area of Table 1, $76 million was allowed in 1991 for 

ambulance transportation of 2,573 ESRD beneficiaries, less than 2 percent of the total 

ESRD population (193,883). Allowances for services to this small group of 

beneficiaries represent 75 percent of the total $101 million allowed for ambulance 

transport of ESRD beneficiaries. At least $10,000 was allowed in ambulance services 

for each of these 2,573 beneficiaries. 

Most ESRD beneficiaries have few, if any, ambulance transports to dialysis. In fact, 

there were no allowances for ambulance services for 79 percent (152,963) of ESRD 

beneficiaries. Another 14 percent (27,808) had ambulance allowances of $1 to $499, 

indicating few ambulance transports were provided. The table below shows the range 

of allowed amounts for all ESRD beneficiaries. 

Table 1. 

RANGE OF 1991 AMBULANCE ALLOWANCES FOR ESRD BENEFICIARIES 

Source: HCFA’S timmon Working File - Part B Data 

4


II 
WHILE TOTAL ESRD AMBULANCE ALLOWANCES MORE THAN 

DOUBLED, CERTAIN UTILIZATION PA’ITERNS REMAINED THE SAME. 

Total ambulance allowances for ESRD beneficiaries more than doubled between 1988 

and 1991. In 1988, carriers allowed $40 million for ESRD ambulance transport; by 

1991, the total allowed amount had grown to $101 million. 

Patterns of utilization--high dollars paid to ambulance companies for services to a 

small number of beneficiaries--have remained the same. In 1988, 4 percent of 

beneficiaries with ambulance allowances (1, 181 of 27,326) accounted for 65 percent of 

total ESRD ambulance allowances. Each of these 1,181 beneficiaries had allowances 

of $10,000 or more. In 1991, 6 percent (2,573 of 40,920) of the beneficiaries with 

$10,OOOor more accounted for 75 percent of the total. 

The distribution of beneficiaries among earners has also remained essentially the same 

(see Appendix C). The top 16 carrier~ in 1988 and 1991 accounted for 90 percent of 

ESRD beneficiaries with allowances over $10,000. (Fourteen of the top 16 carriers 

were the same in 1988 and 1991.) 

Transport of ESRD beneficiaries for maintenance dialysis provides a small number of 

ambulance companies with a high volume of generally scheduled transports which 

Medicare covers. In fact, Table 2 below shows that in 1991, only 4 percent (215 of 

Table 2 

RANGE OF 1991 AMBULANCE COMPANY ALLOWANCES 

FOR ESRD BENEFICIARIES 

Range of Allowance 

$100,000-199,999 

200,000-299,999 

300,000-399,999 I 

400,000-499,999 

500,000-599,999 

600,000-699,999 

700,000-799,999 

800,000-899,999 

900,000-999,999 

1,000,000-1,999,999 

2,000,000- + 

TOTAL 

Source: HCFA’S Common Working File 

No. of Companies Total Allowed 

103 $14,545,468 

38 9,294,980 

25 I 8,476,857 

18 8,102,946 

8 4,245,493 

6 3,986,299 

1 732363 

2 1,671,806 

1 923,548 

11 15,053,152 

2 5,968,451 

215 $73,001* 

- Part B Data 

5 
5,228)3 of all ambulance companies receiving Part B payments had ’72percent or $73 

million of the total payment allowances for ESRD ambulance transportation. The 215 

companies were allowed 83 percent of the dollars ($62.6 million) for services to the 

2,573 beneficiaries with allowances over $10,000. 

Similarly, in 1988, the percentage of ambulance companies receiving the largest share 

of allowances was very small. Of the ambulance companies which provided transports 

to ESRD beneficiaries in 1988, 2.1 percent (88) accounted for 57.6 percent of the total 

ESRD ambulance allowances. 

HIGH VOLUME USERS CAN BE IDENTIFED PROSPECITVELY. 

It is possible to predict which ESRD beneficiaries will be high volume users of 

ambulance services. With refinements, carriers can use either of two models in 

Appendix D as a step in predicting which beneficiaries will have a high-volume of 

scheduled transports. 

We found the first model, which identifies beneficiaries with a second transport w“thin 

3 days of the first to be highly predictive. The beneficiaries identified represented 66 

percent of the total allowed amount for ESRD ambulance transports in 1991 and 71 

percent of all ESRD beneficiaries with $10,OOOor more in ambulance allowances. 

The second model identified the number of transports each beneficiary had within 15 

days of the first. Beneficiaries with 7 transports in this time period accounted for 

nearly half of the total allowed amounts for ESRD ambulance transports. The 

average amount allowed per beneficiary was over $22,000. 

Identification of high-volume users could be part of new payment strategies to save 

Medicare funds. 

CARRIERS DO NOT USE AMBULANCE CODES UNIFORMLY. 

Ambulance codes represent the types of selvice provided by an ambulance company 

and types of service paid for by Medicare. Without uniform use of codes by carriers, 

HCFA cannot accurately analyze service utilization or payments. For example, 

current coding practices make it impossible to know the number of ESRD 

beneficiaries transported in emergency situations or as scheduled trips. 

In 1991, the eight carriers in our sample varied in terms of which codes they covered 

and how these codes were used. Only two carriers covered all eight national codes 

that we examined (Appendix A lists the codes). The remaining carriers covered from 

five to seven. They also used codes differently, so that the type of service covered 

under a code could vary from carrier to carrier. For example, one carrier used a code 

(A0221) to indicate mileage charges for ALS emergency transport, while another used 

the same code to indicate a base charge for basic life support transport. The 

6

emergency or non-emergency nature of the transport was irrelevant to the latter 

carrier. 

Although inconsistency among carriers has been somewhat reduced since 1991, it still 

exists today. Sample carriers currently lack uniformity in distinguishing between 

emergency and non-emergency transport. Two of the eight carriers require that 

scheduled transport of ESRD beneficiaries to maintenance dialysis be billed under a 

non-emergency code (e.g., A0150), while two other carriers do not cover nonemergency transport and require that the same type of service be billed under an 

emergency code (e.g., AOO1O). Three carriers instruct providers to use a nonemergency code for this service. These three carriers do not automatically deny 

payment if an emergency code is billed for this service. However, if billed routinely, 

the carriers would inform the ambulance company of the preferred code. The one 

remaining carrier in the sample does not categorize transports as emergency or nonemergency. 

The lack of consistency in coding is further illustrated by variations in the use of return 

trip codes. Of the two carriers who cover only emergency codes, one uses the return 

trip code (A0222) to indicate an emergency transport, while the other considers the 

return trip a non-emergency and does not cover it. Five other carriers use the return 

trip code as a non-emergency code, and one includes both emergency and nonemergency transport under this code. 

A study conducted by Project HOPE and included in a recent HCFA Report to 

Congress identified similar problems in the way codes are used. The study suggested 

that HCFA encourage the use of a separate code for scheduled ambulance transport. 

THE PAYMENT SYSTEM DOES NOT TAKE INTO ACCOUNT THE RO= 

PREDICTABLE NATURE OF SCHEDULED AMBULANCE TRANSPORTS. 

Ambulance payments are based on an outmoded payment system 

The Medicare payment system employed by carriers is based on inflation indexed 

charges or the customary or prevailing charge, whichever is less. Under this system, 

payment to an ambulance company is determined by what it has charged in the past 

and what other ambulance companies in the area charge, rather than the cost of 

resources needed to provide the service. 

Both Congress and HCFA have recognized the vulnerabilities in payment based on 

reasonable, usual, or customary charges. As a result, the Medicare program now pays 

hospitals based on diagnostic-related groups and has established fee schedules for 

physician semices, laboratory services, and durable medical equipment. The fee 

schedule for physician services is distinguished by its use of relative resource 

consumption as the primary basis for payment rather than historical charges. 

7

Under the current system, ambulance companies in the same area providing the same 

service may receive different payments. In our sample of 1991 claims, we found 

different payments for the same service in metropolitan areas of Florida, Michigan, 

Pennsylvania, and Texas. For example, in Pittsburgh, Pennsylvania three ambulance 

companies transported ESRD beneficiaries to dialysis facilities. Each billed the carrier 

under the same base code for BLS emergency transport--AOOIO--and were paid base 

rates of $140, $157, and $175. Each company also billed under a mileage code for the 

distance traveled between the beneficiary’s pick up location and destination. (The 

sample carriers pay only for the miles traveled while a beneficiary is aboard.) As with 

base codes, payment for mileage codes varied among the three companies. 

These variations still occur today. In 1993, seven Philadelphia, Pennsylvania 

ambulance companies that were in our 1991 sample had different allowances ranging 

from $130 to $183 for the same base code (BLS emergency transport--AOOIO). 

Another problem associated with this system is that carriers must maintain separate 

charge profiles for each ambulance company. This is complex, time-consuming, and 

costly to administer.5 

l%e payment system dbes not take advantage of the lower cmts associated with highvolume schedukd transpmm. 

The Project HOPE study found ambulance company costs for scheduled transport to 

be substantially lower than costs for emergency transports. According to the study, 

“scheduled runs are provided at ... approximately 20 to 60 percent below the costs of 

providing an emergency BLS run and substantially below the cost of providing an 

emergency ALS run in the surveyed States.”b The study also stated that some private 

ambulance companies specialize in scheduled transports because of the combination of 

lower costs and the fact that carrier payments do not differ for scheduled and 

unscheduled services.’ In 1987, the Office of Inspector General found that Veteran’s 

Hospitals contract with ambulance companies for scheduled transports at rates 

approximately 25 percent less than Medicare rates (OAI-03-86-00012). 

We estimate that Medicare could save between $11.4 to $34.1 million annually ($57 

to $170.5 million over 5 years) by changing its payment method for ambulance 

transports. Since current coding and payment practices make it impossible to precisely 

identiq the ambulance allowances for ESRD beneficiaries going to dialysis, the savings 

are based on approximate calculations. The calculations for these savings are shown 

in Appendix E. 

8

RECOMMENDATIONS


CODING SYSTEM 

In light of our findings, we recommend that HCFA take the following steps to ensure 

greater accuracy in monitoring and analysis of Medicare-covered ambulance sexvices. 

� Establish a code for scheduled transports. 

� Require uniform use of national ambulance codes. 

The HCFA may need to revise or elaborate on the current definitions of 

national ambulance codes so that the distinctions among codes are clear to 

billers and payers alike. A specific type of ambulance service should be 

represented by one code only. Carriers should be notified that sexvices should 

be billed under the appropriate code, as newly defined, in order to be 

reimbursed. 

PAYMENT SYSTEM 

In light of the predictable nature of scheduled transport for dialysis, we offer several 

optional strategies which would better ensure fair payment for services rendered and 

would save Medicare funds. While these options will require start-up costs and, in 

some cases, legislation, we believe Medicare could save between $11.4 to $34.1 million 

annually ($57 to $170.5 million over 5 years). Since current coding and payment 

practices make it impossible to precisely identify the ambulance allowances for ESRD 

beneficiaries going to dialysis, the savings are based on approximate calculations. The 

calculations for these savings are shown in Appendix E. 

The HCFA may consider combining two or more of the following strategies and 

establishing demonstration projects in particular geographic areas. The probability 

models described in appendix D could be used in implementing some of these 

strategies. 

.	 Establish a payment schedule for ambulance transport to maintenance dialysis, 

and set the fee lower than what is paid for unscheduled, emergenq transports. 

To establish the payment amount, HCFA might consider using Project HOPE’s 

data on the lower costs of scheduled transports or assess the practices of other 

payers (e.g., Veterans Administration). 

.	 Negotiate preferred provider agreements with ambulance companies to provide 

scheduled transportation for ESRD beneficiaries. The ambulance company 

would be given a set payment and would have a predictable volume of 

scheduled transports. 

9 
� 

� 

� 

Undertake competitive bidding to establish a price for scheduled transports for 

ESRD beneficiaries or to select companies who agree to provide such services. 

Thecompetitive bidding might remodeled after the 1993 HCFAlegislative 

proposal for oxygen and other durable medical equipment. 

Establish a rebate program for companies that routinely transport ESRD 

beneficiaries. Such a program might be modeled on the Medicaid rebate 

program for prescription drugs. Theadvantage ofarebate program is that it 

does notrequire front-end administration. Forexample, HCFAwould establish 

a base rebate amount and if the ambulance company provided the service it 

would pay Medicare the rebate. If the company did not provide the service, it 

would not have to pay the rebate. 

Provide an add-on to the composite rate Medicare pays dialysis facilities to 

cover the cost of transporting beneficiaries and allow the facility to negotiate 

agreements with ambulance companies. The model for this is the Medicare 

hospital payment mechanism. By bundling an add-on for transportation, 

Medicare would be encouraging the use of the most cost-effective mode of 

transportation. The dialysis facility, which is in an excellent position to 

determine whether a patient requires an ambulance, would have a financial 

interest in arranging for the most economical means of transport. However, 

given the small number of ESRD beneficiaries using ambulances, it maybe 

difficult to set add-on rates for all facilities. 

We are continuing our work to determine whether payments for 1991 Part B 

ambulance transportation for ESRD beneficiaries met Medicare coverage guidelines. 

We believe such information will also help HCFA in its continuing efforts to assess its 

payment policies for this semice. 

COMMENTS FROM HCFA 

The HCFA commented on the draft of this report. They concur with our 

recommendation to make coding changes, and they concur with the intent of our 

recommendation to ensure fairer payment for services rendered. The HCFA is 

“exploring the feasibility of revising the coding system” and is “engaged in a 

comprehensive effort to improve overall coverage and payment policies...including 

those involving payment for non-emergency transport services.” The full text of this 

agency’s comments are in Appendix F. 

10

ENDNOTES


1.	 The earners that were excluded had a combined allowed amount of $3,792,639 

(Maryland - $1,897,209; Railroad Retirement Board - $1,895,430). Therefore, 

the total allowed amount for all carriers was $101,175,828. 

2.	 Al11988B-MAD data is basedon 10national ambulance codes. These include 

the 8 codes listed in Appendix A. 

3.	 This percentage could be lower if, as is often the case, ambulance companies 

have more than one provider identification number. 

4. Project HOPE, A Studv of Pavm ents For Ambulance Services Under Medicare, 

p. 7-3 and p. 7-11, as appended to a report to Congress, Studv of Pavrnent of 

Ambulance Services by Donna E. Shalala, Secretary, Department of Health and 

Human Semites (Washington, DC. U.S. Department of Health and Human 

Services, 1993). 

5.	 Physician Payment Review Commission, Annual Report to Corwress, p. 2 

(Washington, DC: Physician Payment Review Commission, 1992). 

6. Project HOPE, p. 7-10. 

7. Ibid, pp. 7-7 and 7-8. 

11

APPENDIX A


DEFINITIONS OF NATIONAL AMBULANCE CODES 

The Health Care Financing Administration defines national ambulance codes. 

Although most ambulance allowances are associated with the eight codes below, 

carriers va~ in both the number of codes they cover and how they use each code. f% 

shown below, the eight codes include both emergency and non-emergency transports. 

Base Charge Codes 

AOO1O	 Ambulance service, basic life support, base rate, emergency transport, 

one way. 

A0220	 Ambulance service, advanced life support, base rate, all inclusive 

services, emergen~ transport, one way. 

A0223	 Ambulance service, advanced life support, base rate, where non-reusable 

advanced life support supplies are billed separately, emergency 

transport, one way. 

A0150 Non-emergency transportation, ambulance, base rate, one way. 

A0222 Ambulance setice, return trip, transport. 

Mileage Chanze Codes


AO020 Ambulance sewice, basic life support, per mile, transport, one way.


A0221 Ambulance service, advanced life support, per mile, transport, one way.


Miscellaneous Code


A0999 Unlisted ambulance service.


A-1

APPENDIX B


CARRIERS INTERVIEWED 

The eight carriers below made up our carrier sample from which our claim sample 

was drawn. 

We conducted structured interviews with each carrier. 

Blue Shield of California 

Chico, CA 

Blue Cross and Blue Shield of Florida 

Jacksonville, FL 

Blue Cross and Blue Shield of Kentucky 

Lexington, KY 

Massachusetts Blue Shield (for Massachusetts) 

Boston, MA 

Blue Cross and Blue Shield of Michigan 

Detroit, MI 

Empire Blue Cross and Blue Shield (for New York 

Crompond, NY 

Pennsylvania Blue Shield (for Pennsylvania) 

Camp Hill, PA 

Blue Cross-Blue Shield of Texas 

Dallas, TX 

B-1 

City and environs) 
APPENDIX C


COMPARISON OF 1991 AND 1988 CARRIERS WITH 

ACCOUNTING FOR ALLOWANCES OVER 

1991


carrier Total Total 

Empire Blue 408 $13,987,615


Cross/BlueShield


(NYC area)


Pennsylvania


Blue Shield (PA)


Massachusetts 214 8,120,773


Blue Shield (MA)


Arkansas 213 I 6,188,347


Blue Shield (LA)


Travelers


Connecticut %==


I I Nationwide 174 4,267,011 

Ohio 

Texas 128 3,213,977 

Blue Shield 

Alabama 

Blue Shield v

Pennsylvania 

Blue Shield (NJ) 

Kentucky 91 I 2,0~103 

Blue Shield I 

~ 

‘JDTAL $68&2#58


In 1988, thecarrier’s nome was Blue Cross/Blue St


Carrk$ 

Massachusetts Blue


Shield (MA)


Nationwide


Ohio


Pennsylvania


Blue Shield [PA)


*Empire Blue


Cross/Blue Shield


(NYC area)


Arkansas


Blue Shield (IA)


Travelers


Connecticut


Pennsylvania


Blue Shield (NJ)


Occidental


California


Texas


Blue Shield


Aetna


Illinois


Blue Shield


MichiganBlue


Shield


Florida


Blue Shield


Maryland


Blue Shield


All Railroad Board


Travelers


Virginia


‘17)TAL


tier New York 

c-1 

BENEFICIARIES 

$10,000 

Total Total 

132 $4,302,419 

151 3,229,400 

121 2,618,380 

105 2,151,463 

74 1,582,462 

64 1,569,767 

63 1,260,118 

54 1,056,789 

41 976,043 

46 898,085 

42 867,031 

42 75~03 

37 729,870 

38 713,053 

21 536,379 

22 485,354 

1.053 S23.728916 
APPENDIX D


PROSPE~ IDENTIFICATION OF HIGH-VOLUME AMBULANCE USERS 

AMONG END-STAGE RENAL DISEASE BENEFICIARIES 

According to data in the Common Working File, $101,175,829 was allowed in 1991 for 

ambulance transportation of 44,141 ESRD beneficiaries. (Of the 44,141 claims 

submitted 40,920 were allowed). Nationwide, 17 percent of the ESRD beneficiaries 

receiving ambulance services accounted for 75 percent of the total dollars allowed for 

these services. These 2,573 beneficiaries had an average of over $29,000 allowed for 

ambulance semices. 

An appropriate case management scheme could identify high-volume ambulance users. 

However, in order to introduce such a scheme, we must first identify ESRD 

beneficiaries for whom ambulance services are expected to reach pre-determined 

expenditure levels. Two methods that could identify these beneficiaries are outlined 

below. Both involve reviewing the claims for each beneficiary according to date of 

service and aggregating all claims with the same date of service as one trip. 

The first method looks at the number of days between the first and the second trip 

claimed during the year. For those beneficiaries falling within defined categories, the 

total allowed amounts for the whole year are summed. The second method looks at 

the number of ambulance trips for which claims were filed w’thin a fixed time period. 

For this exercise, we have used a 15-day period. 

Table I presents the outcome analysis using the first method based on the number of 

days between the first and second trip. First, we grouped those ESRD beneficiaries 

using 3 -day intervals between the first and second trip (a second trip within 3 days of 

the first, within 6 days, within 9 days, and so on Up to 30 days. Then we summed the 

total allowed amounts for all ESRD beneficiaries within each category. 

The results of this analysis reveal that those ESRD beneficiaries with a second 

ambulance trip within 3 days of the first accounted for 66 percent of the total amount 

allowed for ambulance trips by ESRD beneficiaries. Over 70 percent of the 2,573 

beneficiaries with over $10,000 in allowed amounts for 1991 had a second trip within 3 

days of the first. 

Table II presents a breakdown of the 44,141 beneficiaries by the number of 

ambulance trips within a 15 day period from their first trip of the year. Those 

beneficiaries with seven trips within 15 days of their first trip accounted for over 44 

percent of the total amount allowed in 1991 and those with seven or more trips, over 

50 percent of the allowed amounts. 

D-1

The results presented here demonstrate that it is possible to identi~, in a prospective 

manner, those ESRD beneficiaries with high potential for large expenditures for 

ambulance services. We have not considered beneficiary demographic variables in this 

analysis. Further research would help to delineate the predictive power of these and 

other factors, test other methods, and potentially reduce the number of false positives 

that occur in our models. 

Table I 

TOTAL ALLOWED AMOUNTS BY CATEGORY OF NUMBER OF DAYS 

BETWEEN THE FIRST AND SECOND TRIP IN ONE YEAR 

Number of Days to Number of 

Second TriD Benes 

One Trip 22,424 

3 Days 5,417 

6 Days 1,421 

9 Days 1,168 

12 Days 904 

15 Days 849 

18 Days 640 

21 Days 622 

24 Days 524 

27 Days 464 

30 Days 470 

30+ Days 9,238 

Total 44,141 

D-2 

Total 1991 Allowed 

Amount 

$4,011,244 

$66,517,097 

$6,358,670 

$3,537,683 

$2,050,833 

$1,779,624 

$1,115,348 

$1,353,194 

$1,067,824 

$647,446 

$966,737 

$11,770,133 

$101,175,833 

Percent of 

Total 

4.0% 

65.8% 

6.39Z0 

3.5% 

2.0% 

1.8% 

1.1% 

1.3% 

1.1% 

0.6% 

Lo% 

11.6% 
Table II


TOTAL ALLOWED AMOUNTS BY NUMBER OF TRIPS WITHIN 15 DAYS


Number of 

Trips within 

15 Days of First 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

Total 

Total 1991 

Number of Allowed Amounts 

Percent 

of Cum 

Total Percen 

21.17% 21.2% 

6.80% 28.0% 

3.71% 31.7% 

3.56% 35.2% 

7.13% 42.4% 

6.58% 49.0% 

44.20% 93.2% 

5.27% 98.4% 

1.04% 99.5% 

0.24% 99.7% 

0.11% 99.8% 

0.14% 100.0% 

0.03% 100.0% 

0.00% 100.0% 

0.00% 100.0% 

Benes 

34,623 

4,619 

1,003 

513 

569 

486 

1,980 

261 

57 

14 

7 

7 

1 

0 

1 

44.141 

$21,423,586 

$6,884,944 

$3,752,379 

$3,602,807 

$7,218,580 

$6,658,750 

$44,720,031 

$5,335,791 

$1,054,543 

$245,418 

$115,645 

$137,670 

$25,550 

$138 

$101.175.832 

D-3

APPENDIX E


POTENTIAL SAVINGS IF A REDUCED ALLOWANCE IS USED 

FOR SCHEDULED TRANSPORTS FOR ESRD BENEFICIARIES 

Since current coding and payment practices make it impossible to precisely identify the 

ambulance allowances for ESRD beneficiaries using scheduled ambulance transports 

to maintenance dialysis, our calculations are based on several assumptions. 

The ESRD Beneficiaries with $10,000 or more per year are frequent users of 

ambulance transports, and it is highly probably that maintenance dialysis accounts for 

most of the transports. While beneficiaries with less than $10,000 may also be 

frequent users, we chose $10,000 as a conservative cut-off. 

We recognize that some transports are indeed emergencies which cannot be foreseen 

and scheduled. We have no way to estimate this precisely. However, a conservative 

estimate is that 75 percent are for scheduled rather than emergency transports. 

Based on this conservative estimate, the third column of the table shows the allowed 

amounts for scheduled transports as 75 percent of the total allowed in 1991. 

The remaining columns show potential annual savings if the scheduled transports were 

reduced anywhere from 20 to 60 percent. Again, we have no way of knowing precisely 

what savings are possible. However, the Project Hope study estimated potential 

savings of 20 to 60 percent. The exact amount of savings would depend on the 

particular approach taken. 

Range of Total Approximate Potential Annual Savings on Scheduled Trips 

Beneficiary Allowed Allowancesfor Baaed on 20 to 60 Pereent Reductions 

Ambulance in 1991 Scheduled 

Allowances Transport 20% 30% 40% 50% 60% 

$1o,ooo19,999 $14,012479 $10309,359 $2,101,872 $3,152W8 $4,203,744 $5,254,680 $6,305,615 

20,000-

29,999 14,465,638 10,849,228 2,169,846 3,254,768 4,339,691 5,424,614 6,509,537 

30,000-

39,999 13,884,494 10,413,370 2,082,674 3,124,011 4,165,348 5,206,685 6,248,022 

40,000-

49,999 11,763,466 8,822,600 1,764,520 2,646,780 3,529,040 4,411,300 5,293,560 

50,000 21,802,426 16,351,819 3,270,364 4,905346 6,540,728 8,175,910 9,811,091 

TOTAL 75,928,503 56,946,376 11,389,276 17,083,913 22,778,551 28,473,189 34,167,825 

E-1

APPENDIX F 

COMMENTS FROM THE HEALTH CARE FINANCING ADMINISTRA~ON 

F-1 
U8PARTMENT OF HliALm & HUMAN SERVICES 

kieehh Cam 

Finaciw Admmimrmmn 

Memorandum 

wSu 

Frum 

mbloet


“!i=iii’~?’qY@’4


Offkt ofIiIaputor Gtmerd DM R- “~buiancc Services for A4e#icarc 

EurMtage Rend Disease %w~ PaymentPra~” (OE1-03-W-~13 1) 

To 

June Gibbt Brown 

IqnXmr Gcrleral 

Wa 

. 

. 

. 

,’ 

,, 

. 

,, 

..,. 

. 

A&2

� 

. . . cnts uf theHealth Care Financj@@nmtraQQu IHCFA) 

~of hg@ar Genera 1KXGl H Rcx 

a Establish a de for dldlkd tmtqmrta 

o Require uniform use of national embulan- oack 

‘lM HCFA may need tQ revise or elabcmte on the current definihm af national 

~ce codca ao that the disbdme emcmgcodes are clear to bilk and payera


dik A-~~~buh~hdtibs~ti&medoo@.


Carriem ehouhi be aotifkd that smviccs dmuld be bind under the appropriate + as


nwiyd&nti rnatdertobelekbumd


HCFA comum We are currcmw explaring the ftasibfity ofrevising our coding qstum


b ambdance services.
 In thatq~ we lmw b= working with the American 

~cm to eneure tha~ to tho extentposaibk any coding chsnga we 

~ - -W ~ the ambulaucs iwhstry. 

CkUSi&CaIrtbh.htg WU ax mwe of the fohwbtg s@8te ‘u and eeteblishing 

niorlprujec’t$ill pdlxllar gcographk areaa- % e probabi~ rnodeb dtibcd 

.in appendix D oouid be ueed in implementing come of tbe stmstegica. 

o Establieh a payment sAdoIe h ambulancetranspt to rnaimtmamx 

di8iy&andaottho feelcJverthanwM iepaid-foP un9Chedule4 

emeqpmq traneportL To eetablieh the payment amoux HCFA might 

~ usiog Rujeot HOPE%data an the lower costs of scheduled 

~ - ~ he PI--C d ok P8yors (sg., US. Depmnent of 

v~’a Jl&@ 

0	 Neguth pmkrred providerqpemcnrs wfthambulance compios to 

prcwide*ednkd tmuptmion h ESRI) beueficiark Under this typa 

. . 

-. 

‘. 

“. 

, 

.. 

. 

.r“. 

. . 

[F - 3]

Page 2 

of syman, the mbdanm cxunpanycould be given a set pawent for each 

~ in rctnrn for Medicaze’s buaincas 

a UBdartakc competitive biddiug to est=blhh � ~ h **kd frJUWXXTX 

for E3RD beuefkiaries or tn Mm cnmpanies who agree m prtide such 

~ l’%c amtpeuti bidding rnigltfbe rnockkd afbr the 1993 HCFA 

kgishfve prqxxal fur oxygenand other hrabk medical equipment 

o	 Establish a rebate programfor earnpaaks that rmtinely transportESRD 

kelkiaries. Under MS type of qete~ ccxrqnmicawhkh reaiw over a 

certain dcilez Ievd in paymcats might be required to ~ovide a rebata 

based on a percentage of tho payments made. For exampiq companies 

wbieh rcsived $SO,?MX)in Med~e pqmeam cotdd be required to rebate 

S percent ($Z500) at the cad of the year. 

0 Provide en add-on to the cumucufte rate hdedicarc Payadialwis f=dhiea co 

Cmer t.h mst oftransporung bedimmee ­ and alkivihe fa&ty to

negodaliia egreetumte with ambuhtm -nies. TIM ntodeI for this is 

the hiediam hoepital pllyYlleBtm=hanmm By bundlfng an add-an for 

tmmpmad~ Medkare would be enoouzegimgdie use uf the nrcmccxn. . eKcethmmodoof~ -rbcdMyeie f*, w&btirnm 

excdkrn poeidon to detenttine whether a patient xqrirea an ambulance, 

mhmafkektmst timangingfortiem~ --~~m-s 

od trempmL Hawever, giventb smail number of ESRD beneficiaries 

ubg ambu~~ it maybe dif&ult to aet add-en mtea for 8JItilith. 

H(?FA ~m witk the intern of tha reeommendaCkr&We mmgnizs that tbete are a 

number ofvtdneeaMEda in the *payment syuem for exnimlanca~ under 

Pert B. As � -i% we am am’unt!yengaged in 8 Cmllpnehllsnm efh)rt to improve 

overeRRYv6mp esdpaynMntpoiideaf orxlwaneeserwieek 

.’ 

.“ . 

,, 

. . 

‘. 

,.. 

., ,. 

J. 

. . 

[1? - 4]