Ground ambulance services are provided by a wide range of organizations that differ in their organizational structure, types of services offered, staffing, and revenue sources. Local conditions—including whether providers are affiliated with other organizations; whether their service areas are predominately urban, rural, or super-rural; and the amount of community-dedicated revenues—contribute to this diversity. In addition, communities have few, if any, tools to help them decide the optimal organizational structure, staffing, or amount of funding for ambulance services, given local conditions. Although there have been efforts to establish national performance or quality standards, there is limited information about how to best evaluate the costs of providing ambulance services in a community. In recent years, industry associations and federal agencies have worked to develop a data system and mechanisms for measuring the performance of emergency medical services (EMS); however, these tools cannot yet be applied to measure performance and evaluate the efficiency of ambulance services. The lack of data and performance standards makes it difficult to assess whether any given provider is delivering quality care or whether services are being provided efficiently. Organizational structures differ in that some ambulance providers are affiliated with another institution, such as a hospital or fire department, and in that providers may or may not offer other types of services, such as hospital services, fire suppression, rescue, or wheelchair transportation. Providers affiliated with another institution or that offer other types of services may share resources and operational costs, such as building space, administrative support, or personnel, with these other entities and services. About two-fifths of the ambulance industry shared operational costs with other institutions or services in 2004. Nine percent of the ambulance industry was affiliated with a hospital, while 37 percent was affiliated with a fire department and 21 percent was affiliated with another government agency. Other communities (33 percent of the ambulance industry in 2004) were served by freestanding, for-profit or not-for-profit provider organizations. The types of services offered and the staff employed also vary among providers. Some providers perform only emergency transports, in response to a 911 or equivalent call, while other providers offer nonemergency transports, which are typically transfers from one facility to another and may be scheduled in advance. In 2004, 45 percent of the ambulance industry performed only emergency transports; 55 percent performed emergency and nonemergency transports. Some providers perform only basic life support (BLS) transports because their staff are not certified to perform more intensive medical assessments and interventions, such as advanced life support (ALS) and other more complex services. In 2004, 9 percent of the ambulance industry specialized in only ALS and more complex Medicare transports, such as those requiring one or more ALS services or respiratory care; 14 percent performed only BLS Medicare transports; and 86 percent provided a mix of BLS, ALS, and more complex Medicare transports. Fire departments are more likely to be specialized in ALS and more complex services. According to the fire departments that responded to our survey, 70 percent of their Medicare transports, on average, required ALS or more complex services; for other providers ALS and more complex transport services constituted only 49 percent of their Medicare transports. Ambulance providers use of a variety of staff to deliver services to their communities. First, providers and communities determine what proportion of their staff will be emergency medical technicians (EMT) trained to perform BLS services, and what proportion will be EMT- intermediates or paramedics, who have training to perform more intensive ALS interventions. In 2004, 77 percent of providers that completed our survey reported having at least one staff member trained as a paramedic, nurse, or physician, but the remaining 23 percent of respondent providers relied on staff with less training than a paramedic. Other staffing choices include whether to employ career-oriented paid staff, rely on volunteers, or use a mix of paid and volunteer staff. Some providers choose to employ cross-trained staff. In 2004, two-fifths of the ambulance industry relied substantially on volunteer staff. In addition, providers and communities make different choices about whether to maintain backup vehicles and staff or to rely to a greater extent on nearby providers for backup assistance. Providers’ service areas can be urban, rural, super-rural, or a mix of areas. During 2004, CMS defined urban transports as those that originate within metropolitan statistical areas (MSA) and New England county metropolitan areas (NECMA), rural transports as those that originate in rural counties that are outside of MSAs and NECMAs, and super-rural transports as those that originate in the bottom 25 percent of rural areas as defined by population density. About half of the ambulance providers served predominately urban areas, and the other half served predominately rural and super-rural areas. However, three-fourths of all Medicare transports originated in urban areas. Therefore, rural and super- rural providers performed fewer transports on average than urban providers. In addition, rural and super-rural transports were longer than urban transports, on average, requiring more time and resources per transport. In 2004, urban Medicare transports averaged 7 miles, while rural Medicare transports averaged 13 miles and Medicare transports from super-rural areas averaged 20 miles. Providers have several potential revenue sources depending on their communities and their choices about funding ambulance services. Revenue sources can include community tax support (such as revenue from local governments); charitable donations; state and federal grants; subscription programs; and reimbursements from Medicare or Medicaid patients, and private health insurance companies. Not all providers receive revenues from all sources, and the mix and amount of revenues available may vary. For example, 48 percent of the ambulance industry indicated that a state or local government approves the fees they may choose to charge. In communities that limit ambulance providers’ fees, providers may bill Medicare (and other payers) less than the allowed amount and therefore do not receive the maximum Medicare payment allowed for their services. In 2004, Medicare payments for ambulance transports accounted for 31 percent of the providers’ revenues, on average, while Medicare beneficiaries accounted for about 40 percent of their transports during that same year. However, the percentage of Medicare revenues among providers ranged from less than 1 percent to 80 percent. Furthermore, different communities provide different levels of tax support to address specific issues, such as ensuring a minimum level of service in remote areas or being equipped with more sophisticated transport vehicles or having more highly trained staff. The ambulance national fee schedule was part of a series of payment reforms to make Medicare a more equitable and prudent purchaser of health care services. Phased in from April 2002 through December 2005, the national fee schedule standardized payment rates and reduced wide variations in payments for the same service. Medicare ambulance payments under the fee schedule have two components: a base-rate payment and a mileage payment. The base-rate component of ambulance payments under the fee schedule consists of the relative value unit (RVU), the conversion factor (CF), and a geographic adjustment factor. Ambulance RVUs account for the relative resources needed to provide services during an ambulance transport. The ambulance CF converts the RVU into a payment expressed in dollars and is set by CMS annually. Ambulance base-rate payments are also adjusted by a geographic practice cost index (GPCI), which is intended to account for regional differences in the cost of providing ambulance services. The mileage component consists of the number of miles traveled during an ambulance transport multiplied by the applicable mileage rate. (See fig. 1 for an example of the payment formula.) The ambulance national fee schedule was phased in from April 2002 through December 2005 by blending new fee schedule payments with historical payments. During this transition, the national fee schedule portion constituted a greater share of the total blended ambulance payment each year until January 2006, when the historical payment portion of the blend was discontinued. For example, in the latter part of 2002, total ambulance payments were a blend of 20 percent under the national fee schedule and 80 percent under the historical payment system. In 2004, the blend was 60 percent national fee schedule and 40 percent historical payment system. (See fig. 2 for further details on the blending of historic payments and national fee schedule payments.) The MMA introduced several temporary ambulance payment provisions that were implemented in 2004, the last of which expires at the end of 2009. CMS estimates that these payment adjustments will add $840 million to Medicare ambulance services over the 5 years they are in effect. The MMA provisions increased payment rates for urban and rural transports and for transports 51 miles or greater. The MMA also provided a significant base rate increase for transports originating in super-rural areas and provided for a new regional fee schedule based on the nine census divisions. The regional fee schedule was designed to ease the transition from the historical payment system to the national fee schedule. The introduction of the regional fee schedule overlapped with the phase-in of the national fee schedule. The regional fee schedule gave temporarily higher ambulance payments than what would generally be paid under the national fee schedule to ambulance providers in census divisions that had historically higher payments. If the regional base-rate payment was determined to be greater than the national base-rate payment for a particular region, then the region received the more advantageous blend of the regional fee schedule base-rate payment and the national fee schedule base-rate payment. For example, in the second half of 2004 under the regional fee schedule, affected regions received a blend of 80 percent of their regional fee schedule base-rate payment and 20 percent of the national fee schedule base payment rate. This base-rate payment was then further blended with historical payments as a part of the gradual phase-in of the ambulance national fee schedule. The regional fee schedule component of the base rate blend was reduced each year from 2005 through 2007, and expires at the end of 2009. (See fig. 2 for further details on the blending of historical, national fee schedule, and regional fee schedule payments.) In addition to providing for a regional fee schedule, the MMA temporarily required higher payment rates for super-rural transports.