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Author: Brian Werfel

Brian S. Werfel, Esq. is a partner in Werfel & Werfel, PLLC, a New York based law firm specializing in Medicare issues related to the ambulance industry. Brian is a Medicare Consultant to the American Ambulance Association, and has authored numerous articles on Medicare reimbursement, most recently on issues such as the beneficiary signature requirement, repeat admissions and interrupted stays. He is a frequent lecturer on issues of ambulance coverage and reimbursement. Brian is co-author of the AAA’s Medicare Reference Manual for Ambulance, as well as the author of the AAA’s HIPAA Reference Manual. Brian is a graduate of the University of Pennsylvania and the Columbia School of Law. Prior to joining the firm in 2005, he specialized in mergers & acquisitions and commercial real estate at a prominent New York law firm. Werfel & Werfel, PLLC was founded by David M. Werfel, who has been the Medicare Consultant to the American Ambulance Association for over 20 years.

CMS Posts 2023 Public Use File

On November 23, 2022, CMS posted the 2023 Ambulance Fee Schedule Public Use Files. These files contain the amounts that will be allowed by Medicare in the calendar year 2023 for the various levels of ambulance service and mileage. These allowable reflect an 8.7% inflation adjustment over the calendar 2022 rates. The 2023 Ambulance Fee Schedule Public Use File can be downloaded from the CMS website by clicking here.

Please note that these files reflect the Medicare allowable based on current federal law.  Accordingly, the 2023 Public Use Files do not include the current add-ons (i.e., 2% for urban, 3% for rural, and the super-rural bonus), as these add-ons are currently scheduled to expire on December 31, 2022.

The AAA is actively working with congressional offices to not only extend but hopefully increase, the Medicare ambulance add-ons by the end of the year. If you have not already written to your members of Congress about extending the add-ons at increased levels, please do so today by using the AAA online advocacy tool by clicking here.

Unfortunately, in recent years, CMS has elected to release its Public Use Files without state and payment locality headings. As a result, in order to look up the rates in your service area, you would need to know the CMS contract number assigned to your state. This is not something the typical ambulance service would necessarily have on hand. For this reason, the AAA will be publishing a reformatted version of the CMS Medicare Ambulance Fee Schedule that includes the state and payment locality headings. The reformatted fee schedule will be available on the AAA website in the coming days.

The AAA will also be publishing an updated version of its Medicare Rate Calculator, which we expect to have available on our website once we have a better sense of the timing of the extension of the add-ons.

CMS Announces 2023 Ambulance Inflation Factor

On October 14, 2022, CMS issued Transmittal 11642 (Change Request 12948), which announced the Medicare Ambulance Inflation Factor (AIF) for the calendar year 2023.

The AIF is calculated by measuring the increase in the consumer price index for all urban consumers (CPI-U) for the 12-month period ending with June of the previous year.  Starting in the calendar year 2011, the change in the CPI-U is now reduced by a so-called “productivity adjustment”, which is equal to the 10-year moving average of changes in the economy-wide private nonfarm business multi-factor productivity index (MFP).  The MFP reduction may result in a negative AIF for any calendar year.  The resulting AIF is then added to the conversion factor used to calculate Medicare payments under the Ambulance Fee Schedule.

For the 12-month period ending in June 2022, the Federal Bureau of Labor Statistics (BLS) has calculated that the CPI-U increased by 9.1%.  CMS further indicated that the CY 2023 MFP would be 0.4%.  Accordingly, CMS indicated that the Ambulance Inflation Factor for the calendar year 2023 will be 8.7%. 

This is the largest inflation update since the implementation of the current Medicare Ambulance Fee Schedule in April 2002.  The increase from last year’s 5.1% increase is also the single largest year-over-year increase on record.

CMS Ambulance Open Door Forum Summary

On August 18, 2022, the Centers for Medicare and Medicaid Services (CMS) held its most recent Ambulance Open Door Forum (ODF). As is typically the case, CMS started the ODF with a series of announcements, before opening the call to questions from the ambulance industry.

 

The first announcement related to proposed changes to the regulations governing the medical necessity requirements for non-emergency, scheduled, repetitive ground ambulance services. Specifically, CMS is proposing to modify the so-called “special rule” for repetitive, scheduled non-emergency services (set forth in the regulations at 42 C.F.R. §410.40(e)(2)(ii)). CMS indicated that these proposed changes would provide necessary and ensure the consistent application of the documentation requirements by its contractors. The proposed change would add language indicating that both the Physician Certification Statement and “additional documentation from the beneficiary’s medical record” could be used to support medical necessity for the ambulance transport. The new language would further indicate that these documents must provide detailed explanations that are consistent with the beneficiary’s current medical condition. On the ODF, CMS encouraged the industry to submit comments on these proposed changes. However, CMS indicated that, because these changes were the subject of ongoing rulemaking, it would not be able to answer any questions on the ODF.

 

The second announcement related to the proposed changes to the Medicare Ground Ambulance Data Collection System (GADCS) included in the July 2022 Proposed Rule. CMS and its contractor, the Rand Corporation, went through a detailed PowerPoint presentation that summarized these proposed changes. That PowerPoint presentation can be accessed by clicking here.

 

As part of its discussion of the GADCS, CMS also announced the implementation of an automated process for requesting hardship exemptions and informal review of determinations that an ambulance provider is subject to a financial penalty for failing to properly submit its cost data.

 

The final announcement related to ambulance services furnished by Rural Emergency Hospitals (REHS). In the FY 2023 Outpatient Hospital Proposed Rule, CMS is proposing to codify in its regulations the statutory requirement that ambulance services furnished by entities that are owned and operated by REHS will be paid under the Medicare Ambulance Fee Schedule. CMS is also proposing to revise the origin and destination requirements to include REHS as both a covered origin and covered destination for ambulance services.

 

The ODF concluded with a brief Q&A period. All of the questions posed to CMS related to the GADCS.  One of the questions placed to CMS was whether it would permit ambulance suppliers to prospectively seek a hardship exemption, i.e., to permit an ambulance supplier to ask now that it be relieved of the financial penalties for failing to report its cost data. The person posing the question specifically referenced ambulance suppliers impacted by the severe flooding in the State of Kentucky. CMS confirmed that an ambulance supplier had to be notified that it was subject to a financial penalty before it was eligible to seek a hardship exemption.

PRF Late Reporting Extended

HRSA announces potential relief for health care providers that missed the deadline to report on their use of Provider Relief Funds

On April 7, 2022, the Health Resources and Services Administration (HRSA) posted a notice that offers providers that missed the deadline to report on their use of HHS Provider Relief Funds the opportunity to potentially be able to file that report and therefore avoid the potential recoupment of PRF funds.  The “Request to Report Late” is limited to situations where the failure to timely submit the required report was due to one or more extenuating circumstances.

 

If you were notified that you failed to submit your required PRF Report on a timely basis and are being asked to return PRF funds, you should read this member advisory carefully. 

 

Relevant Background

 

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).  As part of that Act, Congress allocated $100 billion (increased to $178 billion by subsequent legislation) to the creation of the CARES Act Provider Relief Fund (PRF) which was used to support hospitals and other healthcare providers on the front lines of the nation’s coronavirus response.

 

Under the terms of the PRF program, health care providers that received more than $10,000 in any reporting period were required to submit a report that provides details on how those funds were expended.  The first report covered PRF payments received between April 10, 2020, and June 30, 2020, and was due on or before September 30, 2021.  HHS subsequently enacted a 60-day grace period, which ran from October 1, 2021, through November 30, 2021.  The second report covered PRF payments received July 1, 2020, and December 31, 2020, and was due on or before March 31, 2022.

 

Providers that failed to submit any required report by these deadlines are subject to the potential recoupment of those funds.

 

What HRSA Considers to be “Extenuating Circumstances”

 

According to the notice, health care providers will be permitted to request the opportunity to complete their report after the deadline to the extent the filing of their report was delayed due to one or more of the following:

 

  • Severe illness or death – a severe medical condition or death of a provider or key staff member responsible for the reporting hindered the organization’s ability to complete the report during the relevant reporting period.
  • Nature Disaster – a natural disaster occurred during or in close proximity to the end of the reporting period that damaged the organization’s records or information technology.
  • Lack of receipt of reporting communications – an incorrect email or mailing address on file with HRSA prevented the organization from receiving instructions prior to the relevant reporting period deadline.
  • Failure to click “Submit” – the organization registered and prepared a report in the PRF Reporting Portal but failed to take the final step to click “Submit” prior to the reporting deadline.
  • Internal Miscommunication or error – internal miscommunication or error regarding the individual who was authorized and expected to submit the report on behalf of the organization and/or the registered point of contact in the PRF Reporting Portal.
  • Incomplete Targeted Distribution payments – the organization’s parent entity completed all General Distribution payments, but a Targeted Distribution(s) was not reported on by the subsidiary.

 

Process for Applying for Permission to Submit a “Late Report”

 

To the extent one or more of the extenuating circumstances described above applies, the provider will be given the opportunity to submit a Request to Report Late Due to Extenuating Circumstances.  The timeframe to submit these requests will run from April 11, 2022, to April 22, 2022. 

 

HRSA is indicating that any provider that plans to submit such a request but has yet to register in the PRF Reporting Portal, should register prior to submitting their request.

 

To submit a request to file late, the provider will need to submit a form indicating the extenuating circumstance(s) that prevented the required report from being submitted in a timely fashion.  That form will require the provider to provide a “clear and concise explanation” of the applicable extenuating circumstance.  However, providers will not be required to submit any supporting documentation.  The provider will be required to attest to the truthfulness and accuracy of their extenuating circumstance.

 

After submitting their request, the provider will be notified by HRSA whether their request is approved or denied.  If the request is approved, the provider will have 10 days from the date of the notification to submit the required report through the PRF Reporting Portal.

 

If the request is denied, HRSA will proceed with the recoupment of the PRF funds subject to the missed report.

 

HRSA Announces Distribution of Phase 4 General Distribution Funds

The Health Resources & Services Administration (HRSA) has announced that it will begin distributing Phase 4 General Distribution Payments on Thursday, December 16, 2021.  According to HRSA, approximately 75% of all Phase 4 applications have now been processed.  HRSA indicated that the remaining 25% of applications require additional review under its risk mitigation and cost containment safeguards.

HRSA further indicated that it began distributing American Rescue Plan (ARP) Rural Payments on November 23, 2021.  As of December 14, 2021, HRSA has indicated that it has processed approximately 96% of ARP applications.  The ARP allocated a total of $8.5 billion to health care providers who serve rural Medicare, Medicaid and CHIP patients.  HRSA indicated that it will distribute $7.5 billion of these funds in its initial distribution.

To the extent a provider was determined to be eligible for either a Phase 4 payment or an ARP Rural Payment, the provider will receive both an email notification and a paper letter with additional details on these payments.  This will include the individual amounts attributed to any subsidiary TINs submitted as part of their application.  To the extent HRSA determined that you were not eligible for a Phase 4 payment, the email notice will provide an explanation for why you were determined to be ineligible.  These email notices will be sent to the email address provided in the Phase 4 application.  Providers selected for additional review will receive email notification as soon as HRSA completes its review process, which it indicated would be completed in “early 2022.”

AAA members are encouraged to look for this email.  If you have not received an email notification, we would suggest that you check your spam filter, as several of our members have indicated that the email was flagged as “spam” by their email system. 

CMS Announces Timeline for National Expansion of Prior Authorization for Repetitive, Scheduled Non-Emergency Ambulance Transportation

On August 26, 2021, the Centers for Medicare and Medicaid Services (CMS) announced its proposed timeline for the national expansion of the Prior Authorization Model for Repetitive, Scheduled Non-Emergent Ambulance Transports (RSNAT).  The formal notice appeared in the Federal Register on August 27, 2021.

Background

In December 2014, the Centers for Medicare and Medicaid Services (CMS) implemented a prior authorization model for payment of repetitive, scheduled non-emergent ambulance transportation.  Under this Model, ambulance suppliers are required to seek and obtain prior authorization for the transportation of repetitive patients beyond the third round-trip in a 30-day period.  Absent prior authorization, the Medicare Administrative Contractors (MACs) are required to subject further claims to prepayment review.

The Model was initially implemented in three states: New Jersey, Pennsylvania, and South Carolina.  These “Year 1” states were selected based on relatively high per-capita expenditures on RSNAT.  The Model was subsequently expanded in January 2016 to five additional states (Delaware, Maryland, North Carolina, Virginia, and West Virginia) and to District of Columbia.  These “Year 2” states were selected based on their inclusion in the same MAC Jurisdiction as one or more of the Year 1 states.

The purpose of the RSNAT Model was to test whether prior authorization would be effective in reducing Medicare expenditures on RSNAT, without adversely impacting beneficiary access to medically necessary services.  CMS engaged Mathematica, a public health care research firm, to study the impact of prior authorization on ambulance utilization in the demonstration states.  Mathematica issued several reports that concluded that the Model was effective in reducing Medicare expenditures without any measurable impact on the quality of care available to Medicare beneficiaries.

On November 23, 2020, CMS published a notice in the Federal Register indicating that it intended to expand the Prior Authorization Model to all remaining states and U.S. territories.  However, citing the current Public Health Emergency, CMS elected not to set a timeline for that national expansion.

The current notice announces that timeline for national expansion

Expansion Timeline

CMS has indicated that the RSNAT Model will be expanded into new states on the following timeline:

Expansion Date Affected States
December 1, 2021 Arkansas, Colorado, Louisiana, Mississippi, New Mexico, Oklahoma, and Texas
Not earlier than

February 1, 2022

Alabama, California, Georgia, Hawaii, Nevada, Tennessee, American Samoa, Guam, and the Northern Mariana Islands
Not earlier than

April 1, 2022

Florida, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, Wisconsin, Puerto Rico, and the U.S. Virgin Islands
Not earlier than

June 1, 2022

Connecticut, Indiana, Maine, Massachusetts, Michigan, New Hampshire, New York, Rhode Island, and Vermont
Not earlier than

August 1, 2022

Alaska, Arizona, Idaho, Kentucky, Montana, North Dakota, Ohio, Oregon, South Dakota, Utah, Washington, and Wyoming

 

An analysis of the proposed timeline suggests that CMS has elected to expand the RSNAT Model based on existing Medicare Administrative Contractor (MAC) Jurisdictions.  For example, each of the states slated to be included in the December 1, 2021 expansion fall within MAC Jurisdiction H.  This MAC Jurisdiction is administered by Novitas Solutions, Inc.  Novitas also administers MAC Jurisdiction L, which has been operating under the RSNAT Model since 2014.  Thus, CMS likely selected MAC Jurisdiction H for the first stage of the national expansion due to Novitas’ experience in administering the RSNAT Model.

The second stage of the national expansion will occur no earlier than February 1, 2022.  This stage will include all states and territories located in MAC Jurisdiction J and MAC Jurisdiction E.  MAC Jurisdiction J is administered by Palmetto GBA, LLC, which has been administering the RSNAT Model in MAC Jurisdiction M since 2014.  MAC Jurisdiction E is administered by Noridian Healthcare Solutions, LLC.  This will be Noridian’s first experience with the RSNAT Model.

The third stage of the national expansion will occur no earlier than April 1, 2022.  This stage will include all states and territories located in MAC Jurisdiction 5 (Wisconsin Physicians Service Government Health Administrators), MAC Jurisdiction 6 (National Government Services, Inc.), and MAC Jurisdiction N (First Coast Service Options, Inc.)

The fourth stage of the national expansion will occur no earlier than June 1, 2022.  This stage will include all states and territories located in MAC Jurisdiction 8 (Wisconsin Physicians Service Government Health Administrators) and MAC Jurisdiction K (National Government Services, Inc.).

The final stage of the will occur no earlier than August 1, 2022.  This stage will include all states and territories located in MAC Jurisdiction 15 (CGS Administrators, LLC) and MAC Jurisdiction F (Noridian Healthcare Solutions, LLC).

Outreach and Education

With the formal announcement of CMS’ timeline for the national expansion of the RSNAT Model, the American Ambulance Association will be increasing its educational efforts related to prior authorization.  This will include webinars and other educational materials on the technical elements of the prior authorization process, the importance of third-party documentation, as well as basic best practices related to the transportation of repetitive patients.  We encourage all members that may be impacted by the expansion of prior authorization to take advantage of these educational materials.

Provider Relief Fund Reporting Requirement Deadline is Approaching

The American Ambulance Association wants to remind our members that the deadline to submit your initial report on your use of HHS Provider Relief Funds is fast approaching.  Any ambulance provider or supplier that received more than $10,000 in aggregate funds from the first two rounds of General Distribution funding will need to submit a report on their use of such funds by September 30, 2021.  This initial report will detail the expenditure of PRF funds through June 30, 2021.

Relevant Background

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).  As part of that Act, Congress allocated $100 billion to the creation of a “CARES Act Provider Relief Fund,” which will be used to support hospitals and other healthcare providers on the front lines of the nation’s coronavirus response.  An additional $75 billion was allocated as part of the Paycheck Protection Program and Health Care Enhancement Act, with subsequent legislation adding further amounts to this fund.  In total, the Provider Relief Fund (PRF) will distribute $178 billion to health care providers and suppliers to fund healthcare-related expenses or to offset lost revenue attributable to COVID-10.

To date, HHS has distributed approximately $148.4 billion through three rounds of General Distribution funds ($92.5 billion) and multiple smaller Targeted Distributions.  A portion of the PRF is also being used to reimburse health care providers for the costs of testing, treating, and vaccinating the uninsured.

Summary of Final Reporting Requirements

On June 11, 2021, HHS issued its final PRF Reporting Requirements.  Under these new guidelines, health care providers will be required to report for any “Payment Received Period” in which they received one or more PRF payments that, in the aggregate, exceed $10,000.  Providers meeting this threshold for any Payment Received Period will report on their use of such funds during the corresponding “Reporting Time Period.”

The following table sets forth the applicable Payment Received Periods and corresponding Reporting Time Periods.  The table also sets forth the deadline to use funds received within each Payment Receiving Period.

 

Period Payment Received Period Deadline for use of Funds Reporting Time Period
1 April 10, 2020 – June 30, 2020 June 30, 2021 July 1, 2021 – September 30, 2021
2 July 1, 2020 – December 31, 2020 December 31, 2021 January 1, 2022 – March 31, 2022
3 January 1, 2021 – June 30, 2021 June 30, 2022 July 1, 2022 – September 30, 2022
4 July 1, 2021 – December 31, 2021 December 31, 2022 January 1, 2023 – March 31, 2023

 

PRF payments received in the first two rounds of General Distribution funding will fall within the first reporting period.  PRF payments received in the third round of General Distribution funding will fall within either the second or third reporting periods, depending on when the funds were actually received.

As a result, ambulance providers and suppliers that received more than $10,000 in the aggregate from the first two rounds of General Distribution funding will need to submit an initial report during the 90-day period starting on July 1, 2021.  This initial report will detail all expenditures of PRF funds through June 30, 2021.

Ambulance providers and suppliers that received between $10,001 and $499,999 in aggregated PRF funds during each Payment Received Period are required to report on their use of such funds in two categories: (1) General and Administrative Expenses and (2) Health Care Related Expenses.  Ambulance providers and suppliers that received $500,000 or more in aggregated PRF funds during each Payment Received Period will be required to submit more detailed information for each of these general categories.

Specific Instructions Related to Reporting of Lost Revenues

The American Ambulance Association has received numerous questions from members regarding the appropriate methodology to report lost revenues attributable to the coronavirus.  Specifically, many members have inquired as to the appropriate methodology for calculating their lost revenues.

HHS has indicated that health care providers must report their lost revenues using one of three methodologies:

  1. The difference between actual patient care revenues;
  2. The difference between budgeted patient care revenues and actual patient care revenues; or
  3. An alternative methodology selected by the provider for estimating lost revenues.

Based on HHS guidance, it appears that the default methodology is to measure the difference between actual patient care revenues for each calendar quarter during the applicable period.  The provider will also be asked to further break down patient care revenues by applicable payer.  In basic terms, the first methodology will compare: (i) your actual calendar year 2019 patient care revenues to (ii) your actual calendar year 2020 patient care revenues.  The A.A.A. suggests that all members start by conducting this basic revenue analysis.  To the extent your lost revenues in 2020 equal or exceed (in combination with your increased expenses, if any) the total PRF funds received during the first Payment Received Period, no additional revenue analysis is required. 

In some instances, you may find that your actual revenue losses for calendar year 2020 do not fully offset the PRF funds received during the First Payment Received Period.  In that event, it may be beneficial to conduct a separate revenue analysis using the budgeted vs. actual methodology.  Note: you are only eligible to use this methodology to the extent you had a formal budget approved prior to March 27, 2020. 

This methodology is likely to be beneficial to ambulance providers or suppliers that, pre-pandemic, were projecting significant revenue growth in calendar year 2020.  For example, consider the case of a hypothetical “ABC Ambulance Service, Inc.”  ABC Ambulance had $1 million in patient care revenues in calendar year 2019.  However, in November 2019, the company signed an agreement to be the preferred provider of a major hospital system in its service area.  As a result, the company was projecting significant revenue growth in calendar year 2020.  Specifically, when it created its 2020 budget in December 2019, it projected that its patient care revenues would rise to $1.5 million in 2020.

When the pandemic hit in mid-March 2020, the company saw a significant slowdown in its transport volume.  Like many ambulance providers, it saw its transport volume rebound somewhat in the 3rd and 4th quarters of 2020.  As a result, it ended the year with $1.2 million in patient care revenues.

A revenue analysis using the default methodology would show an increase in revenues, i.e., its revenues increased by $200,000 over 2019.  However, its 2020 actual revenues were $300,000 less than it projected in its 2020 budget.  Using this second methodology, the company would be able to claim $300,000 in lost revenues to offset against its PRF funds.

Please note that any ambulance provider or supplier using this second methodology will be required to submit additional documentation with its initial PRF report.  Specifically, you will be required to submit a copy of the 2020 budget relied upon to show the lost revenue, together with an attestation from its CEO, CFO, or other authorized official attesting to the fact that this budget was formally established prior to March 27, 2020.

HHS will also permit ambulance providers or suppliers to utilize an alternative methodology created by the entity for calculating their lost revenues.  However, to utilize an alternative methodology, the provider or supplier will be required to submit additional documentation explaining not only the methodology, but also the justification for why this methodology was reasonable.  HHS has indicated that providers or suppliers electing to use an alternative methodology will face an increased risk of audit.  As a good rule of thumb, the use of an alternative methodology is likely to limited to situations where the EMS agency’s business is extremely seasonal, or where there was some major change in their operations during the 2020 calendar year (e.g., a partial sale of the company, a large acquisition, etc.).

Further Information Related to PRF Reporting

HHS updated its instructions for how ambulance providers and suppliers should complete their PRF Reporting obligations.  These updated instructions start on Page 4 of the Revised Reporting Requirements.

HHS also recently updated its Frequently Asked Questions (FAQs) associated with the PRF Reporting Program.

 

 

Preliminary Calculation of 2022 Ambulance Inflation Update

Section 1834(l)(3)(B) of the Social Security Act mandates that the Medicare Ambulance Fee Schedule be updated each year to reflect inflation.  This update is referred to as the “Ambulance Inflation Factor” or “AIF”.

The AIF is calculated by measuring the increase in the consumer price index for all urban consumers (CPI-U) for the 12-month period ending with June of the previous year.  Starting in calendar year 2011, the change in the CPI-U is now reduced by a so-called “productivity adjustment”, which is equal to the 10-year moving average of changes in the economy-wide private nonfarm business multi-factor productivity index (MFP).  The MFP reduction may result in a negative AIF for any calendar year.  The resulting AIF is then added to the conversion factor used to calculate Medicare payments under the Ambulance Fee Schedule.

For the 12-month period ending in June 2021, the federal Bureau of Labor Statistics (BLS) has calculated that the CPI-U has increased by 5.39%.

CMS has yet to release its estimate for the MFP in calendar year 2022.  However, assuming CMS’ projections for the MFP are similar to last year’s projections, the number is likely to be in the 0.4% range.

Accordingly, the AAA is currently projecting that the 2022 Ambulance Inflation Factor will be approximately 5.0%. 

Cautionary Note Regarding these Estimates

Members should be advised that the BLS’ calculations of the CPI-U are preliminary, and may be subject to later adjustment.  The AAA further cautions members that CMS has not officially announced the MFP for CY 2022.  Therefore, it is possible that these numbers may change.  The AAA will notify members once CMS issues a transmittal setting forth the official 2022 Ambulance Inflation Factor.

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