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 2020, the federal Bureau of Labor Statistics (BLS) has calculated that the CPI-U has increased by 0.646%.
Cautionary Note Regarding CPI-U. Members should be advised that the BLS’ calculations of the CPI-U are preliminary, and may be subject to later adjustment. Therefore, it is possible that these numbers may change.
CMS has yet to release its estimate for the MFP for calendar year 2021. Since its inception, this number has fluctuated between 0.3% and 1.2%. For calendar year 2020, the MFP was 0.7%. Under normal circumstances, it would be reasonable to expect the 2021 MFP to be within a percentage point or two of the 2020 MFP. However, the economic impact of the COVID-19 pandemic makes predictions on the MFP difficult at this point.
Accordingly, the AAA is not in a position to confidently project the 2021 Ambulance Inflation Factor at this point in time. However, the relative low increase in the CPI-U strongly suggests that the 2021 Ambulance Inflation Factor will be significantly lower than last year’s increase of 0.9%.
The AAA will notify members once CMS issues a transmittal setting forth the official 2021 Ambulance Inflation Factor.