Reimbursement Archives - Page 12 of 15 - American Ambulance Association

CMS SMR Contractor Audit Error

Written by Brian Werfel on November 15, 2016. Posted in Medicaid, Medicare, Member Advisories, Member-Only.

Over the past week, we have learned that several ambulance suppliers have received letters from the CMS Supplemental Medical Review Contractor (SMRC), StrategicHealthSolutions, LLC. These letters indicate that the SMRC is conducting a medical review of their claims.

The letter contains a section that explains why the supplier has been selected for review. That section contains the following explanation:

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), signed into law on April 16, 2015, extended the therapy cap exception process through December 31, 2017, and modified the requirement for manual medical review for services over the $3,700 therapy thresholds. MACRA eliminated the requirement for manual medical review of all claims exceeding the therapy thresholds and instead allows a targeted review process. CMS has tasked the SMRC with performing post-payment medical review of Part B therapy claims for providers with a high percentage of patients receiving therapy beyond the threshold as compared to their peers for dates of service July 1, 2015 to the present.

Our firm contacted the SMRC on behalf of a number of affected providers. On November 14, 2016, StrategicHealthSolutions responded to our inquiry. The SMRC indicated that its review was intended to be limited to suppliers of physical therapy services. Accordingly, the SMRC confirmed that these audit letters were sent to ambulance suppliers in error.

The SMRC further indicated that ambulance suppliers that received this audit letter in error will be notified by telephone that they were selected in error. The SMRC will also be sending letters to affected ambulance suppliers notifying them of its error. These letters are expected to be mailed tomorrow, Tuesday, November 15, 2016.

If your organization received a letter from StrategicHealthSolutions, LLC, please know that this letter was sent in error. Your organization is not being audited by the Supplemental Medical Review Contractor. You can expect to receive a phone call and/or a letter in the next few days formally notifying you of the contractor’s error. That letter should formally withdraw the SMRC’s request for medical records.

If you received a letter from the SMRC, and have any further questions, please feel free to contact Brian S. Werfel, Esq., the AAA’s Medicare Consultant. He can be reached via email at bwerfel@aol.com.

CMS List of Medically Unlikely Edits for Ambulance Services

Written by Brian Werfel on November 15, 2016. Posted in Medicaid, Medicare, Member Advisories, Member-Only, Reimbursement.

On October 1, 2016, the Centers for Medicare and Medicaid Services (CMS) updated its list of Medically Unlikely Edits (MUEs). The MEU program is designed to reduce the paid claims error rate for Part B claims. The program operates by estimating the maximum number of units of service that a provider/supplier would report under most circumstances for a single beneficiary on a single date of service. A claim that submits units of service in excess of this threshold will typically be denied by the Medicare Administrative Contractor.

For additional information on the CMS Medically Unlikely Edit Program, click here.

Effective October 1, 2016, claims for ambulance services will be subject to the following MUE edits:

HCPCS Code	MUE Threshold
A0425 (Ground Ambulance Mileage)	250
A0426 (Ground Ambulance, ALS Non-Emergency)	2
A0427 (Ground Ambulance, ALS Emergency)	2
A0428 (Ground Ambulance, BLS Non-Emergency)	4
A0429 (Ground Ambulance, BLS Emergency)	2
A0430 (Air Ambulance, Fixed Wing)	1
A0431 (Air Ambulance, Helicopter)	1
A0432 (Ground Ambulance, Paramedic Intercept)	1
A0433 (Ground Ambulance, ALS-2)	1
A0434 (Ground Ambulance, Specialty Care Transport)	2
A0435 (Air Ambulance, Fixed Wing Mileage)	999
A0436 (Air Ambulance, Helicopter Mileage)	300

AAA Posts 2015 National and State-Specific Medicare Data

Written by Brian Werfel on November 5, 2016. Posted in Medicare, Member Advisories, Member-Only.

The American Ambulance Association is pleased to announce the publication of its 2015 Medicare Data Payment Report. This report is based on the Physician/Supplier Procedure Summary Master File. This report contains information on all Part B and DME claims processed through the Medicare Common Working File and stored in the National Claims History Repository.

The report contains an overview of total Medicare spending nationwide in CY 2015, and then a separate breakdown of Medicare spending in each of the 50 states, the District of Columbia, and the various other U.S. Territories.

For each jurisdiction, the report contains two charts: the first reflects data for all ambulance services, while the second is limited solely to dialysis transports. Each chart lists total spending by procedure code (i.e., base rates and mileage). For comparison purposes, information is also provided on Medicare spending in CY 2014.

Findings Patterns Where None Exist

Written by Brian Werfel on October 28, 2016. Posted in Medicaid, Medicare, Reimbursement, Talking Medicare.

On August 16, 2016, the HHS Departmental Appeals Board (DAB) issued a decision related to CMS’ authority to revoke a Medicare supplier’s billing privileges. The DAB is the fourth and final level of administrative appeal within the Department of Health and Human Services.

Factual Background

The case involved John P. McDonough III, Ph.D., a clinical psychologist residing in Florida, and two of his affiliated medical practices, Geriatric Psychological Specialists and Geriatric Psychological Specialists II. In October 2014, First Coast Service Options, Inc., the Medicare Administrative Contractor for Florida, notified McDonough and both medical practices that their Medicare billing numbers were being revoked for alleged abuses of their billing privileges. Specifically, First Coast indicated that data analysis had revealed that the three suppliers had submitted a total of 420 claims for deceased beneficiaries over an approximately two-year period.

McDonough and his two medical practices appealed for a reconsideration of the revocation of their billing privileges, which was denied in February 2015. The suppliers then appealed for an ALJ hearing. The suppliers conceded that they submitted more than 200 claims for beneficiaries that were deceased on the date of service. However, they attributed these claims to data-entry errors and other clerical mistakes. The suppliers argued that these were simple billing errors, representing a small percentage of the tens of thousands of claims they submitted during this period of time. In December 2015, the ALJ issued his decision. While the ALJ seemingly accepted the suppliers’ explanation that these were billing errors, and that there was no intent on the part of the suppliers’ to submit false claims, the ALJ nevertheless upheld the revocation of their billing privileges. Citing previous DAB decisions, the ALJ held that the admitted submission of repeated claims for services to deceased beneficiaries due to “incorrect billing entries due to similar beneficiary names or Medicare numbers, and inadvertent typing errors” was not inconsistent with a finding that the suppliers’ had abused their billing privileges.

The suppliers’ then appealed to the DAB. In its decision, the DAB first noted that it has consistently rejected contentions that revocation required a finding that the supplier acted intentionally:

“The Board has long held that the regulation’s plain language does not require CMS to establish fraudulent or dishonest intent to revoke a supplier’s billing privileges under this section and that the regulatory language also does not provide any exception for inadvertent or accidental billing errors.”

The DAB then countered the suppliers’ argument that CMS never intended to revoke a supplier’s billing privileges for simple mistakes. They cited language from the June 27, 2008 final rule, where CMS stated revocation “is not intended to be used for isolated occurrences or accidental billing errors.” The DAB noted that CMS, in that same final rule, indicated that it would not consider the submission of three or more improper claims to be accidental. The DAB also noted that the relatively small percentage of erroneous claims was irrelevant, as the regulation does not require CMS to establish any particular error rate or percentage of improper claims.

The DAB held that since the record established that the suppliers’ had submitted more than 3 claims for deceased beneficiaries, CMS had met the requisite legal standard for revocation. Accordingly, the DAB upheld the revocation of the suppliers’ billing privileges.

Potential Impact on Ambulance Providers

The DAB’s decision effectively establishes a strict liability standard for revocations based on the submission of claims for deceased beneficiaries. The submission of three or more such claims over any designated period of time could constitute legal grounds for CMS to revoke a supplier’s Medicare billing privileges.

The implications of this decision should give every Medicare provider pause. However, given the nature of our operations, our industry needs to pay particular attention. The psychologist and therapists that were the subject of the above-referenced case saw patients on a scheduled basis, and spent many hours with each of their patients. This gave them ample time to obtain insurance information from each of their patients, and to confirm the accuracy of that information. Yet the suppliers’ still had more than 200 claims billed incorrectly.

EMS providers do not have that luxury. We frequently encounter patients on the street or at their home. Many of these patients do not have their insurance information on them at the time of transport. Even when the patient had this information on their person, under the stress of an emergency medical situation, the paramedic or EMT may not record this information accurately.

As a result, our billing offices spend a good portion of their time trying to verify a patient’s insurance. Unfortunately, some of the administrative “shortcuts” we have developed to address these problems create the potential to inadvertently submit claims for deceased patients. While there is nothing at present that suggests that CMS intends to expand the use of its revocation authority, we probably want to rethink these shortcuts.

An example you say?

Consider a transport of an elderly woman to the hospital in an emergency. The crew does not obtain the patient’s insurance information at the time of transport. However, they do obtain the hospital face sheet, which lists the patient’s social security number. To convert this social security number to a Medicare HIC#, we need to include a Medicare suffix. How would you go about doing that?

One option would be to ping the patient’s name, date of birth and SSN against an eligibility database. While effective, provider’s typically pay for these lookups.

Another option would be to simply guess what the applicable suffix might be, affix that to the SSN, and submit the claim. If it goes through, the provider guessed correctly. If it rejects as an invalid name and HIC# combination, the provider would know to try another suffix. So let’s assume the provider elects to use this option. Playing the percentages, the provider would likely add the “B” suffix, on the theory that, given her age, the woman likely qualified for Social Security Benefits (and therefore Medicare benefits) based on the work history of her spouse. But what if the provider was wrong, and the woman was the primary wage earner in her family? If that were the case, her suffix would likely be the “A.” Now imagine that her husband shared the same Social Security numerics, and that his suffix was the “B.” Further imagine that he has since passed, and the provider has now inadvertently submitted a claim for the dead husband.

Now imagine this happens three times in a year…

Another way we can inadvertently submit claims for dead patients is not using front-end verification. Many providers submit claims based off the insurance information they received at the time of transport (or from the hospital, nursing home, etc.), without any attempt to confirm its accuracy. These providers recognize that the insurance information will be correct more often than not. They are making the calculated decision that it is easier to deal with any issues after they have been identified by the payer. However, one reason an insurance can come back as invalid is because the crewmember recorded the HIC# incorrectly. For example, they may transpose a few digits (i.e., they wrote “1243” rather than “1234”). If the transposed HIC# relates to a deceased beneficiary, that would be captured by the data analytics used by the Medicare contractors.

The DAB’s decision is certainly troubling. However, I do not believe that our industry needs to overreact. Rather, I would encourage everyone to view the DAB’s decision as a starting point, and to re-examine their own billing and verification processes to see if there is anything they can do to reduce the likelihood of their organization every confronting this issue.

Have an issue you would like to see discussed in a future Talking Medicare blog? Please write to me at bwerfel@aol.com.

CMS Announces 2017 Inflation Factor

Written by David Werfel on October 25, 2016. Posted in Government Affairs, Medicare, Member Advisories, Member-Only, Regulatory, Reimbursement.

The Centers for Medicare and Medicare Services (CMS) issued Transmittal 3625 officially announcing that the inflation factor for payments under the Medicare ambulance fee schedule for 2017 will be 0.7%.

The calculation for determining the Medicare ambulance inflation factor is as follows: Consumer Price Index – Urban (which is the change in the CPI-U from June to June) minus the non-farm business multi-factor productivity adjustment (MFP) as projected by the Secretary of HHS (10-year average). The CPI-Urban for 2017 is 1.0% with a MFP of 0.3% which equals the 0.7% inflation factor. As part of the Affordable Care Act, a productivity adjustment is subtracted from the CPI-Urban for the final inflation update.

MetroWest’s JD Fuiten on Mobile Integrated Health

Written by JD Fuiten on October 13, 2016. Posted in Patient Care, Reimbursement.

Metro West Ambulance’s Mobile Integrated Heath Program is a leader in the emerging world of community paramedicine and MIH. The successes in our programs have been centered on the strong relationships we have built with our health system partners. This partnership allows Metro West Ambulance MIH paramedics to better participate in the longitudinal care of our patients instead of the focused, episodic care of traditional EMS. We have now positioned ourselves as an integral part of the health care team. The value of an MIH paramedic continues to expand as the skills, tools and knowledge of the paramedic profession as a whole continues to increase.

As the success of the MIH programs across the country continue to prove their value, we look forward to full recognition by CMS as a valuable patient care service that should be recognized outside of the traditional transport fee for service.

JD Fuiten
CEO, Metro West Ambulance
Director, AAA Board
2015 AAA Distinguished Service Award Winner
Hillsboro, OR

Prior Authorization Data Shows Dramatic Reductions in Spending on Dialysis Transports

Written by Brian Werfel on October 3, 2016. Posted in Medicare, Talking Medicare.

In May 2014, CMS announced the implementation of a three-year prior authorization demonstration project for repetitive scheduled non-emergency ambulance transports. CMS initially elected to limit this demonstration to three states: New Jersey, Pennsylvania, and South Carolina. These states were selected based on higher-than-average utilization rates and high rates of improper payment for these services. The Medicare Payment Advisory Commission (MedPAC) had previously singled out these states as having higher than average utilization of dialysis transports in a June 2013 report to Congress.

This demonstration project went into effect on December 15, 2014. The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) subsequently expanded the demonstration project to five additional states and the District of Columbia on January 1, 2016, with a further expansion to all remaining states expected to occur at some time during 2017. However, national expansion is contingent upon CMS determining that the demonstration project has been effective in reducing Medicare expenditures without jeopardizing patient’s access to necessary medical care.

Every year, CMS also releases data on aggregate Medicare payments for the preceding year. This file is referred to as the Physician/Supplier Procedure Master File (PSP Master File). This past month, CMS released the 2016 PSP Master File, which contains information on all Part B and DME claims processed through the Medicare Common Working File with 2015 dates of service. I will be discussing this report in greater detail in next month’s blog.

This month, I want to focus on the impact the prior authorization project has had on total dialysis payments in the original three target states. Reproduced below is a chart tracking the total payments for dialysis transports in these three states between 2010 and 2015. Interestingly, these three states demonstrated very different trajectories prior to last year.

New Jersey saw a sustained, dramatic increase in payments over that time, increasing from approximately $56 million in 2010 to more than $106 million in 2014, an increase of nearly 90% over a 5-year period. (Note: spending figures for 2014 and 2015 take into account the 10% reduction in payments for dialysis transports).

South Carolina saw a much more moderate increase over that same period, increasing from $51 million in 2010 to slightly more than $60 million in 2014, an increase of roughly 18%. By contrast, payments in Pennsylvania peaked in 2011 at $69.6 million, and have been in steady decline ever since.

While these states’ trajectories were different prior to 2015, the results for 2015 are fairly similar. Each state saw a significant reduction in the total expenditures for dialysis once the prior authorization project went into effect.

The fact that these states saw a reduction in overall spending on dialysis is not surprising (to me at least, I recognize this came as a shock to many providers in these states). These states were not selected at random; CMS selected these states based on its belief that they were particularly suspect to overutilization.

What I do find surprising is the relative sizes of the declines in these states. New Jersey and Pennsylvania both experienced a more than 80% reduction in payments for dialysis. By contrast, the reduction in South Carolina (approximately 25%) was far less dramatic.

Does this suggest that abuse was more prevalent in New Jersey and Pennsylvania? Perhaps. An ongoing federal Medicare Strike Force in the Philadelphia metropolitan area has resulted in a number of convictions against fraudulent providers in these states. However, the impact has not been limited to these alleged “bad actors.” Even those companies employing accepted best practices have seen significant reductions in their approved patient populations.

To me, the common factor seems to be the applicable Medicare contractor. New Jersey and Pennsylvania are both administered by Novitas Solutions, Inc., whereas South Carolina is administered by Palmetto GBA. While Medicare’s coverage standards are intended to be national, it seems reasonable to conclude that Novitas has taken a far harder stance on dialysis than Palmetto. Anecdotal evidence from the states that came went live with prior authorization in January 2016 seems to confirm this thesis, although we will not be able to know for sure until the 2016 Medicare payment data is released this time next year.

Those of you that have attended this year’s AAA Regional Conferences, or who participated on AAA webinars this past year have heard me say that the Medicare Administrative Contractor’s stance on dialysis is the most important factor in determining whether an ambulance provider needs to rethink its current approach to its repetitive patient population. To the extent the MAC takes a fairly lenient stance, providers will likely find that only a few “tweaks” are needed to align their existing practices with a prior authorization regime. AAA members in these states may even find it worthwhile to even considering expanding the spectrum of patients they accept for transport. If, however, the MAC takes a fairly restrictive stances (as Novitas has clearly done), providers will likely find it necessary to dramatically trim these populations, or to arrange for alternative sources of payment for these transports.

I also encourage AAA members to attend our panel discussion at this year’s Annual Conference & Tradeshow in exciting Las Vegas (November 7 – 9^th). I have the privilege of serving as the moderator for a panel consisting of several providers that are currently operating under the prior authorization project. These providers will talk about their experiences, and will be able to offer helpful tips on how to best navigate this major shift in Medicare’s coverage rules. (See full Conference Agenda)

Have an issue you would like to see discussed in a future Talking Medicare blog? Please write to me at bwerfel@aol.com.

Cataldo Ambulance’s Ron Quaranto on Mobile Integrated Health

Written by Ron Quaranto on September 29, 2016. Posted in Operations, Patient Care, Reimbursement.

As a current mobile integrated health provider, we recognize the values of an MIH program which most importantly provides quality patient care to those in need, often in the comfort of their own homes. This is often done under the direction of the patient’s primary care physician in conjunction with the patient’s healthcare team. This allows for the patient to maintain their quality of life while receiving the medical attention they need—and ultimately reducing the healthcare expenses of hospitalization.

Ron Quaranto
COO, Cataldo Ambulance Service

Life EMS’s Jimmy Johnson on Sustainable Reimbursement

Written by Jimmy Johnson on September 28, 2016. Posted in Government Affairs, Legislative, Medicare, Reimbursement.

To address the importance of the work that the payment reform committee is doing, we must consider the value of the part that small providers play in the healthcare delivery system today, and how imperative it is that we accomplish goals such as moving from Supplier to Provider status for all ambulance services in order to set the table for reimbursement that is more creative than just fee for transports. For example, 73% of all ambulance services who are credentialed by Medicare do less than 1,000 transports per year, which does not add up to sustainability for ambulances services endeavoring to adhere to best practices in providing emergency medical care. A vast majority of those services represented in the 73% are the first line—and in many cases the only line—of emergency medical care in their communities.

—Jimmy Johnson
CEO, Life EMS
Past President, American Ambulance Association
Co-Chair, American Ambulance Association Payment Reform Committee
Enid, OK

Northwell Health’s Jonathan Washko on AAA Membership

Written by Jon Washko on September 23, 2016. Posted in Government Affairs, Reimbursement.

“Northwell Health’s Center for EMS is an active participant in the AAA and encourage every EMS agency in the U.S. to participate. Through this relationship, we receive insights, expert analysis and input into important industry issues that affect us all. Our membership has returned dividends in countless ways and therefore its value proposition is significant. From risk management, to financial reform, leadership development and industry best practice, the AAA has given us a platform from which to learn, share and grow as an organization and as leaders in our industry.”

Jonathan D. Washko, MBA, NREMT-P, AEMD
Assistant Vice President, Center for EMS at Northwell Health
Alternate Director, American Ambulance Association Board

Press Release: Ambulance Delivery To ERs Set To Skyrocket

Written by Don Johnson on September 22, 2016. Posted in Press, Reimbursement.

Press Contact
Don Johnson
Vice President Marketing
CDO Squared, Inc.
309.530.8269

Ambulance Delivery To Emergency Rooms Set To Skyrocket Putting Ambulance Company Financials On Life Support

Medicaid and Medicare Drive Reimbursements Below Cost of Service

Schaumburg, IL—September 22, 2016—The convergence of the aging baby boomer population, the projected increase of emergency room services for baby boomers, added to lower reimbursement rates for Medicaid and the increasing influence of private insurance companies with Medicare, signals a rough road ahead for ambulance companies.

In a new survey by revenue realization leader, CDO Squared, and the American Ambulance Association, 126 ambulance company executives were asked, “As a rule, the number of emergency department visits is much higher for Medicaid and Medicare recipients than for the uninsured and those with private insurance. How will this effect your profitability over the next five years?”

The survey revealed that well over 70 percent of ambulance companies saw decreased profitability over the next five years. “In an industry already hard hit by the effects of Obama Care, this is just one more pressure point put onto ambulance companies to maintain profitability.” according the William Stuckert, CEO of CDO Squared. The American Ambulance Association also weighed in on the survey results. “Ambulance services continue to struggle to do more in the way of providing high-quality medical care and improving patient outcomes with less financial resources, and from the survey it doesn’t appear it will get better.” Stated Mike Hall, AAA President. “On the Medicare payor front, H.R. 745 and S. 377 would make permanent the current temporary add-ons that have allowed ambulance services to maintain critical financial relief.”

Stuckert offered this advice for those struggling with increased pressure on their financials. “Ambulance companies must learn how to balance their payer mix. With the push by many states to move Medicaid patients into Managed Medicaid Programs, ambulance companies must choose a payer mix that provides a reasonable amount of profitability.” Stuckert stressed the importance of using cash flow analytics to take a deeper look at the profitability of an ambulance company’s location. “Once you understand the true value of your facility, you’ll be able to balance your runs for reasonable profitability” said Stuckert.

About CDO Squared

CDO Squared maximizes revenue realization for profit-minded EMS providers by connecting data, developing processes, and optimizing their ROI. CDO Squared has been helping healthcare businesses run more profitably for over two decades. Through proven financial technology and innovative workflow tracking, CDO Squared provides the medical industry advanced software and tools for analytics, visualization, and financial management along with the industry experience of seasoned revenue realization management professionals.

About AAA

The American Ambulance Association represents ambulance services across the United States that participate in serving more than 75% of the U.S. population with emergency and non-emergency care and medical transportation. The AAA was formed in response to the need for improvements in medical transportation and emergency medical services. AAA views pre-hospital care not only as a public service, but also as an essential part of the total public health care system.

# # #

Visit CDO Squared at the AAA Annual Conference & Tradeshow in island booth #518!

Acadian’s Asbel Montes on Ambulance Payment Reform

Written by Asbel Montes on September 22, 2016. Posted in Medicaid, Medicare, Reimbursement.

“EMS is instrumental to the healthcare fabric of our country. As the healthcare industry continues to innovate, it is imperative to recognize the value that EMS brings to the pre- and post-hospital environment. EMS providers are the only gatekeepers to the healthcare system in many communities.

73% of all ambulance suppliers credentialed with Medicare bill the program less than 1,000 transports per year. It is imperative that any cost data collection system reporting requirements consider this to ensure the reliability of the data and the administrative burden to ambulance providers and suppliers.”

Asbel Montes
Vice President of Governmental Relations & Reimbursement, Acadian Ambulance
Co-Chair, American Ambulance Association Payment Reform Committee

Prior Authorization Expansion Delay

Written by David Werfel on September 21, 2016. Posted in Medicare, Member Advisories, News, Reimbursement.

Prior Authorization – Repetitive Non-Emergencies – Expansion Delay

CMS has notified the American Ambulance Association that the expansion of Prior Authorization for repetitive non-emergencies, to the states not already on Prior Authorization, will not be implemented January 1, 2017.

The reason for the delay is that, pursuant to Section 515(b) of the Medicare Access and CHIP Reauthorization Act (MACRA), CMS must make determinations as to whether: (1) Prior Authorization for repetitive non-emergencies saves money, (2) it adversely affects quality of care and (3) it adversely impacts access to care.

These studies are being conducted and are expected to show the program saves money without adversely affecting quality or access to care.

For those of you in states currently not under Prior Authorization, it is highly recommended that you still prepare for it to be implemented, even though it will not be implemented January 1, 2017. You should still ensure that these patients meet the requirements for medical necessity by reviewing your documents, obtaining documents from facilities, conducting assessments of repetitive patients, implementing internal procedures and processes, etc.

For those of you in states already under Prior Authorization for repetitive non-emergencies, there is no impact. Your program continues.

When a Capitated Payment Arrangement Makes Sense

Written by Brian Werfel on August 29, 2016. Posted in Medicare, Member-Only, Reimbursement, Talking Medicare.

Question

We operate a mid-sized ambulance services in the Midwest. Recently, one of our local hospitals entered into an agreement to become part of a large health system. We are increasingly being asked to transport patients from this local hospital to an affiliated facility in the neighboring city. These patients are being transported for consultations, medical tests, etc., and then being transported back to the local hospital. These transports become the financial responsibility of the health system, which has resulted in our monthly invoices to the hospital increasing nearly ten-fold over the past year. Recently, the hospital approached us with a proposal to move to a capitated payment arrangement. Are these arrangements permissible? And, if so, are there any “dos” and “don’ts” we should know about?

Answer

As the AAA’s Medicare Consultant, I am probably asked this question, or some variation of this question, several times a month. To me, these questions are a natural reaction by our industry to one of the larger tectonic shifts in health care over the past decade, namely the increasing footprint of national and regional hospital health care systems. According to the American Hospital Association, approximately 65% of hospitals nationwide were part of a larger health system in 2016. This is up from 51% in 1995. As these health systems have grown larger, ambulance providers are increasingly looking for alternatives to the traditional fee-for-service payment models.

Broadly defined, a “capitated payment” arrangement is any arrangement where the facility pays the ambulance provider a set amount to cover all or a portion of the transportation costs it incurs during a period of time, without regard to the specific volume of transports. A simple example would be a flat monthly fee for all transportation costs.

There is nothing in federal law that prohibits the use of capitated payment arrangements. The HHS Office of the Inspector General has signed off on capitated payment arrangements in numerous contexts, including the compensation paid to insurers under the Medicare Advantage Program (Medicare Part C). In fact, it could be argued that the Medicare Ambulance Fee Schedule includes some principles of capitation, e.g., it does not reimburse ambulance providers separately for certain ancillary services.

Therefore, capitated payment arrangements are something ambulance services can consider offering to their facility counterparties. However, you should aware that the normal prohibitions under the federal anti-kickback statute continue to apply. To the extent the OIG has a concern related to capitated payment arrangements, that concern would be that the capitated payment amount is used as a means of disguising an otherwise impermissible discount being offered to a potential referral source. In other words, the capitated payment must be structured in a way that avoids any improper remuneration to a potential referral source.

The arrangements do offer several advantages to both the ambulance provider and the facility. For the ambulance provider, the primary advantage is a stable, steady source of cash. However, there are other advantages, including the administrative benefits associated with submitting a simple monthly invoice, rather than a detailed invoice listing numerous transports. Many providers also find that a flat rate reduces tensions with the facilities, as they don’t have to engage in negotiations over why a particular transport is being billed to the facility. For the facility, the primary benefit is that it fixes their costs for transport during each measuring period. An ancillary benefit is that it offers a measure of insurance against unforeseen events (e.g., an MRI machine at hospital breaks down for an extended period of time, and as a result, the hospital is forced to incur the costs of sending patients to an affiliated facility for testing). Generally speaking, as the total volume of services rises, the benefits to moving away from a fee-for-service model also increases.

As noted above, capitated payment arrangements come in many forms, ranging from relatively simple to mind-numbingly complex. However, all arrangements share certain common features. The first is an estimate of the volume of services the facility would be purchasing from the ambulance service during any particular measuring period (hereinafter referred to as the “volume benchmark”). To the extent you are currently the facility’s vendor, this could be calculated based on past volume. This is then multiplied by the “price” of each service to arrive at the amount of the capitated payment. For example, if past history indicates that a facility pays for an average of 100 ambulance transports per month, and the parties agree to a rate of $200 per trip, then the monthly payment would be $20,000 per month. This monthly rate would stay the same regardless of whether the facility ends up responsible for 20 trips in the next month, or 200.

This brings us to one of the key features to a properly structured capitation agreement, i.e., both parties should have some degree of “risk” under the arrangement. In the example listed above, the facility runs the risk that the actual volume of services it would have otherwise been responsible for is less than the estimated 100. If so, it would have essentially paid more than $200 per transport. The ambulance provider bears the opposite risk, i.e., if the number of transports the facility would have paid for ends up being more than 100, it ends up receiving less than $200 per transport. As long as both parties bear risk, the arrangement is permissible.

If, however, one party bears no actual risk under the arrangement (e.g., because the monthly payment is based on an unreasonably low volume benchmark), the OIG could see the arrangement as a disguised way of rewarding the facility for other referrals. Thus, the key to any capitated arrangement is a good-faith estimate of the number of services involved. Please note that there is nothing wrong within incorporating language to adjust the monthly payment if the actual volume over any period of time is radically different than the volume benchmark. For example, I frequently include language that calls for the monthly payment to be recalculated if the actual volume is 20% more or less than the volume benchmark over any calendar quarter. These adjustments can be made prospectively (i.e., they only apply to future monthly payments) or they can be paid retroactively. To the extent you want to include an adjustment mechanism, the guiding principle is that any adjustment should be for the purpose of better estimating the volume benchmark.

Capitated payment arrangements may not be appropriate for all ambulance providers. However, as fee-for-service becomes an increasingly smaller portion of your facility partners’ operations, it may make sense to consider these arrangements.

Have an issue you would like to see discussed in a future Talking Medicare blog? Please write to me at bwerfel@aol.com.

Press Release: ACA Costs Ambulance Companies More Than $2B

Written by Don Johnson on August 24, 2016. Posted in Press, Reimbursement.

Press Contact
Don Johnson
Vice President Marketing
CDO Squared, Inc.
309.530.8269

Obama Care Costs Ambulance Companies More Than $2 Billion In Lost Revenue

Schaumburg, IL—August 30, 2016—To understand the serious affect that the Affordable Care Act (Obama Care) has had on ambulance companies, CDO Squared™, the leader in revenue realization for profit-minded EMS providers, initiated a survey with the American Ambulance Association. The results were staggering when dollarized. One hundred twenty-six ambulance company executives were asked the following question: “Over the past few years, many ambulance companies have been negatively impacted by the increase in Medicare and Medicaid patients now enrolled in managed care plans run by for-profit insurance companies. What effect has this had on your operation in lost revenue since the Affordable Care Act (Obama Care) was enacted?”

The result: Overall the impact totaled $2.1 billion in lost revenue because of reduced margins due to lower fees dictated by the plan. The survey also revealed that those with revenues of $1 to $50 million (82.5% of the participants) had lost revenues between $315,000 to $730,000 with larger operations driving the averages up. According to William Stuckert, President and CEO of CDO Squared, “The results are not surprising when you consider that over 75 percent of Medicare and Medicaid patients now opt for a managed care plan. What it boils down to is that these for-profit insurance companies are driving costs down, in many cases below the actual operating costs of many ambulance companies. It’s a numbers game, as you see the larger companies with more exposure being hit the hardest.” When asked what ambulance companies can do to offset these losses, Mr. Stuckert said “Ambulance companies need to manage their commercial payers and overall costs better, and that means collecting more of the revenue they are entitled to. Since ambulance companies excel at saving lives, many lack the tools to collect revenue they are owed. In fact, on average, ambulance companies collect only 70 percent of the revenue they are due as reimbursements are lost in a sea of EMS data.”

Maria Bianchi, Executive Vice President of American Ambulance Association, echoed much the same sentiment regarding insufficient reimbursements in the industry. “The CDO Squared survey results reinforce what the American Ambulance Association has long known—ambulance services across the country are operating in a climate where reimbursement is often well below the cost of service. AAA volunteers, consultants, partners, and staff are working tirelessly across many channels to bring to ambulance services the reimbursement revenue they need to continue serving the public each and every day.”

About CDO Squared

About AAA

# # #

Visit CDO Squared at the AAA Annual Conference & Tradeshow in island booth #518!

Novitas – Denials

Written by David Werfel on August 18, 2016. Posted in Medicare, Member Advisories, Member-Only.

This advisory is for members who have Novitas as their Medicare Administrative Contractor.

On August 17, 2016, Novitas called me to let me know that they are seeing many ambulance claims denied due solely to the diagnosis codes that are listed on claims. Novitas requires a minimum of two ICD-10 codes, as follows:

A primary diagnosis code that describes the patient’s medical condition at the time of transport, AND
A secondary diagnosis code that reflects the patient’s need for the ambulance at the time of transport.

The list of primary ICD-10 codes was published by Novitas in their Ambulance Local Coverage Article A54574. While the ICD-10 codes in A54574 are not the only codes that will be accepted, it is highly recommended that you use one of those as your primary code, whenever possible.

Novitas also requires a secondary “diagnosis code”. This list is in their Ambulance Local Coverage Determination (LCD) Policy L35162. That has the four “Z” codes, at least one of which must be used as the secondary diagnosis code:

Z74.01 – Bed Confined
Z74.3 – needs continuous supervision (includes EKG)
Z78.1 – physical restraints (patient safety, danger to self/others)
Z99.89 – dependence on enabling machines (includes IV fluids, active airway management)

If the claim does not list a primary AND a secondary code, the claim is automatically denied. While the claim can be corrected and resubmitted for processing, that delays cash flow and adds time and expense for the ambulance supplier. Therefore, please make sure you list an appropriate primary code AND an appropriate secondary code.

AAA 2016 State Balanced Billing & Direct Pay Survey Results Released

Written by Brian Werfel on August 11, 2016. Posted in Finance, Medicare, Member-Only, Reimbursement.

Just Released!

View the AAA 2016 State Balanced Billing Survey Results

View the AAA 2016 State Direct Pay Survey Results

The AAA is providing its members with the results of two important surveys conducted of state laws impacting ambulance services. The first chart entitled “2016 State Balance Billing Survey” shows whether a state restricts balancing billing of patients. The second entitled “2016 State Direct Pay Survey” lists whether a state has a law requiring an insurer to send payment directly to a non-contracted ambulance service or a law allowing the insurer do send payment to the patient. We thank AAA Medicare Consultant Brian Werfel for compiling the data and members of the AAA Medicare Regulatory Committee and the AAA membership to which Brian reached out for their assistance.

CMS Moratoria Update

Written by Kathy Lester on August 3, 2016. Posted in Government Affairs, Medicaid, Medicare, Member Advisories, Member-Only, Regulatory.

The Centers for Medicare & Medicaid Services Lifts Moratoria on Enrollment of Part B Emergency Ground Ambulance Suppliers in All Geographic Locations; Moratoria for Part B Non-Emergency Ground Ambulance Suppliers Extended

Effective July 29, the Centers for Medicare & Medicaid Services (CMS) has lifted the temporary moratoria in all geographic locations for Part B emergency ground ambulance suppliers. Beginning in 2013, CMS placed moratoria on Medicare Part B ground ambulance suppliers in Harris County, Texas, and surrounding counties (Brazoria, Chambers, Fort Bend, Galveston, Liberty, Montgomery, and Waller). In February 2014, CMS announced it would add six more months to these moratoria and add Philadelphia, Pennsylvania, and surrounding counties (Bucks, Delaware, and Montgomery), as well as the New Jersey counties of Burlington, Camden, and Gloucester. Since that date, CMS extended the moratoria four additional times, most recently in February of this year.

CMS considers qualitative and quantitative factors when determining if there is a high risk of fraud, waste, and abuse in a particular area and whether or not it should establish a moratorium. If CMS identifies an area as posing an increased risk to the Medicaid program, the State Medicaid agency must impose a similar temporary moratorium as well. CMS also consults with the Office of the Inspector General (OIG) within the Department of Health and Human Services (HHS) and the Department of Justice (DOJ) when identifying potential areas and providers/suppliers that should be subject to a temporary moratorium. Finally, CMS also considers whether imposing a moratorium would have a negative impact on beneficiary access to care. In areas where there is a temporary moratorium, the policy does not apply to changes in practice location, changes to provider/supplier information (e.g., phone number, address), or change in ownership. Temporary moratoria remain in place for six months, unless CMS extends the policy through notice in the Federal Register.

CMS may lift a moratorium at any time if the President declares an area a disaster under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, if circumstances warranting the imposition of a moratorium have abated, if the Secretary of HHS has declared a public health emergency, or if, in the judgment of the Secretary of HHS, the moratorium is no longer needed. After a moratorium is lifted, providers/suppliers previously subject to it will be designated to CMS’s “high screening level” for six months from the date on which the moratorium was lifted.

CMS has announced it will lift the moratoria on new Part B emergency ambulance suppliers in all geographic locations because the Agency’s evaluation has shown the primary risk of fraud, waste, and abuse comes from the non-emergency ambulance supplier category and that there are potential access to care issues for emergency ambulance services in the areas with moratoria. New emergency ambulance suppliers seeking to enroll as Medicare suppliers will be subject to “high risk” screening. If enrolled, these suppliers will be permitted to bill only for emergency transportation services. They will not be permitted to bill for non-emergency services.

The moratoria remain in place for Medicare Part B non-emergency ground ambulance suppliers for all counties in which moratoria already are in place in New Jersey, Pennsylvania, and Texas.

A Preliminary Estimate of 2017 Medicare Rates

Written by Brian Werfel on July 27, 2016. Posted in Finance, Medicare, Member-Only, Talking Medicare.

On July 15, 2016, the Bureau of Labor Statistics released its monthly report on inflation. This release includes the change in the Consumer Price Index for all urban consumers (CPI-U) for June 2016. As a result, it is now possible to make a preliminary estimate of the Ambulance Inflation Factor (AIF) for calendar year 2017. The AIF is main factor that determines the increase (or decrease) in Medicare’s payment for ambulance services.

Calculating the 2017 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. For 2017, this means the 12-month period ending on June 30, 2016. Starting in calendar year 2011, the change in the CPI-U is 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 resulting AIF is then applied to the conversion factor used to calculate Medicare payments under the Ambulance Fee Schedule.

The formula used to calculate the change in the CPI-U is limited to positive increases. Therefore, even if the change in the CPI-U was negative over a 12-month period (a rarity in the post-war era), the change in the CPI-U cannot be negative. However, when the MFP reduction is applied, the statute does permit a negative AIF for any calendar year. That is precisely what occurred in 2016, where the change in the CPI-U was 0.1% and the MFP was 0.5%. As a result, the industry saw an overall reduction in its Medicare rates of 0.4%.

Fortunately, it seems unlikely that we will see a negative AIF in 2017. For the 12-month period ending in June 2016, the Bureau of Labor Statistics (BLS) currently calculates the change in the CPI-U to be exactly 1.00%.

CMS has yet to release its estimate for the MFP in calendar year 2017. However, assuming CMS’ projections for the MFP are similar to last year’s projections, the 2017 MFP is likely to be in the 0.5% range.

Therefore, at this time, my best guess is that the 2017 Ambulance Inflation Factor will be a positive 0.5%.

Please note that this estimate assumes the Bureau of Labor Statistics does not subsequently revise its inflation estimates. Please note further that this projection is based on the MFP being similar to last year. To the extent either of these numbers changes in the coming months (up or down), my estimate of the 2017 AIF would need to be adjusted accordingly. Ultimately, the 2017 AIF will be finalized by CMS by Transmittal, which typically occurs in the early part of the 4^th quarter.

Impact on the Medicare Ambulance Fee Schedule

Assuming all other factors remained the same, calculating your 2017 Medicare rates would be a relatively simple exercise, i.e., you would simply add 0.5% to your 2016 rates. However, as part of its 2017 Physician Fee Schedule Proposed Rule (issued on July 15, 2016), CMS proposed extensive changes to the GPCIs. These changes can be viewed by going to the Physician Fee Schedule page on the CMS website and clicking the link for the “CY 2017 PFS Proposed Rule GPCI Public Use Files” (located in the Downloads section). You would then need to open the file for “CY 2017 Proposed Addendum E.”

If the PE GPCI in your area is proposed to increase, you can expect your 2017 Medicare rates to increase by slightly more than 0.5%. If the PE GPCI in your area is proposed to decrease, you can expect your 2017 Medicare rates to increase by slightly less than 0.5%.

If you are looking for a more precise calculation of your rates, you will need to use the following formulas:

Ground Ambulance Services

Medicare Allowable = (UBR x .7 x GPCI) + (UBR x .3)

Air Ambulance Services

Medicare Allowable = (UBR x .5 x GPCI) + (UBR x .5)

In this formula, the “UBR” stands for the unadjusted base rate for each HCPCS code. These are calculated by multiplying the national conversation factor by the relative value unit assigned to each base rate. To save some time, estimates for the 2017 unadjusted base rates are reproduced below:

Base Rate (HCPCS Code)	2017 Unadjusted Base Rate
BLS non-Emergency (A0428)	$221.84
BLS emergency (A0429)	$354.95
ALS non-emergency (A0426)	$266.21
ALS emergency (A0427)	$421.51
ALS-2 (A0433)	$610.08
Specialty Care Transport (A0434)	$721.00
Paramedic Intercept (A0432)	$388.23
Fixed Wing (A0430)	$3,010.52
Rotary Wing (A0431)	$3,500.17

Plugging these UBRs into the above formulas will result in adjusted base rates for each level of ground and air ambulance service. The final step would be to apply the current adjustments for urban (2%), rural (3%) and super-rural (22.6% over the corresponding rural rate).

2017 Projected Rates for Mileage:

At this time, I am estimating the following rates for Medicare mileage:

Base Rate (HCPCS Code)	2017 Unadjusted Base Rate
Ground Mileage – Urban	$7.28
Ground Mileage – Rural Miles 1 – 17	$11.02
Ground Mileage – Rural Miles 18+	$7.35
Fixed Wing Mileage – Urban	$8.54
Fixed Wing Mileage – Rural	$12.81
Rotary Wing Mileage – Urban	$22.79
Rotary Wing Mileage – Rural	$34.19

Please keep in mind that a number of assumptions went into these projections. The Bureau of Labor Statistics can revise its inflation figures in the coming months. CMS may announce an MFP projection that differs from what we expect. CMS may also announce that it is electing not to finalize its proposed changes to the GPCI (highly unlikely). If any of these assumptions was to change, these projections would need to be revised. Therefore, I would suggest that you view these as rough estimates at best. The AAA will update members as more information becomes available in the coming months.

Have an issue you would like to see discussed in a future Talking Medicare blog? Please write to me at bwerfel@aol.com.

2016 Medicaid Crossover Study

Written by Brian Werfel on July 22, 2016. Posted in Medicaid, Reimbursement.

The AAA is pleased to announce the release of its Medicaid Crossover Survey 2016. A companion to its recently released 2016 Medicaid Rate Survey, the 2016 Medicaid Crossover Survey focuses on each state’s treatment of Medicare crossover amounts (i.e., copayment’s and deductibles).

The survey notes whether a state will pay the full crossover amount, will make a payment only to the extent Medicare’s payment was less than the amount Medicaid would have paid as a primary, or will not make a payment under any circumstances.

We hope members will find this tool useful in comparing their state’s Medicaid reimbursement to neighboring states, and hope it will assist in their efforts to ensure fair and equitable compensation for their services.

The AAA also wants to thank all members that participated in the survey. Without your help, these sort of projects would be impossible.

Factual Background

Potential Impact on Ambulance Providers

About CDO Squared

About AAA

Prior Authorization – Repetitive Non-Emergencies – Expansion Delay

Question

Answer

Obama Care Costs Ambulance Companies More Than $2 Billion In Lost Revenue

About CDO Squared

About AAA

Just Released!

Stay In Touch!