Mandated report: Medicare payment for ambulance services. John Richardson and Zach Gaumer April 5, 2012
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1 Mandated report: Medicare payment for ambulance services John Richardson and Zach Gaumer April 5, 2012
2 Mandated report on Medicare payment for ambulance services MedPAC directed to study: Appropriateness of temporary ambulance add-on payments Urban (2 percent) and rural (3 percent) ground ambulance add-ons Super-rural ground ambulance add-on (22.6 percent) Grandfathering of certain areas for rural air ambulance add-on Effect of add-on payments on providers Medicare margins Need to reform ambulance fee schedule, whether add-ons should be built into base rate Critical dates: Report due June 15, 2013 Add-on payment policies in effect through December 31,
3 Project plan Coverage and payment basics Trends in numbers of providers, claims volume, spending Review of program integrity issues Provider costs and Medicare margins Possible recommendations 3
4 Medicare ambulance coverage Medicare Part B covered service Medicare pays 80 percent, 20 percent beneficiary coinsurance Ambulance services covered if: Transportation of the beneficiary occurs Transportation to an appropriate location Medical necessity: other forms of transport contraindicated Provider/supplier meets state licensing requirements Transportation is not part of a Part A covered stay Some exceptions allow Part B payment for ambulance service during Part A stay (e.g., SNF resident with ESRD to/from dialysis) Non-emergency transports require physician certification of medical necessity 4
5 Non-institutional suppliers growing as institution-based providers declining Type of entity Number of entities, 2008 Number of entities, 2010 Percent of all entities, 2010 Percent change in number of entities, 2008 to 2010 Non-institutional supplier Institution-based provider 10,477 10,926 93% 4.3% % -8.9% All 11,320 11, % 3.3% Source: MedPAC analysis of Medicare Carrier and Outpatient claims data. Data are preliminary and subject to change. 5
6 Institution-based providers Majority are hospital and CAH-based (some SNF, LTCH, others) 18 percent of hospitals offer ambulance services Large urban (33 percent of hospitals with 400+ beds) CAHs (25 percent) State and local government hospitals (31 percent) Hospitals in certain states more likely to offer ambulance services Iowa (47 percent), Wyoming (45 percent), Minnesota (35 percent) Source: American Hospital Association Hospital Statistics Data are preliminary and subject to change. 6
7 Non-institutional suppliers Many forms of suppliers Government agency (fire department, county EMS agency) Public-private partnership (county EMS agency using nongovernment staff from a private entity) Private entity Type 2008 (n) 2009 (n) Change (n) Growth rate Percent of all suppliers Government 5,807 5, % 55% Non-government 4,670 4, % 45% For-profit 3,033 3, % 65% Non-profit 1,637 1, % 35% Source: MedPAC analysis of Medicare Carrier and Outpatient claims data and U.S. Census Bureau Statistics of U.S. Business (SUSB) data. Data are preliminary and subject to change. 7
8 Ambulance fee schedule: Components 1. Base rate payment Relative value units (RVUs) Ground: 7 levels based on service intensity (Air: 1 level) Conversion factor (CF) Ground: $214 / Air, rotary wing: $3,384 / Air, fixed wing: $2,911 Updated annually by Ambulance Inflation Factor (CPI-U) Geographic adjustment factor (GAF) Uses practice expense GPCI Applied to labor share of rate (ground: 70 percent, air: 50 percent) Tied to ZIP code of patient point of pick-up 2. Mileage payment Miles travelled from patient point of pick-up to destination Uniform national mileage rates for ground and air (fixed and rotary wing) Note: All dollar amounts shown are for
9 Example: Ground ALS Level 1-Emergency in Raleigh, NC excluding add-on payments Base-rate payment (1.9 x $214) x GAF 70% of base rate X GPCI of % of base rate Mileage payment 5 miles x $6.89 per mile + = Total payment $ = $34.45 = $ Note: ALS (advanced life support), GAF (geographic adjustment factor), GPCI (geographic practice cost index). 9
10 Add-on payment policies in current law Add-on policy Status Policy description Ground: rural short-mileage Permanent 50 percent increase to mileage rate if mileage is between 1 and 17 miles Ground: rural and urban pickup Temporary* Rural: 3 percent increase to base rate payment and mileage rate Urban: 2 percent increase to base rate payment and mileage rate Ground: super-rural pickup Temporary* 22.6 percent increase to base rate payment Air: rural pickup Permanent 50 percent increase to air ambulance base rate payment and mileage rate Air: rural pickup in certain areas deemed rural Temporary* Maintains rural designation for application of rural air ambulance add-on for areas reclassified as urban by OMB in 2006 (affects over 3,400 ZIP codes) * In effect through December 31,
11 Average payment per claim by type of provider, type of service, and location Type of service Average payment per claim, 2010 All claims $314 Non-institutional suppliers $304 Institution-based providers $485 Air transports $4,642 Ground transports $293 Emergency $340 Non-emergency $233 Urban $279 Rural $383 Super-rural $660 Source: MedPAC analysis of 100% of Medicare Carrier and Outpatient claims data. Data are preliminary and subject to change. 11
12 Trends in ambulance payments and utilization $5.2 billion in payments on 16.6 million claims in 2010 Payments per FFS beneficiary increased 19.1 percent from 2007 to 2010, driven by: Payments: 10.4 percent increase in payments per claim Users: 4.5 percent increase in users per FFS beneficiary Claims per user: 5.1 percent increase in claims per user Payment growth slowed from 2009 to 2010 Number of users and claims per user continued growth from 2009 to 2010 Source: MedPAC analysis of Medicare 100 percent Carrier and Outpatient claims data. Data are preliminary and subject to change. 12
13 Differences in non-emergency transports by location and provider type Non-emergency transports more common for urban (48 percent), than rural (40 percent) and super-rural (23 percent) Non-emergency transports more commonly provided by noninstitutional suppliers (47 percent) than institution-based providers (30 percent) Service type Claims growth, Urban, 2007 to 2010 Claims growth, Rural, 2007 to 2010 Claims growth, Super-rural, 2007 to 2010 Non-emergency 11% 3% 2% Emergency 8% 7% 7% 13
14 Key takeaways from initial analysis Continued growth since 2007 in claims volume and users per claim Number of for-profit suppliers growing faster than other provider/supplier types Rapid growth in urban non-emergency transports Limited availability of provider/supplier cost data for margins analysis 14
15 Mandated report on Medicare payment for ambulance services MedPAC directed to study: Appropriateness of temporary ambulance add-on payments Urban (2 percent) and rural (3 percent) ground ambulance add-ons Super-rural ground ambulance add-on (22.6 percent) Grandfathering of certain areas for rural air ambulance add-on Effect of add-on payments on providers Medicare margins Need to reform ambulance fee schedule, whether add-ons should be built into base rate Critical dates: Report due June 15, 2013 Add-on payment policies in effect through December 31,
Mandated report: Medicare payment for ambulance services. Zach Gaumer, David Glass, and John Richardson September 6, 2012
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