OIG Report: Ambulance Industry Overpaid $402 Million

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In a report released last year, the Department of Health and Human Services' Office of Inspector General (OIG) published its findings from a study of Medicare payments for ambulance transports. This study was based on trips done in 2002. The OIG has conducted similar studies in past years, and will likely continue to examine the ambulance industry as long as these studies reveal areas for concern about fraud and abuse.

By way of introduction, the OIG report stated that "Medicare covers and pays for emergency and nonemergency ambulance transports when a beneficiary's medical condition, at the time of transport, is such that other means of transportation, such as taxi, private car, wheelchair van or other type of vehicle, would jeopardize the beneficiary's health." In auditing ambulance claims, the OIG broke down the analysis into three categories: dialysis transports, other nonemergent transports and emergent transports. The study found that 25% of all ambulance transports in 2002 did not meet Medicare program requirements, resulting in an estimated $402 million in improper payments. The report also stated that "Despite previous OIG inspections indicating that transports for dialysis treatment and other nonemergency transports were particularly vulnerable to abuse, the error rates for these kinds of transports continue to be high." The study found that 27% of dialysis transports (resulting in an estimated $48 million in overpayments) and 20% of other nonemergency transports (resulting in $101 million in overpayments) did not meet Medicare's coverage requirements. With emergency transports, the report found that only 7% of the claims did not meet Medicare requirements. However, due to the large number of emergency transports that occurred during 2002, the estimated overpayment from this 7% was more than $71 million. The OIG noted the clear and significant difference in the error rates for emergency and nonemergency services. It also found an additional 9% error rate for "upcoding," or charging for a higher level of service than was actually needed or rendered (e.g., charging ALS rates for a BLS call), and this practice resulted in an additional $31 million in overpayments.

The report also noted that while almost two-thirds of the coverage errors involved a transport from a dialysis facility, hospital or other third-party provider, these providers received little education regarding Medicare's coverage requirements for ambulance transports. (Note: The remainder of this paragraph has nothing to do with the OIG's report; it is my personal editorial comment on an issue not directly addressed by the OIG.) The third-party medical provider issue is a problem that the ambulance industry has struggled with since the implementation of the Physician Certification Statement (PCS) requirement. Medicare requires that a doctor, nurse or other licensed caregiver sign a statement in support of the necessity for ambulance transport, but the person signing the certificate often does not know the requirements for medical necessity as they relate to ambulance services. Could we, as an industry, do a better job educating these doctors and nurses on what "medical necessity" means for us? Maybe (good luck getting your local ED attending physician to sit down and learn a thing or two from one of your EMTs!), but what does that get you? Medicare has made it clear that ambulance services cannot rely on these statements to get claims paid. So we end up with a certifying statement that ambulance services are "medically necessary" being signed by someone unfamiliar with the requirements for medical necessity, or the service gets a certificate it cannot use as conclusive proof that the service was actually necessary even if the certifying person understood the requirements.

But that is not the end of the problem created by the PCS requirement. Here's the kicker: What happens when you get a PCS form for a nonemergent trip (as you are required to do) on which a doctor concludes that the patient requires ambulance transportation, but your crew decides the patient does not qualify under Medicare guidelines? You have two choices: Have the patient transported by other means (automobile or wheelchair van) and pray they don't have a health issue arise during transport (because if they do, you have just gone against a doctor's request, and the civil lawsuit will certainly mention that) or you give the patient a free ride in your ambulance. If anyone can give me a third option, I'd love to hear it.

Back to the OIG's report: Another major concern I have is that the OIG stated that "generally, nonemergency transports involve a beneficiary who is bed-confined." This, in my opinion, is not correct. The federal regulations [42 CFR §410.40 (d)(1)] state:

"Nonemergency transportation by ambulance is appropriate if either: the beneficiary is bed-confined, and it is documented that the beneficiary's condition is such that other methods of transportation are contraindicated; or, if his or her medical condition, regardless of bed confinement, is such that transportation by ambulance is medically required."

The phrase bed-confined has a set definition: a person who cannot get out of bed without assistance, cannot ambulate and cannot sit in a chair or wheelchair. It is a rare patient who cannot do one of these things, especially when you include merely sitting in a chair or wheelchair. Consequently, the phrase bed-confined will have limited use in ambulance transports, and in fact, if you use that term, you should be sure the patient meets all three of these requirements. The recently published Condition Codes also clearly set forth many circumstances where nonemergent ambulance services may be appropriate. Therefore, I take exception to the OIG's position that nonemergent trips will generally be for bed-confined patients. But the real underlying problem is that the OIG and many of the Medicare loss-prevention subcontractors feel that all patients need to be bed-confined in order to be covered. This belief creates a dangerous difference of opinion between the OIG and many in the ambulance industry.

In noting the similar results from past studies (a 1994 study found that 70% of dialysis trips did not meet Medicare coverage requirements, and a 1998 study found that 66% of all ambulance transport claims did not meet Medicare requirements) and past warnings to the industry (such as "fraud alerts" posted on the OIG's website), it appears that the OIG is showing more concern over, and less patience with, ambulance services billing for nonemergent trips. However, the report did not find fault solely with the ambulance providers and suppliers. The OIG also determined that Medicare carriers' and intermediaries' safeguards are insufficient to identify and prevent improper payments for ambulance transports. The study found that these Medicare contractors used few ambulance-specific prepayment edits consistently, and fewer than half of the contractors conducted postpayment reviews of ambulance claims. Regarding the contractors that did conduct reviews, the study found that there was no uniform requirement regarding the documentation that should be reviewed in making the payment determination (which makes it difficult for ambulance services to know what documentation should be submitted).

In conclusion, the OIG recommended that CMS implement program integrity activities designed to reduce improper payments for the types of ambulance transports that are at the greatest risk for error: i.e., dialysis and other nonemergent transports. The OIG recommended that these activities should include: 1) instructing all Medicare contractors to implement prepayment edits that target dialysis and nonemergency ambulance transport claims; 2) instructing all Medicare contractors, when conducting postpayment medical reviews, to obtain documentation from ambulance suppliers and third-party providers to determine that ambulance transports meet program requirements; and 3) directing all Medicare contractors to educate third-party providers responsible for initiating ambulance transports. The OIG also stated that when those initiatives were accomplished, CMS should consider whether third-party providers should continue to "order non-covered ambulance transports." If by that last statement the OIG is questioning whether these third parties should be required to sign PCS forms (which I assume they are, since hospitals and other medical entities will have to be able to continue to request ambulance services), then maybe I am not the only one who sees the PCS form as a liability with no real significance.

Last year, EMS Magazine published articles in which I discussed the issue of medical necessity in ambulance transportation (Are You a Fraud? and OIG Focus for 2006: Curbing Fraud and Abuse in Healthcare, both in April 2006). This report reiterates what was already known: that the OIG will continue to scrutinize scheduled nonemergent transports, especially dialysis trips, for fraud and abuse. If your service is running nonemergent transports, I urge you to carefully consider these patients and their need for ambulance transportation, while keeping in mind that the vast majority of these claims (73%--80%) were found to qualify for Medicare reimbursement. There are clearly plenty of patients whose conditions warrant ambulance transportation. It is the other 20%--27% that should be reviewed more carefully.

The entire Medicare Payments for Ambulance Transports report can be viewed at www.oig.hhs.gov/oei/reports/oei-05-02-00590.pdf.

Related Articles:

• Medicare to Recover $21 Million in Ambulance Overpayments for Inpatients
  The ambulance industry is going to continue to be a target as long as studies such as these find significant errors and overpayments.
• Snitching for dollars
  How the Deficit Reduction Act rewards employees who expose fraud or mistakes.

To hear more from Chris Kelly, click here to listen to his podcast.

G. Christopher Kelly is an attorney who focuses on federal laws and regulations as they relate to the healthcare industry, and specifically to the ambulance industry. He lectures and advises EMS service clients across the U.S. This article is not intended to be construed as legal advice. For information regarding how your service can implement a compliance plan and stay on top of these issues, Chris can be reached at chris@emscltd.com or 800/342-5460.