Improvement, and Modernization Act of 2003, temporarily extended by  subsequent acts, and most recently extended through the end of 2012  by the Middle Class Tax Relief and Job Creation Act of 2012. The variability of costs  per transport reflected differences in certain provider characteristics, such  as volume of transports, intensity of Medicare transports, and level of  government subsidies received. Providers reported that personnel costs  accounted for the largest percentage of their total costs in 2010 and  contributed the most to increases in total costs between 2009 and 2010. Median Cost per Transport in 2010 Was $429, but Costs per Transport Varied Widely across All Providers

The median cost per ground ambulance transport for providers in our  sample was $429 in 2010, but providers’ costs per transport ranged from  a low of $224 to a high of $2,204. Median Medicare Margin for Providers in Sample Was about 2 Percent in 2010, but Medicare Margins Varied Widely across Providers

The median Medicare margin, including add-on payments, was about  positive 2 percent in 2010 for the 153 providers in our sample.removed the add-on payments, we found that payments decreased for  the providers in our sample, resulting in a lower median Medicare margin  of negative 1 percent for those providers. Ambulance Transports Increased from 2004 to 2010, with the Largest Growth Occurring in Super-Rural Areas

Ambulance transports for all Medicare fee-for-service beneficiaries in the  nation increased by 33 percent from 2004 to 2010. Transports  per 1,000 beneficiaries in super-rural areas grew the most, by 41 percent,  and transports per 1,000 beneficiaries in rural and urban areas increased  by 35 percent and 32 percent, respectively. The increase in ambulance transports from 2004 to 2010 is attributable  primarily to an increase in BLS nonemergency transports, which rose by  59 percent from 2004 to 2010. Super-rural areas experienced the largest  increase in BLS nonemergency transports (82 percent). However, these local governments have begun to bill  Medicare as well as other insurers because of increased budgetary  pressures. The Department of Health and Human Services (HHS) Office of Inspector  General (OIG) has explored increases in ambulance utilization and has  cited improper payments as one potential cause. HHS OIG also  found that Medicare’s ambulance transport benefit is highly vulnerable to  abuse and found that many ambulance transports paid for by Medicare  did not meet Medicare program requirements, including transports that  were not medically necessary. AAA representatives had some questions about the results of our  regression analysis. National Survey of Ground Ambulance Providers’ Costs

To collect data on ground ambulance providers’ costs, revenues,  transports, and organizational characteristics for calendar year 2010, or  for the fiscal year that corresponded to all or the majority of a provider’s  calendar year 2010 data, we sent a web-based survey to a random,  nationally representative sample of 294 eligible ambulance providers. We  determined that our sample was nationally representative of the  approximately 2,900 ambulance providers that billed Medicare in 2003  and 2010, were still operational in 2012, and did not share costs with  nonambulance services or air ambulance services. Calculating Medicare Ambulance Payments and Use of Transports with Claims Data

To examine the relationship between Medicare payments and providers’  costs, we used Medicare claims data to calculate Medicare payments in  2010 for the providers in our sample, and we calculated Medicare  margins—the percentage difference between providers’ Medicare  payments per transport and their costs per transport. To examine  ambulance transports per 1,000 Medicare beneficiaries, we used  Medicare claims data and Centers for Medicare & Medicaid Services  (CMS) 2010 Medicare enrollment data. We calculated payments with and  without the applicable add-on payment rates, and we assumed that  providers charged the maximum allowed amount under the ambulance  fee schedule.that our payment calculations were comparable to actual payments made  based on the claims, we compared the payments we calculated with add- ons to the payment amounts on the claims for a random sample of 6,000  urban, rural, and super-rural claims, and we found the difference in the  amounts to be less than 1 percent. For the providers in our sample, we reported the  median Medicare margin and the distribution of providers’ Medicare  margins by predominant service area (urban, rural, or super-rural) and for  all providers. We determined that the Medicare claims data were  sufficiently reliable for the purposes of this report. Ambulance Services: Medicare Payments Can Be Better Targeted to  Trips in Less Densely Populated Areas.
Why GAO Did This Study

Since 2004, Congress has authorized supplemental temporary payments, called "add-on" payments, to augment Medicare fee schedule payments to ambulance providers. The add-on payments increased payments for transports in urban, rural, and super-rural (the least densely populated) areas by $175 million in calendar year 2011, according to the Medicare Payment Advisory Commission. In 2007, GAO reported a decline in transports by beneficiaries in super-rural areas and recommended that the Centers for Medicare & Medicaid Services (CMS) monitor beneficiary use of ambulance transports to ensure access to services, particularly in super-rural areas. The Middle Class Tax Relief and Job Creation Act of 2012 required GAO to update the 2007 report. GAO examined, for 2010 (the most recent year complete data were available when GAO began the study), (1) ground ambulance provider costs for transports, (2) the relationship between Medicare payments and provider costs, and (3) beneficiary use of ground ambulance transports. To do this work, GAO sent a survey to a sample of eligible providers based on the 2007 report sample asking for provider costs and characteristics. The sample is representative of all ground ambulance providers that billed Medicare in 2003 and 2010, were operational in 2012, and did not share costs with nonambulance services or air ambulance services. GAO also performed a regression analysis to examine factors that affect costs, analyzed Medicare claims and enrollment data, and interviewed representatives of ambulance provider organizations. CMS reviewed a draft of this report and had no comments.

What GAO Found

Ground ambulance providers' costs per transport for 2010 varied widely. The median cost per transport for the providers in GAO's sample was $429, ranging from $224 to $2,204 per transport. Provider characteristics that affected cost per transport were volume of transports (including both Medicare and non-Medicare transports), intensity of transports (the proportion of Medicare transports that were nonemergency), and the extent to which providers received government subsidies. Higher volume of transports, higher proportions of nonemergency transports, and lower government subsidies were associated with lower costs per transport. Providers reported that personnel cost was the largest cost component in their 2010 total costs and the biggest contributor to increases in their total costs from 2009 to 2010.
The median Medicare margin, including add-on payments, was about +2 percent in 2010 (meaning that providers' Medicare payments per transport exceeded their overall costs per transport) for the providers in GAO's sample, but Medicare margins varied widely for those providers. When GAO removed the add-on payments, payments decreased for the providers in the sample, resulting in a lower median Medicare margin of -1 percent. Due to the wide variability of Medicare margins for providers in the sample, GAO cannot determine whether the median provider among the providers in the population that the sample represents had a negative or positive margin. The median Medicare margin with add-on payments ranged from about -2 percent to +9 percent, while the median Medicare margin without add-on payments ranged from about -8 percent to +5 percent.
Ground ambulance transports for all Medicare fee-for-service beneficiaries grew 33 percent from 2004 to 2010. Transports by beneficiaries nationwide grew the most in super-rural areas (41 percent) relative to urban and rural areas. The increase overall is attributable primarily to an increase of 59 percent over this period in basic life support (BLS) nonemergency transports, which include noninvasive interventions, such as administering oxygen. In comparing this growth by service area, BLS nonemergency transports in super-rural areas grew the most--by 82 percent. Representatives from an ambulance provider organization suggested the increase in transports may be from increased billing by local governments. Some local governments that used to provide Medicare transports free of charge may bill Medicare now because of increased budgetary pressures. The Department of Health and Human Services Office of Inspector General has cited improper payments--which can be the result of billing mistakes--as one potential cause for increases in Medicare ambulance utilization and has stated that the Medicare ambulance transport benefit is highly vulnerable to abuse, with some payments for transports not meeting program requirements.