As a result, we recommended that CMS adjust payments for  transports in rural counties with particularly low population density to  help ensure Medicare beneficiaries’ access to ambulance services in those  areas. Costs per Transport Were Highly Variable, Reflecting Differences in Certain Provider Characteristics

Costs of ground ambulance transports were highly variable across  providers without shared costs; an average ambulance transport ranged  from a low of $99 to a high of $1,218 during 2004, the year for which we  gathered data. Providers’ Reported Costs per Transport Were Highly Variable

Providers’ average costs for a ground ambulance transport varied from   $99 to $1,218—a range of more than $1,100—across providers without  shared costs in 2004. Average Payments under the National Fee Schedule Will Be Greater Than Average Historical Payments, but Providers’ Expected Medicare Margins Will Vary Greatly

Average ambulance national fee schedule payments in 2010 are estimated  to be 3 percent higher overall than payments in 2001, after adjusting for  inflation and assuming that providers bill the maximum amounts allowed. We cannot assess whether providers  without shared costs will break even, lose, or profit on average under the  ambulance national fee schedule in 2010 after all of the MMA temporary  payment provisions have expired, because the 95 percent confidence  interval surrounding the average Medicare margin spans from negative   14 percent to positive 2 percent. However, across all providers without  shared costs, we estimate that 39 to 56 percent will have average Medicare  payments above their average costs per transport under the ambulance  national fee schedule even after all of the MMA provisions expire. Medicare Beneficiaries’ Use of Ambulance Transports Increased from 2001 to 2004, Except in Super-Rural Areas

Nationally, the use of ambulance transports by Medicare beneficiaries  increased by 16 percent, from 2001, the year before the transition to the  national fee schedule began, to 2004, the year we studied. However declining  utilization coupled with potentially negative Medicare margins in super- rural areas, which could be exacerbated when the MMA provisions expire,  raise questions as to whether Medicare payments will be adequate to  support beneficiary access in super-rural areas. As we discussed in the report,  ambulance providers that could not separately report the costs of the  ambulance portion of their business were excluded because their cost  data were determined to be unreliable. Through our analyses, we determined that the costs reported by providers  that shared costs with other institutions or offered other services appeared  to be unreliable. In our regression analysis of  the cost information for providers without shared costs, we found that  those with fewer transports per year generally had higher costs per  transport than those with more transports. We then used the results from this regression analysis to predict  the average costs per transport across all providers without shared costs,  based on five key provider characteristics: (1) total transports per year,   (2) percentage of BLS Medicare transports, (3) percentage of Medicare  transports in rural and super-rural areas, (4) number of ambulance  transports per staffed hour, and (5) amount of revenue derived from local  tax support.
Why GAO Did This Study

In 2002, Medicare implemented a national fee schedule designed to standardize payments for ambulance services. The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) required GAO to study ambulance service costs. GAO examined providers' costs of ground ambulance transports in 2004 and factors that contributed to cost differences; average Medicare ambulance payments expected under the national fee schedule in 2010 and how those payments will relate to providers' costs per transport; and changes that occurred in Medicare beneficiaries' use of ambulance transports from 2001 to 2004. GAO estimated costs of ambulance transports based on a nationally representative survey of 215 ambulance providers that did not share costs with nonambulance services. Providers that shared costs with other institutions or services and could not report their costs for ambulance services separately, such as fire departments, were excluded because their reported costs appeared unreliable. GAO used its survey, Medicare claims, and other data for its analyses.

What GAO Found

Costs of ground ambulance services were highly variable across providers that did not share costs with nonambulance services in 2004, reflecting differences in certain provider and community characteristics. Costs per transport among these providers varied from $99 per transport to $1,218. Providers without shared costs that had higher costs per transport typically had fewer transports per year, a greater percentage of transports in which more than a basic medical intervention occurred, more transports in super-rural areas (rural counties with lowest population density), lower productivity--measured as number of transports furnished per staffed hour, and a greater percentage of revenues from local tax support. Average payments under the national fee schedule in 2010 are expected to be higher than historical payments, but providers' Medicare margins will vary greatly. GAO could not assess whether, on average, providers without shared costs would break even, lose, or profit under the national fee schedule, because the average Medicare margin for providers without shared costs was estimated to fall from negative 14 percent to positive 2 percent. However, GAO estimated that approximately 39 to 56 percent of providers without shared costs would have average Medicare payments above their average cost per transport under the national fee schedule in 2010. From 2001 to 2004, utilization of ambulance transports per beneficiary increased 16 percent overall. However, use declined by 8 percent in super-rural areas. Declining utilization coupled with potentially negative Medicare margins in super-rural areas, which could be exacerbated when the MMA temporary payment provisions expire, raise questions as to whether Medicare payments will be adequate to support beneficiary access in super-rural areas.