New Ambulance Fee Schedule To Impact Some Fire Departments

You might not work in the front office sending out the bills, but in January 2001, your fire department - especially if it bills for ambulance transport - will be impacted by a process that has been going on the for the past 18 months. Come January, the Health Care Financing Administration (HCFA) is expected to implement a new national Fee Schedule for reimbursement of ambulance services that transport Medicare patients.

It all started with the Balanced Budget Act of 1997, which required HCFA to begin to reimburse for ambulance service provided to Medicare beneficiaries using a national Fee Schedule. Later, Congress also passed legislation that required HCFA to use Negotiated Rulemaking to determine how the new Fee Schedule would look. Under a Negotiated Rulemaking process, those who will be affected are allowed to sit down with, in this case HCFA, and determine objectively what the new Fee Schedule will look like. Simply put, this group representing national EMS and fire organizations meets with HCFA to create the Fee Schedule by general agreement. If the group reaches consensus, HCFA must use that agreement to establish the Fee Schedule. If not, HCFA would set the Fee Schedule however it wishes.

In February 1999, a committee of 11 members, which included HCFA, the International Association of Fire Chiefs (IAFC), the International Association of Fire Fighters (IAFF), the National Volunteer Fire Council (NVFC) and others, sat down to begin the process. The committee members completed their negotiations on Feb. 14, 2000. HCFA is now drafting the Notice of Proposed Rulemaking that will be published in the Federal Register. Once published, the public will have 60 days to comment.

If you work for the fire service, how are you impacted by a group of 11 organizations that has decided how the reimbursement process will look in the future? After all, you're on the front lines, you don't worry whether people pay their bills. You're not an administrator. But it does affect you! It costs money to run your operation - even a volunteer organization needs funding to operate.

The greatest percentage of people who use ambulance services are the elderly, who are more prone to disease and whose injuries are more profound because of the aged condition of the body. Since HCFA is the agency that administers the Medicare program and many elderly receive Medicare benefits, it is easy to see that a change in ambulance reimbursement can drastically impact some fire agencies that need the money to run their operations.

So what did this group reach consensus on? First, assignment will be required. Anyone providing EMS will be required to accept Medicare assignment. What does that mean? If your fire department bills $300 for an ambulance transport and Medicare reimburses only $250, you cannot bill the patient for the $50 balance.

Another change in the new Fee Schedule will be that you can no longer itemize EMS supplies. Essentially, your fire department can no longer create a "laundry list" of medical supplies used on a patient and then bill Medicare for those items used. Think of how many supplies (and their cost) you go through when you run a cardiac arrest or other serious trauma call. In the future, your itemized charges must be rolled into the new base rate. The new Fee Schedule will include a four-year phase-in process, starting with 20% of allowable amounts in 2001 and ranging up to 100% in 2004.

There is currently an estimated $2.5 billion a year in the Medicare "pot" for reimbursement to ambulance services. As of this writing, there are efforts in Congress to add $1 billion to Medicare's budget for ambulance services each year. Nonetheless, reimbursement for ambulance service will be based on a Relative Value Scale (RVU).

The RVU is a weighted scale of values that pays more for higher levels of emergency medical services. As an example, the proposed weighted value in the future for a basic life support (BLS) non-emergency transport would be 1.0, but the weight value of an advanced life support (ALS) Level 2 emergency would be 2.75. Basically, an ambulance service will be paid more for the higher level of service provided. In essence, Medicare payments under the new Fee Schedule will be impacted by these two areas: the total amount of money in the "pot" and the RVU of the call.

Mileage will also be important in the future. In addition to paying the base rate, Medicare will pay $5 per loaded mile ($7.50 per loaded mile for the first 17 miles for rural providers) for a patient residing outside the Metropolitan Statistical Area (MSA). A loaded mile equates to every mile traveled by an ambulance with a patient.

Another factor that will play into the reimbursement rate will be the Geographi-cal Physician Cost Index (GPCI). The GPCI looks at labor costs in various geographic regions and attempts to make adjustments based on those differences.

The bottom line is this: Different types of services provided by different fire departments in different parts of the country will be reimbursed differing amounts. Some fire departments will see an increase in reimbursement amounts and some will see less income. If your fire department is in a part of the country where the Medicare allowable was traditionally low, you can probably expect to see additional revenue. Conversely, if your fire department is in an area where the Medicare allowable was commonly high, your department will see less revenue.

By the year 2004, the entire face of providing EMS may look different in certain areas of the country. Ambulance services that have depended on Medicare funding may find themselves out of business. The fire service in those areas may find itself in a position of having to provide more services. Other services may find themselves with all kinds of new equipment, since they have never depended on Medicare funding, but now find themselves with extra revenue. I guess we'll see!

Gary Ludwig, MS, EMT-P, a Firehouse® contributing editor, is the chief paramedic for the St. Louis Fire Department and is the vice chairman of the EMS Executive Board for the International Association of Fire Chiefs. He has lectured nationally and internationally on fire-based EMS topics and operates The Ludwig Group, a consulting firm specializing in EMS and fire issues. He can be reached at