Healthcare Law Updates for EMS Managers: Prepay Review—Will Your Claim Stand Up?

Prepay Review: Will Your Claim Stand Up?: Feburary 2012

Last July, TrailBlazer Health, the Medicare contractor for Texas, adopted a policy of automatically denying claims for transports between private residences and freestanding dialysis centers. This move prompted outrage and created a dangerous situation for many patients whose transport benefit was being denied. After being challenged on this issue, TrailBlazer later adjusted its policy back to a prepayment review approach, which proved to have very similar results. This prepay review policy has since been expanded to include nursing-home-to-dialysis claims as well.

The effect of this policy is not an automatic denial; what it means is that you have to send in your full trip report and supporting documentation (mainly your PCS, or physician certification statements), which will be reviewed before payment determination is made. More often than not, due to the high bar many Medicare contractors have set for nonemergent ambulance coverage—and also in no small part to our industry’s lack of thorough documentation practices—this review results in denial of the claim.

More recently, First Coast Service Options, the Medicare administrative contractor (MAC) for Florida, announced a similar policy for claims involving hospital discharges to nursing homes. This policy resulted from a study done on the most common claims “errors” in Florida. According to First Coast, for the next 12 months, these transports will not be paid without going through review.

While these Medicare contractors have put the ambulance suppliers in their states on notice of their new policies, others have instituted similar policies without warning, and in some cases these seem to be unwritten policies the contractor will not even readily admit they are enforcing.

So, what rights do you have in the prepay review process? The answer to that is not very clear. Prepay review is authorized by federal regulation, and the process is almost totally at the discretion of the contractor. There is a requirement that there be an “error rate” sufficiently high to justify the prepay review, and the regulations seem to say this error rate must be found for an individual provider/supplier, not an industry as a whole. That prompts a question: How can First Coast apply this to everyone in the state?

I believe the answer to that is that because until you challenge them, Medicare contractors will often interpret rules liberally to get the result they wish to have. The prepay review process runs in three-month cycles, at the end of which your “error rate” should be redetermined and your status reevaluated. If your “error” has been fixed, you should be removed. If you continue to make the error, you should be provided with a summary of the contractor’s opinion on what you are doing wrong, and then you will be on review for another three-month cycle.

In my experience, this process is often not adhered to. Either you will not get the initial explanation of your “error rate,” or you will not get your quarterly reassessment. But again, unless you challenge this, nothing will happen other than your continued prepay review status.

Now, what can you do to avoid this nightmare? It’s simple: Don’t make errors! Of course, some of these “errors” concern matters of subjective analysis—for instance, the issue of medical necessity—and for these all you can do is paint as clear a picture as possible of why an ambulance was necessary for each and every transport you make. But for other “errors,” such as collecting signatures, getting documents dated correctly, coding levels of service correctly and using the proper origination and destination modifiers, you only need to understand what is required and make sure you are doing it. For example, I have written about several different signature requirements over the past few years, but I rarely review a company that is in 100% compliance with all the various signature rules CMS mandates.

Ensure your prosperity for 2012: Make a resolution to avoid “errors” before they are pointed out to you by Medicare! And if you don’t know what to look for or what is expected of you, let me know. I know what the most common “errors” are and can help you avoid them.

Medicare Says: "Give Me a Why!": November 2011

It may sound like a high school cheer, but I’m not talking about a “Y.” What I’m looking for is a “WHY?” But it’s not just me that’s looking; it’s also Medicare and its arsenal of contractors. After more than a decade of fighting Medicare over ambulance reimbursement issues, and after several recent conversations with program integrity contractors (ZPICs and RACs), I’ve found that it really does boil down to that one question. Let me show you what I mean.

Increasingly I’m seeing Medicare, the nurses who work for these program integrity contractors and even administrative law judges ask for more than a diagnosis list on a patient (“patient transported due to history of IDDM, HTN, CVA, CHF,” etc.). They also want more than our conclusions (“stretcher/draw sheet/two-man assist required”). They want to know WHY!

  • For BLS non-emergent trips they want to know WHY the patient could not ride in a wheelchair van. A diagnosis list will not usually suffice to answer that question. And just stating that a stretcher was required is not going to fly. We have to describe how the medical history affects the patient’s physical ability to sit in a wheelchair in a moving vehicle. For example, “Patient required stretcher transport due to history of ESRD, HTN, CVA, left BKA.” is not as descriptive as, “Patient required stretcher due to inability to sit in a wheelchair due to severe left side paralysis secondary to prior CVA and left BKA prevents patient from maintaining sitting position in a moving vehicle.” You might be able to guess from the first general list of conditions what the patient’s limitations are, but trust me Medicare won’t guess. Unless you explain yourself, the claim is subject to denial if reviewed in a pre-pay or post-pay audit.
  • For ALS trips they want to know WHY the ALS intervention was necessary. For example, just because your policy states that all falls get a monitor does not mean that Medicare has an obligation to pay a claim. If the patient tripped over her cat, Medicare is going to want to see more than the fall to justify ALS intervention or assessment. Unless you explain why the monitor was necessary (such as, “the patient states she believes she blacked out”), then they can downcode the claim from ALS to BLS and take back a large portion of your payment.
  • For emergency transports we occasionally see Medicare want to know WHY an immediate response was necessary. Just because you are the 9-1-1 provider and you responded immediately to the SNF who called you about a patient’s skin tear from the night before does not mean that you needed to respond immediately. Again, unless you explain that the patient’s condition was severe enough to warrant an emergent transport, then the patient’s overall condition might warrant transport by ambulance for treatment, but at the lower BLS non-emergent rate.

Because there are so many potential WHYs, and because each one of them could cost you money, it’s my suggestion that you answer these WHYs in your narrative as directly as possible. At the end of each trip report, you should be able to answer these questions without referring to another medical record, without having to rely on your knowledge of the patient outside of the trip report, and without having to guess how their condition affected them or how severe it was.

Why ask why? Because if you don’t, it could prove to be the most costly question you never answered.

Do You Have a Physician Certification Statement You Can Rely On?--May 2011

Since the inception of the Physician Certification Statement (PCS) requirement for non-emergent transports, Medicare has been careful to make sure that we have them, but equally consistent in not allowing us to give them any real weight.

On one hand, we have what amounts to a doctor's order, which should be hard for us to ignore for specific treatment of a patient (specialized handling, monitoring, administration of oxygen, etc.). On the other hand, Medicare policy has been that we have an independent duty to assess the patient and we cannot rely on the PCS to determine medical necessity.

This has placed us between the proverbial rock and hard place. If we ignore the doctor's request and refuse to transport the patient, who then suffers an injury transporting by some other method, we will surely be sued and will most likely lose because we "ignored the doctor." But, if we transport based on the request that Medicare required us to get, Medicare may still refuse to pay if they believe the trip was not medically necessary.

The Medicare Policy and Benefit Manual actually states: "In all cases, the appropriate documentation must be kept on file and, upon request, presented to the carrier. It is important to note that neither the presence nor absence of a signed physician's order for an ambulance transport necessarily proves (or disproves) whether the transport was medically necessary. The ambulance service must meet all program coverage criteria in order for payment to be made."

However, this policy does not match up with what the law actually says. 42 CFR 410.40 (d), the Code of Federal Regulations section that governs ambulance transports, sets out two different categories of non-emergent ambulance transports: section (d)(2), which is titled "Special rule for nonemergency, scheduled, repetitive ambulance services" and (d)(3) titled "Special rule for nonemergency ambulance services that are either unscheduled or that are scheduled on a non-repetitive basis."

For repetitive transports (dialysis or radiation therapy patients, for example), the Code does not mention a limit on the weight of the PCS, but the Code does limit the weight of a PCS used for non-routine trips (i.e. hospital discharges or hospital-to-hospital transfers). For these types of trips, the physician's statement, which may be obtained after the transport and signed by someone other than the physician (RN, CNS, NP, PA or discharge planner), is not sufficient alone to justify medical necessity. This makes sense, seeing that it may be received after the trip has occurred and may not actually have been directly ordered by a physician. However, for trips that are scheduled and repetitive under Section 2, and where a physician's certification has been secured before the trip, there is no such limitation.

This language has long been in the CFR, and I have been arguing this issue in administrative appeals for years; however, I never had a chance to bring the issue before a federal judge in U.S. District Court until this past year. In MooreCare Ambulance v. DHHS (case # 1:09-0078, U.S. District Court, Middle Division of Tennessee), I finally got my chance. I argued that the language of the Code overruled the policy that Medicare published in the Manual, and the Court’s response was: "The court agrees with the plaintiff's interpretation of the regulation. Clearly, the C.F.R. establishes a 'special rule' for certain kinds of repetitive services, whereby a sufficiently detailed and timely 'doctor's note' demonstrates medical necessity. Therefore, where the service is 'scheduled' and 'repetitive' and the 'doctor's note' is sufficient, additional review of the record to determine medical necessity is not called for under the regulations."

In short, the Court agreed with me and ruled that for repetitive transports, if we have a PCS signed by the appropriately credentialed person, dated in the proper time frame, and certifying the necessity of the ambulance as required by the regulations, then we can rely on it to prove medical necessity for payment purposes.

So, do you have a PCS you can rely on? This judge's opinion is not binding on every Medicare contractor in the country, but it is a good start, and the reasoning is something you can use. It looks like the distance between that rock and hard place is not going to be such a squeeze!

Are You Sweating the Small Stuff?: Signature Audits--January 2011

If you are not sweating the small stuff, you should be! It is simply not enough to focus on the big picture when it comes to ambulance operations. I am currently seeing a trend in auditing for technical requirements. Many Medicare Administrative Contractors (MACs) are looking at ambulance documentation in a new way. For years they have focused on the necessity of the ambulance for transport (what I consider to be the "big picture"). Now they are leaving that issue to the Program Safeguard Contractors and the MACs are looking to see if we have dotted our i's and crossed our t's. Specifically, they are looking to see if we have collected all of the proper signatures we need.

I have written on this issue in the past (almost two years ago now), but most ambulance providers I review or assist in an audit are still often missing a key piece of documentation. The "patient signature rule" is really for the patient to acknowledge that they have received the services. Many ambulance suppliers add language into the patient signature block about assignment of benefits and release of medical records, while leaving out any reference to the patient actually receiving the service. In a nut-shell the requirement is that a patient sign at the time of transport just to show that they actually received the services. IF the patient is not able to sign, there are five other acceptable signatories (see the example below), and IF none of them are available, then and only then should the crew sign and state why the patient was not able to sign for themselves. Nothing prohibits throwing in additional language into that signature block about financial responsibility, but the release of medical information is more appropriately covered by the HIPAA signature, which should be a separate signature line, because the patient is acknowledging two separate things.

Figure 1 is a sample of what your signature block should contain at a minimum:

Click here for Figure 1

Make sure that you are collecting these patient signatures or are getting your crews to sign AND explain why the patient did not sign for themselves. MACs and other auditors (Zone Program Integrity Contractors and Recovery Audit Contractors) are using this signature rule to deny claims. Routinely listing "PUTS" or simply "Patient unable to sign" is not acceptable. The patient should actually be unable to sign, and the alternate signors should actually be unavailable. Then your crews must make sure to explain why this is true, and they must get the receiving facility to acknowledge that they took the patient on a specific date.

Legibility is also becoming more of an issue. Crew and other signatures must be legible and should always contain credentials (EMT, EMT-P, RN, MD, etc.). Recently, CMS has advised the MACs that they should deny claims where the signatures cannot be read OR where signatures are not accompanied by the credentials of the person signing. If you cannot read a signature, it is acceptable to have a signature card that has the printed name with the signature next to it for comparison, similar to what banks do with their signature cards for checking accounts. However, this is a cumbersome extra step. The best policy is to have signature lines that contain check boxes for the credentials and lines for both signature and printed names. Figure 2 is the signature block I suggest for PCS (Physician Certification Statement) forms.

Click here for Figure 2

I know that these technical rules are often the last to get attention during your Q/A review of trip reports, but that should change. Pay attention to the details, collect the required signatures, change your forms to make the collection of these signatures easier and more self-explanatory for your crews, and sweat the small stuff, otherwise you may be sweating an audit and the loss of a significant sum of revenue that you would have been entitled to.

Miles Per Tenth: The New Measure of Ambulance Mileage Payments: December 2010

The ruling is in: CMS will begin to pay ambulance claims based on fractional mileage.

CMS first published this proposed policy change on mileage in July 2009. It was supposed to go into effect January 1, 2010, however, due to numerous comments on the burden of this requirement on ambulance suppliers, CMS postponed the effective date. Now CMS has published its response to those comments and stated that the burden is not significant in the face of the $45 million CMS believes this change will save Medicare.

The new requirement will go into effect as of January 1, 2011. This means that by the end of this year, you will need to begin making preparations to gather this data and make adjustments in your billing policies for trips of less than 100 miles (you can continue to round to whole numbers for trips over 100 miles). This is not a difficult change to administer, but there is one issue that is not raised in the CMS publication that concerns me.

As you may have seen over the years, most carriers and almost all Medicaid programs do not like "trip odometer" readings, but prefer to have actual odometer readings because they feel that these are less likely to be altered. If you have actual odometer readings, you are less likely to add on miles, or if you do it will show up in an audit because you will have overlaps or inconsistencies noted on your trip reports or dispatch logs. Of course most odometers do not record tenths of a mile, so which do you record? My answer is both. On trip reports or your dispatch logs, record actual odometer readings for those Medicaid or private insurance companies that want to see them, and the trip meter in order to comply with the new CMS payment scheme. I know that this adds even more to the burden, but there is no other way to make sure you are in compliance with requirements that are likely different between these two major payors.

If you noticed the $45 million dollar figure above, you may have also realized that that money will be coming out of your pocket, that is, $45 million less we will be paid next year. In addition to that loss, the ambulance relief payments (2% urban, 3% rural, 22.6% super-rural bonuses) will expire again this year (December 31, 2010). Without some help from Congress, we may not get this back, which will mean another hit to our payments. Finally, just like last year, there may be no inflation adjustment, and if the Patient Protection and Affordable Care Act stands, we may soon see a negative annual adjustment on the fee schedule. The message from all of this is that we should prepare to function with less in the years ahead.

What's It to You?: June 2010

What could healthcare reform mean to the ambulance industry? It's hard to tell right now, but here are some possibilities


I would ask what healthcare reform will mean to the ambulance industry, but with so much still up in the air and (and more than 20 states' attorneys general suing over its constitutionality), all we can really do at this point is look at what could happen under healthcare reform, aka the Patient Protection and Affordable Care Act.

Here are some of the changes healthcare providers and suppliers may see over the next few years.


  • More insured: The bill's main objective is to provide access to insurance coverage for all Americans and legal citizens, helping make healthcare accessible, affordable and of high quality. Generally, reimbursement for ambulance services is higher for insured individuals than for uninsured; therefore, this should have a positive financial impact on ambulance providers.
  • Required coverage: The bill creates separate exchanges for individuals and small businesses to purchase coverage. Employers with 50 or more employees must offer healthcare coverage or face penalties. If you are a private service with more than 50 employees not currently offering health insurance to your employees, now might be a good time to begin shopping for policies.
  • Expanded Medicaid: Medicaid coverage is expanded to individuals with incomes up to 133% of federal poverty guidelines. Medicaid may be an exception to the rule about insured individuals having higher average claim payments than the uninsured. Depending on your state, Medicaid may have very limited coverage rules and rates. Therefore, having more people covered by Medicaid may not have much impact on your overall reimbursement.
  • Medicare bumps: The bill extends the 2% urban and 3% rural and super-rural bonuses for ground ambulance providers. Increases are retroactive to January 1. Of course this is nothing but a positive provision for ambulance services. Back payments should be automatic, not requiring us to resubmit any claims.
  • Bundling pilot: The bill establishes a Medicare pilot program to develop and evaluate bundled payments between different providers for episodes that begin from three days before hospitalization to 30 days following discharge. This does not sound promising to me--it smacks of Part A PPS (Prospective Payment System) payments to skilled nursing facilities, where the money goes to the SNF and we have to beg to get paid after we finally figure out the claim should not go to Part B. Hopefully the problems HHS has had with SNFs will be avoided by carefully crafting any "bundled" payment arrangements, but the details remain to be seen.
  • Medicare Advantage: The bill restructures payments to Medicare Advantage plans by setting them to different percentages of Medicare fee-for-service (FFS) rates: higher payments to areas with low FFS rates, and lower payments for areas with high FFS rates. This could potentially raise ambulance rates in some geographic areas while reducing them in others. It should be a budget-neutral provision, meaning its overall effect should be a financial wash, but if you are primarily an urban service, you may see rates drop, while rural services see their rates increase. Again, how this provision will actually operate is not very clear, so we can only speculate on its effect.
  • Productivity adjustments: For Medicare providers, these adjust annual reimbursements downward with a presumption that providers become more efficient over time. EMS is a difficult provider group to apply any type of "productivity" assessment to. Hopefully this will be taken into account. Again, the Act is not specific, and we do not know how HHS may go about assessing or creating any such adjustments. However, it could be that fee schedule rates are decreased over time, which would be a burden for ambulance services.
  • Preventable readmissions: Medicare payments to hospitals are reduced for preventable readmissions. Given the difficulties same-day readmissions can have on payment of multiple ambulance claims (one set is often denied as a duplicate or Part A claim), this could be beneficial to us.
  • Independent Payment Advisory Board: The bill establishes an Independent Payment Advisory Board whose members can submit legislative proposals with recommendations to reduce the per-capita rate of growth in Medicare spending if spending exceeds a target growth rate. Any discussion of limiting Medicare spending usually means limiting Medicare payments, and limiting payments or rates is not beneficial to providers and suppliers. Once again, we will have to see exactly what proposals this board makes before we can appreciate the financial impact on ambulance services.
  • Medicare Improvement Fund: The Medicare Improvement Fund is eliminated. If eliminating this and other administrative funds and expenses results in more money for payment of claims, this could be a sign of fiscal responsibility that would benefit medical providers and suppliers, including ambulance services.
  • Primary care at home: A new at-home demonstration program will provide high-need Medicare beneficiaries with primary care services in their homes. This is unlikely to result in a reduction in transports. We could lose a few, but this provision should primarily affect nursing homes. Also, I would assume that in-home providers' medical records might be beneficial in proving medical necessity for any transports, and therefore could benefit us--especially when providing nonemergent transports, which are always a target for medical-necessity denials.
  • Federal Coordinated Healthcare Office: This new office in CMS will work to integrate Medicare/Medicaid benefits and improve coordination between the federal government and states to improve access to and quality of care and services for dual-eligibles. With many states opting not to pay crossover claims for ambulance services, the effect of this provision on ambulance services should be minimal.
  • Prevention and wellness: This bill emphasizes prevention and wellness activities. As employers in a physically demanding profession, I'd think we would benefit from a focus on healthy employees.
  • Pinching pennies: The bill increases programs and incentives to prevent waste, fraud and abuse. At a time when ambulance providers have experienced a significant increase in audits by program safeguard contractors and other Medicare and Medicaid reviewers, the promise of even more scrutiny for overpayments (i.e., "abuse") is not welcome. While true fraud and abuse should be curtailed, ambulance services caught up in these reviews often find themselves in extreme financial difficulty even if they are eventually vindicated in the appeals process.

These are some high points. I wish I had a clearer view of the future, but much of the final analysis will have to wait until we see how the provisions are handled by HHS. As this happens, we'll talk again soon!


I Can't Do That, HIPAA Won't Let Me: April 19, 2010

Sharing of medical records between entities (hospitals, doctors, or other healthcare providers) and ambulance services who are transporting patients has become a major hassle.

HIPAA regulates the disclosure of health information, and is often improperly used as an excuse by one provider not to give patient information to another provider. HIPAA requires that you give notice to a patient that his or her medical information may be disclosed for purposes or treatment, payment, or healthcare operations. Most other disclosures require that you get a patient's authorization before releasing his or her information.

For purposes of receiving medical records for a patient that has been or is going to be transported by an ambulance service, the reasons for any disclosure will always fall within treatment, payment, or healthcare operations, therefore only notice to the patient is required, no other authorization is necessary. Any confusion between what a healthcare provider can disclose once a patient is given notice and what disclosures require a patient's authorization should be easy to clear up by a simple example: once you have given notice to the patient, you can disclose health information to any other healthcare provider who requests the information for purposes of Treating the patient, billing the patient or their insurance company (Payment issues), or Operating the service (known as "TPO"); on the other hand, if a non-healthcare provider were to request a patient's medical records, they would need to provide you with an authorization form signed by the patient.

Perhaps the confusion is not due to the distinction between "notice" and "authorization." Perhaps it was created because under the original HIPAA Privacy Rule it was required that a healthcare provider get a patient's "consent" to disclose information prior to releasing any medical records. The consent requirement was removed in the September 2002 revision of the Privacy Rule. However, many hospitals and other providers seem to think that unless they have specific approval for the disclosure of a patient's health information, the safest procedure is to simply deny the request of another provider. That is incorrect as set out more fully below.

Or perhaps the confusion comes from the so called "minimum necessary requirement." This portion of the Privacy Rule requires that only the minimum amount of information required to meet the needs of the requesting party be disclosed. For example: if you need the patient's address for billing purposes, then you do not need to see their entire medical chart, you just need their address. However, the minimum necessary requirement has never been applied to disclosures for the purposes of treatment. Therefore, there is currently no reason for a hospital or other healthcare provider to withhold patient records requested by an ambulance service for fear of violating the minimum necessary requirement.

In fact, there is no reason for any confusion, and if some still exists with healthcare providers you are transporting patients for, you can use DHHS's own words to justify your request for records. In a "Fact Sheet" published on August 9, 2002, HHS stated that:

"Disclosures for Treatment, Payment, or Health Care Operations of Another Entity- The final Rule clarifies that covered entities can disclose protected health information for the treatment and payment activities of another covered entity or a health care provider, and for certain health care operations of another covered entity." (see or call the HHS press office at 202/690-6343 for a copy).

Also, the HHS guidance written for HIPAA states that:

General Provisions at 45 Code of Federal Regulations § 164.506. A covered entity may, without the individual's authorization disclose protected health information to another covered entity or a health care provider (including providers not covered by the Privacy Rule) for the payment activities of the entity that receives the information. For example:


  • A physician may send an individual's health plan coverage information to a laboratory who needs the information to bill for services it provided to the physician with respect to the individual.
  • A hospital emergency department may give a patient's payment information to an ambulance service provider that transported the patient to the hospital in order for the ambulance provider to bill for its treatment services.


Yes, the very example given by HHS of circumstances where medical records may be disclosed states that a hospital (or any other medical provider) is not restricted by HIPAA in disclosing health information requested by an ambulance service.

Let me be clear on one point, if you have been contacted by any health care entity, the only reason to transport a patient by ambulance is if they need medical care, which makes the trip clearly fall under the "Treatment" provisions of HIPAA. Ambulances are NOT taxis under any circumstances, and if you are not acting as a medical care provider (and therefore "treating" the patient), then you should not be asked to transport.

Consider also the hazards of a hospital or other healthcare provider refusing to release a patient's medical records. First, in the case of a future transport, knowing the patient's medical history and current medications are a must for proper continuing care of the patient. In the case of a past or present transport, knowledge of infectious diseases is equally important for the protection of the ambulance crew. And in the case of a completed transport, documentation of the patient's history and condition may be required to secure payment for the services rendered by the ambulance service. Without these records, the ambulance service will not be able to ascertain the patient's history, diagnosis or treatment. And without that information it may be impossible to properly treat the patient or to get claims paid.

On the other hand, the hazards of releasing the information are minimal, especially in light of those inherent in refusing to release the records. Since ambulance services are healthcare providers and are equally responsible for compliance with privacy laws, there should be no concern on the part of the other provider that the patient's health information will be misused or illegally distributed by the ambulance service. The ambulance service knows as well as any other healthcare provider what the law requires and there is no reason to believe that they will do anything less than their best to protect the patient's privacy.

Finally I would point out that a failure to provide the patient's information for treeatment or payment purposes is likely a HIPAA violation. Ironically, many hospitals and other healthcare providers seem to use HIPAA as a reason not to disclose information, however, when a request is made on behalf of a patient for the purposes of payment, the request is being made in order to make sure the patient's insurance covers the claim instead of leaving the patient responsible. Failure to provide the requested information will result in harm to the patient and will therefore likely be considered a violation of the patient's right to have their healthcare information accurate and available to them, thereby making the entity in violation of the very HIPAA regulations that they were trying not to violate by withholding information.

When you need information on a patient you are transporting, don't take HIPAA for an answer. HIPAA does not mean NO!


SNFing Out the Facts About Skilled Nursing Facilities: February 1, 2010

CMS has recently issued a couple of reminders about SNF's (skilled nursing facilities) responsibilities regarding their patients who are in a "Part A stay." First, in MLN Matters #M6700, CMS reminded SNFs that they are responsible for payment of transportation services while their patients are in a Part A stay (up to the first 100 days of a SNF stay directly after a hospital admission), except in specific circumstances. CMS advised that system edits should reject ambulance claims under Part B during this time. Keep in mind that if you get one of these denials from your Part B Carrier/Medicare Administrative Contractor (MAC), the claim should be paid by the SNF at a minimum of your Medicare rates.

In a revised MLN Matters publication (#SE0433), CMS also noted that SNFs must pay for residents who are in a Part A stay to be transported to physicians' offices, even though those transportation claims would not be paid under Part B.

To Live and Die in Texas: December 18, 2009

I have been hearing a lot of complaints and questions from non-emergent suppliers in Texas, and it appears that many of them are dying on the vine while they await payments from Medicare. The problem seems to stem from a statewide investigation into non-emergent ambulance transportation that began several years ago. While criminal convictions arising out of the investigation were few, the Medicare Carrier for the state seems to think widespread program abuse still exists. Their response has been to place most ambulance services on prepayment review if they provide transport to or from a private residence. Most ambulance suppliers are finding that once on prepayment review, the Carrier is unlikely to find a claim it feels should be paid. From the cases I have reviewed, the denial rates usually exceed 80%, which means that fewer than 20% of the transports are being paid. The resulting delay in claims processing and initial denials are placing these suppliers in a very difficult financial situation. In fact, many are being forced to close their doors or down-size by cutting the number of runs they provide, thereby terminating transportation services for many, if not all, of their patients.

The financial harm to the ambulance suppliers is obvious. How many of us can operate at our current cost without 80% of our current income? If we could operate like this at all, it would be only for a short time. The less obvious harm is the effect of this prepayment review policy on the patients. The last time the Department of Health and Human Service's Office of Inspector General ("OIG") studied the ambulance industry, they found that about 21% of the patients who were receiving routine non-emergent ambulance transport did not meet Medicare program coverage criteria (there is an entire article on this study in my article archive). But when you compare that to the denial rates of 80% or more, it seems from the numbers that many of the patients whose claims are being denied by the Medicare Carrier, and who are being dropped by the ambulance supplier that had been providing them transportation, should in fact be covered.

This is not just my opinion. Many of the ambulance suppliers who fight these claims through the appeals process are finding that the vast majority (in excess of 90%) are being paid on appeal. Meanwhile, the damage has been done. The ambulance suppliers have had to close or cut back due to lack of funding, and patients have to find other, more risky means of transportation. I was contacted by a woman who found herself in this exact position. The ambulance service that had been transporting her husband stopped carrying him to dialysis. She was unable to immediately find another ambulance provider, but her husband's need for dialysis could not wait, so she decided to transport him herself. His first trip to dialysis turned into a trip to the hospital when he fell and fractured a hip as his wife tried to help him into an automobile.

One final thought: Does prepayment review last forever? Well, in Texas it very well may. Medicare regulations allow for prepayment review if a provider/supplier has a "high rate of claims errors." Submitting claims that the Carrier says should be denied counts for such an error. You would think that once you were vindicated by the claims being paid in the appeals process, your error rate would be adjusted and you would no longer have a "high error rate," thereby ending prepayment review. This does sound like a reasonable result, but when asked this question, the Carrier's response was that the error rates they consider do not include what was later won on appeal.

The Present and Future of Post-Payment Audits: November 15, 2009

When it comes to audits and appeals, you need to know what to expect, so here are the basics of what post-pay reviews will look like during 2010:

1. Who's looking?

  • Recovery Audit Contractors. RACs are private companies that conduct post-pay audits of Medicare claims. They are paid, in part, based on the amount of improperly paid funds that they recover. The RAC demonstration project, enacted as part of the Medicare Modernization Act of 2003, was conducted between 2005 and 2008 in five states and was a resounding success, identifying more than $900 million in overpayments while costing only a fraction of that amount. As a result of this success, in 2006, as part of the Tax Relief and Healthcare Act, Congress ordered the RAC program to be made permanent and expanded to all states. This year, all 50 states will have a RAC in operation. The RACs will begin provider/supplier reviews by looking for outliers, providers who have more than expected charges in a category. There are no limits, however, on what they can look for, how they pick their targets, or who they can review. Therefore, even if you have had a Medicare audit in the recent past, you may be targeted again.
  • Program Safeguard Contractors. PSCs took over the traditional audit functions from the Carriers several years ago, the concept being that having the Carrier look for overpayments that they might themselves have created was not the best way to identify overpaid funds. Thus was born independent PSCs; however, many were merely spin-offs from the Carriers and not as independent or as aggressive as initially planned. With the new jurisdictions that are part of the MACs, the PSCs are also being both re-aligned and reassigned. The new contractors will be called Zone Program Integrity Contractors (ZPICs), and, pursuant to CMS and OIG directives, they will be very active in reviewing data and conducting audits based on a small random sampling of your claims, generally from a two-year time frame. CMS has made it clear that the RACs are not taking the place of PSC/ZPICs. These two groups will be conducting audits independently of each other, the only limitation being that they will not review the same claims (but they may review the same provider/supplier, and even the same patients on different dates of service).
  • Medicare Administrative Contractors/Carriers. The RACs and PSCs/ZPICs are not the only eyes that will be looking for overpayments. The MACs will still have jurisdiction to review claims if their internal controls show a pattern that is indicative of a possible overpayment. While the MACs do not have the same financial incentives to find overpayments as the RACs and PSC/ZPICs, they still have a responsibility to properly administer the program, and they will not want overpayments found by these other auditors to reflect poorly on their administration of the program. Therefore it is likely that they will continue to conduct probe reviews when prompted by their internal controls. In fact, I have seen one example already where a MAC pulled small samples of ambulance claims looking mainly for the appropriate patient signatures.
  • The OIG. The Office of Inspector General of the Department of Health and Human Services will also continue to conduct reviews of healthcare providers, which is their primary function. These investigations are usually initiated by an allegation of fraud or serious program abuse that comes to them from their fraud hotline or from any of CMS's contractors (MACs, RACs, or ZPICs). In states where the OIG has investigated ambulance services in the past, we are seeing a continued focus on ambulance companies in those regions. It seems that once the OIG has an understanding of issues that often arise in ambulance claims, they actively review other companies in their jurisdiction.
  • Medicaid Fraud Control Units. The Deficit Reduction Act made review of Medicaid payments mandatory for states that want to continue to receive federal matching funds. Therefore, we are seeing many more Medicaid audits than we have in the past. Medicaid rules are often different than Medicare rules, and understanding those differences is very important. You must jump through the Medicaid-specific hoops or risk an overpayment assessment in the event of an audit.


2. Why Are They Looking?

  • Post-Pay Review: Medicare and most Medicaid programs require payment be made to the provider within 30 days of submission of the claim. This short time frame and the increasingly high volume of claims being processed make a detailed pre-payment review of claims impossible. Claims are basically paid if they meet some pre-determined criteria, often simply filling in all of the required fields of the claim. Therefore, post-payment review of claims will continue to be the rule, not the exception. You can count on being reviewed by one of the above auditing entities at least every few years, and, for the reasons set forth in the next section, you can count on them assessing a significant error rate.
  • Ambulance Services are a Target: Ambulance claims are ripe for overpayment assessments due to the subjective nature of claims. Specifically, “medical necessity” for ambulance services is often highly debated and a very difficult phrase on which to place a standard set of determining criteria. Key elements in overpayment cases for ambulance are usually: the medical necessity of non-emergent claims (whether the patient could have traveled by other means, such as a wheelchair van), down-coding from ALS to BLS either because the ALS service was not necessary or was not actually performed, and facility-to-facility transfers where it is not apparent from the claim why the transfer was required.
  • Extrapolation: Extrapolation is a mathematical formula that allows any of these auditors to pull a random sample of your claims and then determine that all of your claims are represented by that sample. More specifically, a sample of your claims is reviewed (usually over a two-year period), a number of them are deemed to have been "overpaid" (usually for one of the reasons mentioned above), and an error rate is established by calculating the percentage of your claims that have been “overpaid.” Finally, this error rate is used to calculate the overpayment of not just the claims in the sample, but all of your claims for the time frame reviewed. For example, if 10 out of 40 claims reviewed were deemed overpaid, you have a 25% error rate. If you were paid $400,000 by Medicare in the two years reviewed (for ALL claims, not just the ones reviewed), then the extrapolated overpayment is 25% of $400,000, or $100,000. Thus, the 10 claims may have resulted in an actual overpayment of around $2,500, but with an extrapolated overpayment of $100,000. (The math is a little more complex than this, but the result is basically the same.)


So why are they looking? Because they can often assess huge overpayments by extrapolating from just a small sample of your claims.

NOTE: This is just an example. The error rates and actual overpayments are often MUCH higher! Look at your Medicare receivables for a two-year time period and apply a 50%-90% overpayment error rate to assess your potential liability.

3. What You Need to Know About the Medicare Appeals Process

There are as many Medicaid appeals systems as there are states, and each one is different. Depending on the state you are in, there are unique arguments and defenses that can help you avoid overpayment assessments. If you are reviewed by Medicaid, find someone who can assist you with understanding the system in your state. Here is some basic information:


  • They will take your money if you do not appeal immediately (usually 30-45 days) after assessment;
  • They must stop once you appeal to the MAC/Carrier for re-determination;
  • They will begin to take your money again if you do not appeal immediately after the re-determination decision is received;
  • If you appeal to the QIC, they must stop off-set again, but you must include all of your arguments and documents at this level of appeal, so make sure you are ready before the re-determination decision is even received;
  • After you receive the QIC's decision, you can no longer keep Medicare from off-setting your payments (keeping the money they owe you and crediting the balance you owe them) during the remainder of the appeals process, but they must accept a payment plan. The application can take awhile. Start gathering the documents early on so you will be ready when you need to submit it; and finally
  • You CAN win many of these claims if you proceed through the appeal process correctly. Keep in mind that most of these auditors have some form of financial incentive to find overpayments, so it is no surprise that they often find rather high rates of error. That does not mean, however, that the claims should not be paid.


Has the Big MAC Bitten Off More Than It Can Chew? October 4, 2009

MACs (Medicare Administrative Contractors) are the new and supposedly improved version of what we have known as Medicare Carriers for years. But who are they and how did they get here? Like their Carrier predecessors, they are private insurance companies that bid on the jurisdictional contracts with CMS. The theory in creating these multi-state jurisdictions was that one company could manage a four-state region more economically than four different companies could manage the individual states. With that in mind, the insurance companies that bid on these MAC jurisdictions closed offices, consolidated staff and made other changes necessary to cut costs and get competitive for the bidding process. Of course, as with many government contracts, the lowest bidder wins. This all sounds good until you begin to see that some of the corners that were cut in the name of being more "economical" may be hurting the providers. For example, at the request of several members of one state's ambulance association, I sat in on an "information session" provided by a new MAC. During that session it became clear that this company intended to (and in fact did) deny claims based solely on the destination modifier. In my opinion, to deny a trip to what CMS says is a covered destination solely because of the destination modifier is absolutely inappropriate. Specifically, the MAC was denying any claim that had an R as the destination, basically saying if you are healthy enough to go to home ("R" is for residence), you don't need an ambulance. They admitted to me they were not even looking at the narrative to see the patient's condition. When I asked why, their response was that they did not have the ability to kick out these personal claims, so they were just denying them and forcing the ambulance company to appeal. Sounds like some of these MACs bid too little to effectively manage the contract. And who suffers? We do.

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. Chris lectures and advises EMS clients across the U.S. This article is not intended to be construed as legal advice. For more information or questions, reach Chris at or by contacting EMS Consultants, Ltd., 800/342-5460.