Medicare to Recover $21 Million in Ambulance Overpayments for Inpatients

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In a report released last March, the Department of Health and Human Services' Office of Inspector General (OIG) published its findings from a study on Part B Medicare payments for ambulance transports rendered during inpatient stays. This is the second study specifically focusing on the ambulance industry released by the OIG in 2006, and is a further indication of Medicare's interest in pursuing abuse and recovering overpayments to ambulance service suppliers.

The study considered payments made for hospital inpatients during the years 2001--03. The purpose of the study was to determine whether Medicare carriers had made payments under Part B for ambulance services rendered to beneficiaries who were at "prospective payment system" (PPS) hospitals. PPS payments are made to hospitals under Part A of the Medicare program. These payments are all-inclusive and based on the patient's condition or diagnosis-related group (DRG). The DRG for a hospital inpatient includes nonphysician outpatient services the patient requires during their hospital stay. These outpatient services include transportation by ambulance to and from another facility for services not available at the hospital to which the patient is first admitted. Therefore, the proper procedure should have been to bill the hospital for the service; the hospital would then pay out a portion of the PPS per diem it had already received for the patient's care.

Instead, the ambulance suppliers billed, and were paid by, Medicare Part B. An example of how this might happen is when a hospital needs an MRI on a patient but does not have the necessary equipment. The hospital calls an ambulance service supplier for a trip to a facility that does, but then the ambulance service bills Part B instead of sending the bill to the hospital as it should.

The study found that Medicare carriers over the three years at issue (January 2001 through December 2003) made improper payments for 203,377 ambulance services provided to inpatients in PPS hospital stays. The potential damages caused by these improper payments include an overpayment by Medicare of approximately $21.7 million. An additional $6.2 million in improper payments could have resulted from Medicaid, private insurance or the patients themselves paying the coinsurance and deductible portions of the ambulance service charges.

The study also found that neither CMS nor the individual carriers had established computer edits to detect and prevent Part B payments during a patient's Part A inpatient stay, even though several carriers contacted by the OIG claimed to have such edits in place. Neither were there any postpayment review procedures in place. The OIG noted that it had done a similar study on inpatient services, which was released in August 2002. However, even though CMS and the carriers had no edits, had no review process, knew this was an area where improper payments might occur and did little to educate the ambulance supplier community, responsibility does not fall to them; it falls on the ambulance suppliers. This is a good example of why you must be on top of healthcare laws and regulations and not simply rely on carriers to educate and direct you. While the OIG report states that "carriers are responsible for ensuring that they do not pay for these services," the consequences will be felt by the ambulance industry, not by the carriers.