You asked for information on (1) charges for and payment of paramedic services associated with emergency medical services and (2) Medicare coverage of such services.

SUMMARY

Billing for the cost of paramedic and ambulance services is a normal and customary practice in the state. The Department of Public Health (DPH) regulates this practice and sets the rates for each service provider. Providers cannot charge for services that are not specified in their rate schedules. DPH must consider a variety of factors when setting these rates.

Private insurance, as well as Medicare and Medicaid, may pay for all or some of the charges, depending on the particular case. Medicare Part B (Medical Insurance) covers ambulance services when other transportation would endanger the beneficiary's life. The Balanced Budget Act of 1997 mandated a national fee schedule for ambulance services furnished under Medicare Part B. This new fee schedule, which is being gradually implemented over five years, starting on April 1, 2002, applies to all ambulance services including volunteer, municipal, private, independent, and institutional providers. Ambulance providers and suppliers must accept the Medicare allowed charge as payment in full and not bill or collect from the beneficiary any amount other than any unmet Part B deductible and coinsurance amounts.

The new fee schedule creates seven categories of ground ambulance services and two categories of air ambulance services, including basic life support (BLS) and advanced life support (ALS), Levels 1 and Level 2. Ambulance services covered under Medicare will be paid based on the lower of the actual billed amount or the ambulance fee schedule amount. Also under the new system, Medicare will pay a basic life support rate for services furnished at the BLS level even when an ALS vehicle is used.

STATE RATE SETTING FOR PARAMEDIC SERVICES

The public health commissioner sets rates for emergency and nonemergency medical transportation services. Each provider must be allowed to impose special charges for mileage, waiting time, night time response, and special attendants. Providers cannot charge for services that are not specified in their rate schedules.

In setting the rates, the commissioner must consider specific factors including the necessary costs incurred in providing the services, net income after taxes, utilization rate of equipment and personnel, inflation and other economic factors relevant to ambulance maintenance operations, anticipated costs for provider compliance with state and federal requirements, rate differentials set and paid for by other state agencies and third party payers, the proportion of cancelled calls, a reasonable return on investment, and any other factors he deems relevant (Department of Public Health Regs. , § 19a-179-21, see attached).

MEDICARE COVERAGE

Background

By law, Medicare (Part B) pays for medically necessary ambulance services in emergencies and other situations when other transportation would endanger the person's health. Medicare will not pay for ambulance services to transport a beneficiary from home to the doctor's office. Ambulance transport is covered for a patient who is "bed confined. " Bed confined individuals are not able to be up and out of bed under any condition and are therefore unable to tolerate transportation by other methods.

Medicare will not pay for an ambulance trip for convenience only (such as for a trip from one hospital to another so the patient can be closer to family members). The trip must be medically necessary for the patient transferred to another facility. In other words, the hospital that the patient is being transferred from cannot meet his needs. If this is the case, the ambulance must transfer the patient to the nearest facility equipped to care for the patient.

New Medicare Ambulance Fee Schedule

The Centers for Medicare and Medicaid Services (CMS), through regulation, adopted a new Medicare fee schedule for ambulance services effective April 1, 2002. Congress mandated this new payment mechanism in the Balanced Budget Act of 1997. Under the new system, ambulance service providers will be paid a pre-established fee for each different service provided. This is similar to the payment method Medicare has progressively adopted for hospitals, nursing homes, home health agencies, and other providers.

The new regulation requires ambulance service providers to accept the Medicare approved fee as their full payment. This means that beneficiaries will not pay more than 20% of the approved amount, once they have met their annual $ 100 Medicare Part B deductible. The new fee schedule creates seven categories of ground ambulance services, ranging from basic life support to specialty care transport, and two categories of air ambulance services. Payment for each category is based on the relative value assigned to the service, adjusted to reflect wage differences in different parts of the country. Mileage will also affect payment levels. The fee schedule allows for increased payments when an ambulance service is provided in rural areas.

Levels of Ambulance Service. This new schedule defines different levels of ambulance services. (Some of these, but not all seven levels are described below. ) Basic life support means transportation by ground ambulance vehicle and medically necessary supplies and services, plus the provision of BLS ambulance services. The ambulance must be staffed by an individual who is qualified in accordance with state and local laws as an emergency medical technician-basic (EMT-Basic). (These laws may vary from state to state. )

The new fee schedule defines Advanced life support, level 1 (ALS1) as transportation by ground ambulance vehicle, medically necessary supplies and services, and either an ALS assessment by ALS personnel or the provision of at least one ALS intervention. Advanced life support (ALS) personnel means a person trained to the level of the EMT-intermediate or paramedic. An EMT-Intermediate is an individual qualified, according to state and local laws, to perform essential advanced techniques and administer a limited number of medications.

The EMT-Paramedic has the qualifications of the EMT-Intermediate plus enhanced skills that include the ability to administer additional interventions and medications.

Advanced life support, level 2 (ALS2), means either transportation by ground ambulance vehicle, medically necessary supplies and services, and the administration of at least three medications and/or the provision of one or more of the following ALS procedures: manual defibrillation/ cardioversion, endotracheal intubation, central venous line, cardiac pacing, chest decompression, surgical airway, and intraosseous line.

Carrier Payment and Reimbursement. Under the new fee schedule, ambulance services covered by Medicare will be paid based on the lower of the actual billed amount or the ambulance fee schedule amount. This fee schedule will be phased in over a five-year period, blending current payment with the new rates. When fully implemented, the fee schedule will replace the current retrospective reasonable cost reimbursement system for providers and the reasonable charge system for ambulance suppliers.

For ground ambulance services, the fee schedule amount is calculated using:

1. a nationally uniform base rate called a "conversion factor" for all ground ambulance services;

2. a relative value unit assigned to each type of ground ambulance service;

3. a geographical adjustment factor for each ambulance fee schedule area (geographic practice cost index (GPCI));

4. a nationally uniform loaded mileage rate; and

5. for services furnished in a rural area, an additional amount. (More detail on these various elements is included in Attachment "A". )

Basically, the point of pickup determines the basis for payment. The point of pickup is reported by its five-digit zip code, which thus determines both the applicable GPCI and whether a rural adjustment applies.

Carrier Coding Requirements. Implementing the new fee schedule has generated new coding requirements for carrier claims. The following fee schedule elements will require changes in the coding: (1) seven categories of ground ambulance services; (2) two categories of air ambulance services; (3) payment based on the condition of the beneficiary, not on the type of vehicle used; (4) payment determined by the point of pickup (zip code reported); (5) increased payment for rural services; and 6) services and supplies included in the base rate. (For more information on coding, see Attachment "B" pp. 3, 23-27. )

Medicare will pay a basic BLS rate for services furnished at the BLS level even when an ALS vehicle was used because payment is based on the person's condition and not on the vehicle used.

Paramedic Intercept Services. Paramedic intercept services are ALS services provided by an entity that does not provide the ambulance transport. Questions have arisen under the fee schedule concerning payment for paramedic intercept services. According to CMS, for Medicare Part B to pay ALS, there must be an agreement in place between the BLS supplier that furnishes the transport and the ALS entity that provides the ALS paramedic service. But the compensation between the BLS entity and the ALS entity is not a matter for the Medicare program to regulate. If there is no agreement between the BLS ambulance supplier and the ALS entity providing the paramedic, then Medicare pays only for BLS level and does not cover the paramedic's services. In that case, the beneficiary would be liable for the expense of the paramedic's ALS services; that is, to the extent that the paramedic's services were beyond the scope of the BLS level payment.

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