Buried deep within the Patient Protection and Accountable Care Act (PPACA), Section 3401, Subtitle E, “Ensuring Medicare Sustainability,” is a little known change to ambulance reimbursement that may affect the financial stability of EMS agencies. This section of the law focuses on adjusting specific fee schedules and prospective payment systems in relation to economic productivity. The Centers for Medicare and Medicaid Services has maintained a fee schedule for EMS ground transport reimbursement since 2002.
Unlike ED care, ambulance service is reimbursed based only on the level of transport service provided. Transport to alternative destinations are not reimbursed via Medicare Part B, nor are procedures or critical care time spent with a patient. Relative value units (RVUs) for ALS, BLS, emergency, and non-emergency values are multiplied by a conversion factor to correlate reimbursement with level of care. An additional mileage fee and adjustment factor applies depending on the location of service. (Figure.) (National Center for Health Statistics. National Hospital Ambulatory Medical Care Survey: 2011 Emergency Department Summary Tables. October 2014:1-39.)
The base ambulance rate is adjusted annually using an ambulance inflation factor to adjust for cost increases. The PPACA adjusted the Ambulance Fee Schedule in 2010 to subtract a special economic metric known as the non-farm multifactor productivity (MFP) value. This value, although complicated to calculate, in the simplest sense accounts for economic productivity and efficiencies in relation to the cost of production. As the U.S. economy becomes more productive per unit of labor, the MFP increases. Each technological advancement and piece of automation slowly moves the MFP.
Every year the Ambulance Inflation Factor (AIF) had provided for changes in ambulance reimbursement by accounting for the Consumer Price Index (CPI). Generally, the AIF was positive. The AIF will be negative in 2016 for the first time since the MFP was incorporated into the calculation. The MFP is 0.5 and the CPI is 0.1 so the AIF is adjusted down 0.4 percent. (Ann Emerg Med 2013;61:624.)
Private insurance reimbursement generally follows the CMS ambulance fee schedule, so all private insurers will most likely also begin adjusting down their payments to ambulance transports accordingly or at the very least providing less future base rate increases. The impetus for this change by CMS and the PPACA is to encourage productivity and reduce costs. The main cost to EMS, however, is not technological innovation and procedural efficiency but personnel and labor. The resulting MFP adjustment on an annual basis will only negatively affect the finances of EMS agencies as the majority of the economy continues to grow with greater efficiency.
As a reaction to this small measure of downward pressure on EMS finances, most should begin exploring alternative sources of revenue. Innovations such as Community Paramedicine Mobile Integrated Healthcare (CP-MIH) is one option for EMS agencies positioned to provide nonemergent chronic care assistance. (Ann Emerg Med 2016;67:361.) MedStar Mobile Healthcare in Fort Worth, TX, has already demonstrated feasibility and sustainability with CP-MIH as an alternative care model. MedStar partners with hospitals to identify and assist patients care for chronic diseases after discharge, decreasing hospital readmissions. The cost savings for decreased admissions can be shared between the hospital and the EMS agency. (Mobile Healthcare Programs-Overview. MedStar, April 2015; http://bit.ly/1sgLK8J.)
The near future will ultimately involve greater cost constraints for EMS, but these financial pressures should encourage a greater level of community involvement and partnership with hospitals to improve patient care and ensure financial sustainability.
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