Articles on Compliance Strategies

CMS Cracks Down on Hospital Bundling of Ambulance Charges

Reprinted from the March 13, 2006, issue of REPORT ON MEDICARE COMPLIANCE, the nation's leading source of news and strategic information on false claims, overpayments, compliance programs, billing errors and other Medicare compliance issues.

The hospital/ambulance connection is ripe for compliance attention in light of recent moves by CMS and the HHS Office of Inspector General (OIG). CMS recently announced enforcement of hospital inpatient unbundling for purchased ambulance services and the implementation of new edits to ensure ambulance suppliers don't bill Medicare separately for ambulance rides that should be bundled into the DRG.

Meanwhile, ambulance suppliers may be overcharging hospitals for transports that are bundled into Part A inpatient services as a defense mechanism for the new and overwhelming Medicare ambulance fee schedule methodology, one expert says. But hospitals have a new tool to protect themselves from inflated charges: a detailed "medical conditions" list published by CMS that gives hospitals a better sense of when patients need an advanced life support (ALS) vs. basic life support (BLS) ambulance.

"A lot of money is at stake," says Cheryl Rice, corporate director of corporate responsibility at Catholic Healthcare Partners in Cincinnati. "A roundtrip ambulance ride can cost hundreds of dollars."

The OIG Work Plan has three ambulance-related items for 2006. Plus an OIG regional office and fiscal intermediaries have warned about improper ambulance charges to Medicare involving institutional providers.

CMS announced enforcement of hospital inpatient bundling of charges for ambulance trips that take place during a hospital stay in Transmittal 668 (Change Request 3933), which took effect Jan. 3, 2006. That's always been the policy, but CMS said it recently learned of improper payments for these trips from the Boston Regional OIG. So now there's a crackdown and new measures to prevent abusive ambulance payments.

When ambulance rides occur before the patient is admitted to the hospital (preadmission transports), ambulance suppliers bill Medicare directly. The same kind of direct Medicare billing is required for ambulance rides arranged to pick up the patient from the hospital after discharge to take them home or to another facility (post-discharge transport).

But there is one circumstance in which hospitals pay ambulance suppliers directly for their services, says Rice. When inpatients need a particular diagnostic or therapeutic service during their inpatient stay but the hospital lacks that particular service, the hospital summons an ambulance to take the inpatients to the diagnostic or therapeutic service and then bring them back to the hospital immediately. This is called a "purchased service" because the hospital will pay the ambulance provider directly for the trip, and otherwise the hospital stay will continue uninterrupted, she says.

The cost of the purchased service is bundled into the hospital's Medicare DRG payment. For example, morbidly obese patients who can't fit in closed MRI machines may be transported to open MRIs for a test and then returned to the hospital. It's all part of the DRG.

"Normally, ambulance trips are not the financial responsibility of the hospital, except on the inpatient side when it is part of transporting them for purchased services we can't provide," Rice says. "We have to include on our inpatient bill the costs of the open MRI that is purchased, for example, as well as the roundtrip ambulance ride. We arrange it and pay for it, and Medicare pays the usual DRG."

Transmittal Announces New Edit

But Transmittal 668 does more than reiterate the importance of hospital bundling of purchased tests and purchased ambulance services for inpatients. It also cracks down on ambulances that allegedly are exploiting the inherent weakness in Medicare caused by the fact that the purchased services are the lone circumstance in which ambulances don't directly bill Medicare.

To make sure that ambulance suppliers don't charge Medicare for these trips, Transmittal 668 also announced a new edit to screen for ambulance charges that are supposed to be bundled into the DRG. The edit will check whether ambulance services are billed with service dates that match the admission and discharge dates of a covered hospital DRG for that patient. Ambulance suppliers should not seek Medicare payments for these trips because hospitals already pay directly for them or are supposed to pay directly for them.

With this edit, CMS can tell that an ambulance supplier took an inpatient to and from the hospital for a service during an inpatient stay. "Medicare can now see everyone's claims," she says. If an ambulance supplier attempts to double dip — bill Medicare and the hospital — it will be transparent, she says.

The hospital/ambulance issue is also an OIG target. According to the OIG Work Plan for 2006, it will "determine whether ambulance suppliers were paid for services provided to beneficiaries who were in an inpatient status. A recent survey indicated that Medicare Part B improperly paid a significant amount of calendar year 2001 ambulance services for periods when the beneficiary was an inpatient. This follow-up review will cover calendar years 2001 and 2002."

Hospitals should scrutinize the bills they receive from ambulance suppliers because they might be inflated, Rice says. And hospitals might be plagued by the same abuses that Medicare faces — such as billing for ALS when patients need only BLS, charging for medically unnecessary trips or paying kickbacks.

Rice says ambulance suppliers might be tempted to bill hospitals even when they're supposed to bill Medicare just because it's easier to bill hospitals. The reason: Medicare ambulance billing rules are complex — current rules are updated at least annually, HCPCS coding and modifier designation are constantly changing, and ambulance suppliers must maintain detailed documentation to support their billing, she says. "The biggest problem is some ambulance companies' not being able to keep up with all the CMS updates to payments and codes. They don't adapt to them," Rice says. "Hospitals have had to be very proactive in trying to thwart ambulance companies from trying to get payment from us."

She says hospitals might not realize this is a problem, "so they wind up paying ambulance suppliers money they are not entitled to."

But Pennsylvania attorney Doug Wolfberg, who represents ambulance suppliers, says this may occur occasionally, but hospitals share the blame because they won't always give give ambulance suppliers necessary patient information, erroneously citing HIPAA privacy restrictions.

In another major development affecting ambulance trips, CMS issued a transmittal that created a whole new framework for medical necessity. Transmittal 789 (Change Request 4221) includes a medical conditions grid that indicates what level of ambulance service is warranted according to ICD-9 diagnosis codes and HCPCS codes (and a few other factors). Then the list of medical conditions is cross-referenced depending upon whether the patient is in an emergency trauma or non-trauma situation. It takes effect March 27.

Transmittal 789 can help ambulance suppliers — and hospital staffers who arrange for ambulance transport — understand what clinical conditions warrant transport and what specific clinical information must be communicated and documented to support proper ambulance billing, maintains Rice. "This guidance takes some of the guesswork out of a very fundamental ambulance compliance issue: whether the patient needs basic life support vs. the more expensive advanced life support ambulance," she says. This guidance helps to flesh out clinical scenarios and coding to ALS and BLS transports that previously were described only by limited, narrative definitions of ambulance transport levels.

Hospitals benefit from the definitive nature of the new guidance because "it helps us determine which mode of transportation may be best for the patient [e.g., ALS vs. BLS]," Rice says. "We will know the diagnosis code and general condition and can make sure the patient has the proper ride from a CMS quality-and-billing standpoint."

Also, she says, the grid will help hospitals double check the appropriateness of the amount charged by hospitals for purchased ambulance services. With the grid at its fingertips, the hospital can check the diagnosis and HCPCS codes of an inpatient being transported to and from the hospital for a purchased test or treatment to see whether the ambulance company is using the medically necessary level of ambulance service.

View the transmittals at AIS's Government Resources; click on "CMS Program Transmittals/Change Requests."

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