CMS Releases 2015 Zip Code Changes Affecting Ambulance Bonus Payments

AAA Challenges CMS-Revisions Possible

Change Announced

Last week the Centers for Medicare and Medicaid Services (CMS) released the final rule that sets in motion a significant shift in the way that geographical areas are determined to identify urban versus rural areas for ambulance fee schedule bonus payment purposes.

The potential reimbursement impact for many ambulance services across the United States is huge!

CMS Releases 2015 Zip Code Changes Affecting Ambulance Bonus PaymentsCurrently the urban bonuses add an additional 2% to payments, rural areas see a 3% increase and super-rural bonuses add 22.6% to the final payment for base rates payments. Additional mileage dollars are paid at 50% higher in rural and super-rural areas for the first 17 loaded miles for each transport that originates in a rural-designated Zip code. Federal rules dictate what Zip codes are considered Urban using a formula that considers census information and something called the “Goldsmith Standard.”

Using the new method of determining rural versus urban Zips (derived from 2010 census data), a whopping 3,038 Zip codes potentially will change from rural to urban, effectively cutting ambulance reimbursement payments overall by 1% and by 50% per mile for the first 17 miles of each ambulance transport for the areas that change.

However, the American Ambulance Association is challenging the ruling, asserting that CMS incorrectly applied the formula that is supposed to determine the changes. The AAA had hoped for an announcement about a revision to the final list from yesterday’s CMS Ambulance Open Door Forum audio-conference, however no such announcement indicating a change was made during that forum. One Open Door Forum caller did ask about the possibility of a review, citing a change to a particular very rural area as an example, and the CMS representative answering that person’s question simply stated that a review was underway.

So until such a review and the results of that review are announced (if ever), we all must assume that the Zip code change table released by CMS are the expected changes as they exist right now.

There are a number of Zip codes adjusting from urban designation to rural, boosting payments for ambulances in those areas by the same margins. In all, 387 Zip codes nationwide will adjust upward.

January through March…for now…

Of course; these changes, as they stand right now, will only affect payments from the beginning of 2015 through the end of March unless Congress acts to extend the bonus payments beyond that point.

Readers of this space will remember that there is currently at least one major initiative in Congress to push for permanent ambulance fee schedule reform. It will be interesting to see if the recent results of the mid-term elections that swept the Republican party to power in both chambers will affect the momentum of enacting those lasting changes. While the amount of Zip code changes will negatively impact Medicare payments made to EMS agencies that will see their operating Zip codes move from rural to urban, the entire industry potentially will be hugely impacted if the bonus payments are allowed to expire altogether sans Congressional action. At that point, payments would revert to the National Medicare Ambulance Fee Schedule amounts minus any bonus payments and the losses, industry-wide, would prove to be substantial.

Pennsylvania and West Virginia Hardest Hit!

In the Zip code designation change, ambulance services transporting patients in origin Zip codes within Pennsylvania and West Virginia will experience the most negative impact.

Pennsylvania ambulance services will experience payment decreases in 293 total Zip codes while the greatest percentage of Zip codes in one State to change will come to West Virginia where 269 Zip codes or 28.74% of all Zips will see a decline.

On the other hand, California ambulance providers will see the most payment increases when 43 Zip codes move from urban to rural, there. In all, 387 Zip codes will see changes from urban to rural, increasing payments in those areas nationwide.

What’s the effect?

Take a look at your EMS agency’s payer mix to determine the percentage of reimbursement dollars that flows from Medicare sources (Medicare Advantage products included unless your agency is a participating provider paid under a negotiated fee schedule separate from the National Ambulance Fee Schedule.)

Next, think about your EMS agency’s average Medicare transport, including the average number of loaded miles that you are reimbursed for each trip.

If a majority of your transports currently originate in Zip codes that are designated as rural and you find that come January 1, 2015 that same Zip code will only call for an urban payment, then you stand to lose 50% of your mileage payment for the first 17 loaded miles paid and 1% of the base rate payment.

Right now, given the current adjusted fee schedule amounts that mileage payment loss would adjust by a whopping $3.69 per mile! Then add a loss of 1% of the current base rate payment to the mix and depending on how many miles your average transport entails the loss could amount to a fairly significant dollar amount per trip.

Plan now!

Now’s the time to be planning how your EMS agency will be affected. Chances are you will need to adjust your budget and if you are affected by negative reimbursements it will be a good idea to adjust your revenue forecasts well before the changes hit.

Access to data is important and the more information you can extract from your billing program and the reports derived from the program the better off you’ll be come New Years Day.

Stay Tuned!

Follow this space for more developments. If CMS does issue a revision in the number of Zip codes that are changing and they release a new list of potential changes, we will make an announcement in this space.

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