2026 AIF Set Following Government Shutdown
By Chuck Humphrey, B.A., EMT-B, CACO, CAC, CADS*
Congratulations! You made it!
Congratulations! You have weathered the longest Federal government shutdown in history!! On the heels of the government’s re-opening, CMS has released Transmittal 14364 containing Change Request 14269 containing the Ambulance Inflation Factor (AIF) for 2026.
The AIF is 2.0 percent.
Let’s look at the calculations.
Cool Inflation
Inflation remains cool. While that’s a good thing for pricing, it means that the AIF remains smaller than we were used to just a few years ago. In theory, the costs for ambulance service operators should be remaining fairly stable with regards to the “things” we all must buy to do the job.
However, as other costs such as labor and insurance are on the rise, a two percent increase seems, on the surface, to be somewhat inadequate. Nonetheless, this is the tenth year in a row the AIF has been positive.
Two Factors…
Here’s a reminder of how the AIF is calculated.
Two factors are combined to arrive at the AIF. The first element of the formula is the Consumer Price Index for all urban consumers (CPI-U) which pulls data from the 12-month period ending in June of the previous year (for this year, June 2024 was the cutoff.) Once that value is arrived at, then the productivity adjustment is configured. Called the Total Factor Productivity (TFP), the value is equal to the 10-year moving average of changes in American economy-wide private non-farm business calculations which began for the current AIF on January 1, 2016. Once recorded, this value is subtracted from and as an adjustment to the CPI-U.
As such, the resulting AIF value is a product of this formula:
CPI-U – TFP = AIF
Breaking Down the Components
To help you understand the AIF, let’s break down the individual components of the formula used to calculate the AIF.
First, let’s establish the CPI-U
The CPI-U is the statistical metric developed by the U.S. Bureau of Labor Statistics used to monitor the change in the cost of a set list of products. It really is a type of pseudo inflation monitoring device. While not directly measuring inflation, the value provides the Federal government with a window into the price trending of products and predicts the severity of any pending inflation or deflation on the overall economy.
Using a cross-section of 8 major groups across 200 different types of goods and services, government statisticians pull the data to arrive at the CPI-U factor, annually. These 8 major groups include: food and beverages, housing, apparel, transportation, medical care, recreation, education, communication and a catch-all category called “other goods and services” which include such things as tobacco and smoking products, personal care items and services including such outlying services such as funeral expenses and the like.
The tracking of the fluctuations in the prices that urban residents pay to purchase certain sets of what the feds refer to as “basket goods” ensures that the government can effectively follow the cost of living for those persons residing in the sample statistical areas.
We are reminded, of course, of the fact that 80% of the population of the United States resides in an urban setting. As such, the CPI-U data set is a very useful tool as part of the AIF calculation.
Now Subtract the TFP
In March 2010, when the Patient Protection and Affordable Care Act was enacted by the U.S. Congress, the Total Factor Productivity was added as an adjustment to the AIF calculation. The TFP measures changes in the economic output per unit of combined units. Indices of the TFP adjustment are pulled within the United States based on private non-farm business and manufacturing sectors of the economy.
The TFP is subtracted from the CPI-U as an adjustment.
The TFP is a compilation of data indicating the joint effects of many variables affecting the economy, including the effect of efficiency resulting from new technologies, economies of scale, managerial skill ratcheting and also includes positive changes in organizational factors that surround production. What this means is the government is tempering any notion of rising costs directly impacting the ambulance industry against the nation’s ability to work smarter and more efficiently over time. As such, Congress believed they built in a calculation that offsets inflation through working smarter and more efficiently.
The TFP’s addition to the AIF formula includes the government’s opinion that the ambulance industry does not require a full inflationary boost as they, in essence, concluded that the industry’s own efficiency offsets the full impact of inflation over time.
By the Numbers for 2026
Having defined the pieces of the formula, we arrive at this year’s AIF calculation.
For the 12-month period ending in June 2024, the Federal Bureau of Labor Statistics has calculated the CPI-U at 2.7%, down from last year’s 3.0%.
The TFP increased by 0.1% and checks-in at 0.7%.
The resulting formula
CPI-U 2.7% – TFP 0.7% = AIF 2.0%
Next Steps
Now that the AIF is final, the ambulance industry awaits its application to the final National Medicare Ambulance Fee Schedule for 2026. The fee schedule is annually released by CMS using the Public Use File (PUF) which should be published soon.
The 2.0% increase does not always equate to a direct 2.0% dollar increase for next year’s ambulance payments from Medicare for all. Final fee schedule values will not be known until the AIF is applied, while factoring in other elements of the fee schedule calculation including the Relative Value Units (RVUs- which remain constant) and the possible “tweaking” of individual Geographic Practice Cost Indices (GPCIs). GPCI adjustments can be implemented geographically across individual charge class areas and have a say in the final fee schedule dollar approval amounts.
Of course, there continues to be uncertainty with regards to the Medicare Ambulance add-on adjustments extending. The next “showdown” for Federal government funding is set to take place on January 31, 2026.
Until then, the industry looks forward to the next ambulance fee schedule numbers.
Stay tuned!!
*Chuck Humphrey is an independent contractor who spent 25 years in the EMS revenue cycle management industry, prior to his retirement from Quick Med Claims. In addition to holding EMT credentials in Pennsylvania, he is also a Certified Ambulance Documentation Specialist via the National Academy of Ambulance Compliance. Humphrey is a periodic guest contributor to the QMC blog and podcast space.
