U.S. ambulance providers generated about $9 billion in revenue in 2009, according to information gathered by Hoover's, Inc., which offers proprietary business information through the Internet and other online services. Of that amount, hospital-based ambulance services commanded a 9 percent market share. Not surprisingly, given the Medicare program's complex billing requirements, ambulance services were one of the approved audit issues listed by the RACs in early January 2010.

The Issue: Unbundling During an Inpatient Hospital Stay

According to billing requirements established by the Centers for Medicare & Medicaid Services (CMS), ambulance services should be billed to inpatient providers. According to claims data reviewed by the RAC program, an issue may exist when a beneficiary during an inpatient stay receives ambulance services that are billed and reimbursed under Medicare Part B. As a result, RACs are initiating automated reviews for overpayments.

While the majority of hospitals do not provide their own ambulance services, it is important for them to review CMS requirements on when ambulance services are to be provided to inpatients and outpatients. To help you better understand these arrangements, we went straight to the following Medicare regulations to see exactly what is needed to prevent improper payments (all of the following CMS online Medicare manuals can be found at the following Web address: http://www.cms.hhs.gov/manuals/)

• Medicare Benefit Policy Manual (Publication 100-02) Chapter 10, Sections 10 and 10.3.3;
  
  
• Medicare Processing Manual (Publication 100-04), Chapter 3, Sections 10.4 and 10.5; and .
  
  
• Medicare Claims Processing Manual (Publication 100-04), Chapter 15, Sections 10.2 and 30.A.

The Basic Rules

Transportation of a beneficiary from his or her home, an accident scene or any other point of origin is covered under Part B as an ambulance service only to the nearest hospital, critical access hospital (CAH) or skilled nursing facility (SNF) capable of furnishing the required level and type of care for the beneficiary's illness or injury. This is the rule only if medical necessity and other program coverage criteria are met.

Payment Methods

Medicare-covered ambulance services are paid in one of two ways:

• As separately billed services, in which case the entity furnishing the ambulance service bills Part B of the program; or
  
• As a packaged service, in which case the entity furnishing the ambulance service must seek payment from the provider responsible for the beneficiary's care.

Patient Origin is Key

If either the origin or the destination of the ambulance transport is the beneficiary's home, it is paid separately by Medicare Part B. The entity that furnishes the transportation may bill its Medicare carrier or intermediary directly.

If both the origin and destination of the ambulance transport are providers (e.g., a hospital, CAH or SNF), responsibility for payment is determined in accordance with the sequential billing criteria established by CMS. .

Providers must adhere to the following to ensure proper payment:

Note: These three criteria must be applied in sequence as a flow chart, and not independently of one another. 

Criterion 1: Provider Numbers

If the Medicare-assigned provider numbers of the two providers are different, the ambulance service may be billed separately to the Medicare program. If the provider number of the providers is the same, then consider criterion 2 - campus - as described below.

Criterion 2: Campus

"Campus" means the physical area immediately adjacent to a provider's main buildings. It also includes other areas and structures that are not strictly contiguous to the main buildings, but located within 250 yards of them, as well as any of the other areas determined on an individual case basis by the CMS regional office to be part of a provider's campus.

If the campuses of the two providers sharing the same provider number are the same, the transport may not be billed separately to Medicare. Instead, the provider is responsible for payment. If the campuses of the two providers are different, then criterion 3 must be considered.