CMS Announces 2024 Ambulance Inflation Factor
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Tag: Ambulance Inflation Factor
CMS Announces 2023 Ambulance Inflation Factor
On October 14, 2022, CMS issued Transmittal 11642 (Change Request 12948), which announced the Medicare Ambulance Inflation Factor (AIF) for the calendar year 2023.
The AIF is calculated by measuring the increase in the consumer price index for all urban consumers (CPI-U) for the 12-month period ending with June of the previous year. Starting in the calendar year 2011, the change in the CPI-U is now reduced by a so-called “productivity adjustment”, which is equal to the 10-year moving average of changes in the economy-wide private nonfarm business multi-factor productivity index (MFP). The MFP reduction may result in a negative AIF for any calendar year. The resulting AIF is then added to the conversion factor used to calculate Medicare payments under the Ambulance Fee Schedule.
For the 12-month period ending in June 2022, the Federal Bureau of Labor Statistics (BLS) has calculated that the CPI-U increased by 9.1%. CMS further indicated that the CY 2023 MFP would be 0.4%. Accordingly, CMS indicated that the Ambulance Inflation Factor for the calendar year 2023 will be 8.7%.
This is the largest inflation update since the implementation of the current Medicare Ambulance Fee Schedule in April 2002. The increase from last year’s 5.1% increase is also the single largest year-over-year increase on record.
CMS | Ambulance Open Door Forum Dec 9
The next CMS Ambulance Open Door Forum scheduled for:
Date: Thursday, December 9, 2021
Start Time: 2:00pm-3:00pm PM Eastern Time (ET);
Please dial-in at least 15 minutes before call start time.
To participate by phone:
Dial: 1-888-455-1397 & Reference Conference Passcode: 8604468
Conference Leaders: Jill Darling, Maria Durham
**This Agenda is Subject to Change**
- Opening Remarks
Chair- Maria Durham, Director, Division of Data Analysis and Market Based Pricing
Moderator – Jill Darling (Office of Communications)
Announcements & Updates
- Emergency Triage, Treat, and Transport (ET3) Model Update
- ET3 Model Website: https://innovation.cms.gov/
innovation-models/et3 - ET3Model@cms.hhs.gov for inquiries
- ET3 Model Listserv for Model updates: https://public.govdelivery.
com/accounts/USCMS/subscriber/ new?topic_id=USCMS_12521
- ET3 Model Website: https://innovation.cms.gov/
- Upcoming Implementation Dates of the Repetitive, Scheduled Non-Emergent Ambulance Transport Prior Authorization Model
- Ground Ambulance & Patient Billing Advisory Committee Member Nomination Period
- Submission Instructions are contained in this Federal Register Notice: https://www.federalregister.
gov/documents/2021/11/23/2021- 25560/ground-ambulance-and- patient-billing-advisory- committee
- Submission Instructions are contained in this Federal Register Notice: https://www.federalregister.
- CY 2022 Ambulance Inflation Factor (AIF) Change Request 12488, Transmittal 11044
- Medicare Ground Ambulance Data Collection System CY 2022 Physician Fee Schedule Final Rule
- Slide presentation will be available at: https://www.cms.gov/Center/
Provider-Type/Ambulances- Services-Center, under Spotlights, Upcoming Events.
- Slide presentation will be available at: https://www.cms.gov/Center/
III. Open Q&A
**DATE IS SUBJECT TO CHANGE**
Next Ambulance Open Door Forum: TBA
ODF email: AMBULANCEODF@cms.hhs.gov
——————————
This Open Door Forum is open to everyone, but if you are a member of the Press, you may listen in but please refrain from asking questions during the Q & A portion of the call. If you have inquiries, please contact CMS at Press@cms.hhs.gov. Thank you.
Open Door Participation Instructions:
This call will be Conference Call Only.
To participate by phone:
Dial: 1-888-455-1397 & Reference Conference Passcode: 8604468
Persons participating by phone do not need to RSVP. TTY Communications Relay Services are available for the Hearing Impaired. For TTY services dial 7-1-1 or 1-800-855-2880. A Relay Communications Assistant will help.
Instant Replay: 1-800-856-2271; Conference Passcode: No Passcode needed
Instant Replay is an audio recording of this call that can be accessed by dialing 1-800-856-2271 and entering the Conference Passcode beginning 1 hours after the call has ended. The recording is available until December 11, 2021, 11:59PM ET.
For ODF schedule updates and E-Mailing List registration, visit our website at http://www.cms.gov/
Were you unable to attend the recent Ambulance ODF call? We encourage you to visit our CMS Podcasts and Transcript webpage where you can listen and view the most recent Ambulance ODF call. Please allow up to three weeks to get both the audio and transcript posted to: https://www.cms.gov/Outreach-
CMS provides free auxiliary aids and services including information in accessible formats. Click here for more information. This will point partners to our CMS.gov version of the “Accessibility & Nondiscrimination notice” page. Thank you.
CMS Announces 2022 Ambulance Inflation Factor
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Preliminary Calculation of 2022 Ambulance Inflation Update
Section 1834(l)(3)(B) of the Social Security Act mandates that the Medicare Ambulance Fee Schedule be updated each year to reflect inflation. This update is referred to as the “Ambulance Inflation Factor” or “AIF”.
The AIF is calculated by measuring the increase in the consumer price index for all urban consumers (CPI-U) for the 12-month period ending with June of the previous year. Starting in calendar year 2011, the change in the CPI-U is now reduced by a so-called “productivity adjustment”, which is equal to the 10-year moving average of changes in the economy-wide private nonfarm business multi-factor productivity index (MFP). The MFP reduction may result in a negative AIF for any calendar year. The resulting AIF is then added to the conversion factor used to calculate Medicare payments under the Ambulance Fee Schedule.
For the 12-month period ending in June 2021, the federal Bureau of Labor Statistics (BLS) has calculated that the CPI-U has increased by 5.39%.
CMS has yet to release its estimate for the MFP in calendar year 2022. However, assuming CMS’ projections for the MFP are similar to last year’s projections, the number is likely to be in the 0.4% range.
Accordingly, the AAA is currently projecting that the 2022 Ambulance Inflation Factor will be approximately 5.0%.
Cautionary Note Regarding these Estimates
Members should be advised that the BLS’ calculations of the CPI-U are preliminary, and may be subject to later adjustment. The AAA further cautions members that CMS has not officially announced the MFP for CY 2022. Therefore, it is possible that these numbers may change. The AAA will notify members once CMS issues a transmittal setting forth the official 2022 Ambulance Inflation Factor.
CMS Announces 2020 Ambulance Inflation Factor
On October 4, 2019, CMS issued Transmittal 4407 (Change Request 11497), which announced the Medicare Ambulance Inflation Factor (AIF) for calendar year 2020.
The AIF is calculated by measuring the increase in the consumer price index for all urban consumers (CPI-U) for the 12-month period ending with June of the previous year. Starting in calendar year 2011, the change in the CPI-U is now reduced by a so-called “productivity adjustment”, which is equal to the 10-year moving average of changes in the economy-wide private nonfarm business multi-factor productivity index (MFP). The MFP reduction may result in a negative AIF for any calendar year. The resulting AIF is then added to the conversion factor used to calculate Medicare payments under the Ambulance Fee Schedule.
For the 12-month period ending in June 2018, the federal Bureau of Labor Statistics (BLS) has calculated that the CPI-U has increased 1.6%. CMS further indicated that the CY 2020 MFP will be 0.7%. Accordingly, CMS indicated that the Ambulance Inflation Factor for calendar year 2019 will be 0.9%.
Preliminary Calculation of 2020 Ambulance Inflation Update
Section 1834(l)(3)(B) of the Social Security Act mandates that the Medicare Ambulance Fee Schedule be updated each year to reflect inflation. This update is referred to as the “Ambulance Inflation Factor” or “AIF”.
The AIF is calculated by measuring the increase in the consumer price index for all urban consumers (CPI-U) for the 12-month period ending with June of the previous year. Starting in calendar year 2011, the change in the CPI-U is now reduced by a so-called “productivity adjustment”, which is equal to the 10-year moving average of changes in the economy-wide private nonfarm business multi-factor productivity index (MFP). The MFP reduction may result in a negative AIF for any calendar year. The resulting AIF is then added to the conversion factor used to calculate Medicare payments under the Ambulance Fee Schedule.
For the 12-month period ending in June 2019, the federal Bureau of Labor Statistics (BLS) has calculated that the CPI-U has increased by 1.65%.
CMS has yet to release its estimate for the MFP in calendar year 2020. However, assuming CMS’ projections for the MFP are similar to last year’s projections, the number is likely to be in the 0.6% range.
Accordingly, the AAA is currently projecting that the 2020 Ambulance Inflation Factor will be approximately 1.1%.
Cautionary Note Regarding these Estimates
Members should be advised that the BLS’ calculations of the CPI-U are preliminary, and may be subject to later adjustment. The AAA further cautions members that CMS has not officially announced the MFP for CY 2020. Therefore, it is possible that these numbers may change. The AAA will notify members once CMS issues a transmittal setting forth the official 2020 Ambulance Inflation Factor.
Summary of March 28, 2019 Ambulance ODF
The Centers for Medicare and Medicaid Services (CMS) held its latest Open Door Forum on Wednesday, March 28, 2019. As with past Open Door Forums, CMS started the call with the following announcements:
- Ambulance Cost Data Collection – CMS reminded the industry that the Bipartisan Budget Act of 2018, enacted on February 9, 2018, requires CMS to create a new cost data collection system by December 31, 2019.
- Emergency Triage, Treat, and Transport Model – A representative from the Innovation Center within CMS provided an overview of the “Emergency Triage, Treat, and Transport Model” or “ET3.” This is a 5-year pilot program intended to provide ambulance providers with greater flexibility to handle low-acuity 911 calls, by providing Medicare payment for: (a) ambulance transportation to alternative treatment destinations and (b) treatment at the scene. The CMS representative indicated that CMS is in possession of data that suggests that 16% of emergency ambulance transports to a hospital emergency department could have been resolved by transporting the patient to an alternative treatment site, e.g., an urgent care center. CMS estimates that had all of these patients elected to receive care in the lower-acuity setting, it would have saved the Medicare Program approximately $560 million each year. With respect to the operation of the model itself, CMS essentially repeated the information that had been previously provided on its webinars. You can view the AAA Member Advisory on the ET3 Model by clicking here.
- Ambulance Inflation Factor – CMS reiterated that the 2019 Ambulance Inflation Factor is 2.3%.
Following the announcements, CMS moved into a Question & Answer period. The majority of the questions related to the ET3 pilot program. As is typical, many questions were not answered on the call; instead, CMS asked the individual to submit their question in writing. However, the following questions were answered on the call:
- Payment Rates under ET3 – CMS was asked whether the BLS base rate payment would be the BLS emergency base rate. It was not clear that the CMS representative fully understood the question, although she indicated that it would.
- Eligibility for Government Agencies – CMS was asked whether governmental agencies that operate 911 centers would submit applications to participate as part of the RFA process in the Summer of 2019. CMS responded that governmental agencies that operate 911 centers would not submit RFAs, but would rather wait for the Notice of Funding Opportunity (NOFO), which will be issued after the ambulance providers and suppliers are selected for participation (expected to be the late Fall/Winter of 2019). CMS further confirmed that if the governmental agency also operated its own ambulance service that it would be eligible to apply for both aspects of the ET3 Model.
- Limit on Ambulance Providers – CMS was asked whether it would cap the number of ambulance providers and suppliers selected to participate in the program. CMS responded that, at the present time, it has no intent to cap the number of participating ambulance providers and suppliers at any specific number.
- Return Transports from Alternative Treatment Destinations – CMS was asked whether the model would provide for ambulance payment for the return transport after a patient was transported to an alternative treatment site. CMS indicated that the model does not provide for payment for the return transport.
- Definition of “Telehealth” – CMS confirmed that the model will use the same definition of “telehealth” used in other areas of the Medicare Program. CMS further confirmed that telehealth encounters require both audio and video connections.
- Approval of Alternative Treatment Sites – CMS confirmed that state and local regulatory agencies would have final approval over acceptable alternative treatment sites.
- Qualified Health Care Practitioner – CMS confirmed that a “qualified health care practitioner” would be an individually enrolled Medicare practitioner, which includes physicians and nurse practitioners. In some instances, it can also include physician’s assistants. CMS confirmed that the definition would not include registered nurses or advance scope paramedics.
- NOFO Funding – CMS indicated that, at the present time, it is not prepared to release additional details on the nature or size of the funding opportunities available to governmental agencies and their designees that operate or have authority over 911 centers.
- Medicare Advantage and Other Payers – CMS confirmed that the ET3 Model applies only to Medicare beneficiaries enrolled in FFS Medicare. It does not apply to Medicare Advantage enrollees, Medicaid recipients, etc.
Questions? Email Brian at bwerfel@aol.com
CMS Announces 2019 Ambulance Inflation Factor
On November 30, 2018, CMS issued Transmittal 4172 (Change Request 11031), which announced the Medicare Ambulance Inflation Factor (AIF) for calendar year 2019.
The AIF is calculated by measuring the increase in the consumer price index for all urban consumers (CPI-U) for the 12-month period ending with June of the previous year. Starting in calendar year 2011, the change in the CPI-U is now reduced by a so-called “productivity adjustment”, which is equal to the 10-year moving average of changes in the economy-wide private nonfarm business multi-factor productivity index (MFP). The MFP reduction may result in a negative AIF for any calendar year. The resulting AIF is then added to the conversion factor used to calculate Medicare payments under the Ambulance Fee Schedule.
For the 12-month period ending in June 2018, the federal Bureau of Labor Statistics (BLS) has calculated that the CPI-U has increased 2.9%. CMS further indicated that the CY 2019 MFP will be 0.6%. Accordingly, CMS indicated that the Ambulance Inflation Factor for calendar year 2019 will be 2.3%.
Preliminary Calculation of 2019 Ambulance Inflation Update
Section 1834(l)(3)(B) of the Social Security Act mandates that the Medicare Ambulance Fee Schedule be updated each year to reflect inflation. This update is referred to as the “Ambulance Inflation Factor” or “AIF”.
The AIF is calculated by measuring the increase in the consumer price index for all urban consumers (CPI-U) for the 12-month period ending with June of the previous year. Starting in calendar year 2011, the change in the CPI-U is now reduced by a so-called “productivity adjustment”, which is equal to the 10-year moving average of changes in the economy-wide private nonfarm business multi-factor productivity index (MFP). The MFP reduction may result in a negative AIF for any calendar year. The resulting AIF is then added to the conversion factor used to calculate Medicare payments under the Ambulance Fee Schedule.
For the 12-month period ending in June 2018, the federal Bureau of Labor Statistics (BLS) has calculated that the CPI-U has increased by 2.87%.
CMS has yet to release its estimate for the MFP in calendar year 2019. However, assuming CMS’ projections for the MFP are similar to last year’s projections, the number is likely to be in the 0.5% range.
Accordingly, the AAA is currently projecting that the 2019 Ambulance Inflation Factor will be approximately 2.4%.
Cautionary Note Regarding these Estimates
Members should be advised that the BLS’ calculations of the CPI-U are preliminary, and may be subject to later adjustment. The AAA further cautions members that CMS has not officially announced the MFP for CY 2019. Therefore, it is possible that these numbers may change. The AAA will notify members once CMS issues a transmittal setting forth the official 2019 Ambulance Inflation Factor.
Summary of December 2017 Ambulance Open Door Forum
On December 14, 2017, CMS held its latest Open Door Forum. As usual, it started with a few announcements, as follows:
- Ambulance Inflation Factor – CMS announced that it had published Transmittal 3893 on October 27, 2017, which sets forth the Ambulance Inflation Factor (AIF) for calendar year 2018. In that Transmittal, CMS indicated that the CY 2018 AIF would be 1.1%. This is based on an increase in the CPI-U of 1.6%, and a multi-factor productivity adjustment of 0.5%.
- Expiration of Temporary Adjustments – CMS indicated that the current temporary adjustments for urban (2%), rural (3%) and super rural ground ambulance transports are set to expire on December 31, 2017. CMS also indicated that they were aware of proposed legislation that would extend these adjustments for 2018 and beyond, but that they have yet to be enacted into law.
- CY 2018 Public Use File – CMS indicated that the Public Use File on its website has been updated to include Medicare allowables for 2018. CMS made a point of noting that the 2018 rates do not include the temporary adjustments, as they are set to expire on December 31, 2017.
- Prior Authorization Demonstration Project – CMS indicated that it had decided to extend the Prior Authorization Demonstration Project for schedule, non-emergency ground ambulance transportation of repetitive patients for another year. The extension is limited to the 8 states (DE, MD, NJ, NC, PA, SC, VA, and WV) and the District of Columbia in which the program was in effect in 2017. CMS further indicated that the extension would be effective for dates of service on or after December 5, 2018. As a result, claims for dates of service between December 2 and December 4 would not be subject to prepayment review if a prior authorization was not received; however, ambulance providers in these states would be permitted to request prior authorization for those dates. CMS further indicated that it had developed a “streamlined” process to allow for prior authorization of transports in situations where the patient was approved for transport, but where the duration of the authorization was shortened from the normal 60-day period to account for the program’s scheduled expiration on December 1, 2017. An example would be an authorization that was granted for transports starting on November 1, 2017. The provider was likely given authorization for only a 30-day period. The streamlined process would allow them to submit a request to allow that 30-day authorization to be extended to a fully 60 days. CMS indicated that the streamlined process would not require the submission of medical records to establish medical necessity for the ambulance.
As with previous forums, CMS then fielded questions from the audience. The majority of these questions focused on the prior authorization process. As with previous ODFs, CMS declined to answer most of the questions on the call, instead asking the provider to submit their questions to CMS via email.
CMS did answer the following questions on the call:
- CMS was asked when it anticipated issuing its report on the effectiveness of the Prior Authorization Demonstration Program. CMS responded that it expected to issue that report during the first quarter of 2018.
- CMS was asked when it expected to expand the Prior Authorization Demonstration Program to additional states and/or the nation as a whole. CMS responded that it was still evaluating the effectiveness of the program. Therefore, CMS indicated that no decision on national expansion had been made at this time.
Have questions? Please write to the Werfels at bwerfel@aol.com.
CMS Announces Ambulance Inflation Update for 2018
CMS Announces Ambulance Inflation Update for 2018
On October 27, 2017, CMS issued Transmittal 3893 (Change Request 10323), which announced the Medicare Ambulance Inflation Factor (AIF) for calendar year 2018.
The AIF is calculated by measuring the increase in the consumer price index for all urban consumers (CPI-U) for the 12-month period ending with June of the previous year. Starting in calendar year 2011, the change in the CPI-U is now reduced by a so-called “productivity adjustment”, which is equal to the 10-year moving average of changes in the economy-wide private nonfarm business multi-factor productivity index (MFP). The MFP reduction may result in a negative AIF for any calendar year. The resulting AIF is then added to the conversion factor used to calculate Medicare payments under the Ambulance Fee Schedule.
For the 12-month period ending in June 2017, the federal Bureau of Labor Statistics (BLS) has calculated that the CPI-U has increased 1.6%.
In Transmittal 3893, CMS indicated the CY 2018 MFP will be 0.5%. Accordingly, CMS indicated that the Ambulance Inflation Factor for calendar year 2018 will be 1.1%.
Transmittal 3893 can be downloaded from the CMS website.
Preliminary Estimate of 2018 Medicare Rates
A Preliminary Estimate of 2018 Medicare Rates
In this blog, I will provide a preliminary estimate of the Ambulance Inflation Factor (AIF) for calendar year 2018. The AIF is main factor that determines the increase (or decrease) in Medicare’s payment for ambulance services.
Calculating the 2018 AIF
The AIF is calculated by measuring the increase in the consumer price index for all urban consumers (CPI-U) for the 12-month period ending with June of the previous year. For 2018, this means the 12-month period ending on June 30, 2017. Starting in calendar year 2011, the change in the CPI-U is reduced by a so-called “productivity adjustment”, which is equal to the 10-year moving average of changes in the economy-wide private nonfarm business multi-factor productivity index (MFP). The resulting AIF is then applied to the conversion factor used to calculate Medicare payments under the Ambulance Fee Schedule.
The formula used to calculate the change in the CPI-U is limited to positive increases. Therefore, even if the change in the CPI-U was negative over a 12-month period (a rarity in the post-war era), the change in the CPI-U cannot be negative. However, when the MFP reduction is applied, the statute does permit a negative AIF for any calendar year. That is precisely what occurred in 2016, where the change in the CPI-U was 0.1% and the MFP was 0.5%. As a result, the industry saw an overall reduction in its Medicare rates of 0.4%.
Based on current data, it is highly unlikely that the AIF will be negative in 2018. For the 12-month period ending in June 30, 2017, the Bureau of Labor Statistics (BLS) currently calculates the change in the CPI-U to be approximately 1.6%.
CMS has yet to release its estimate for the MFP in calendar year 2018. However, assuming CMS’ projections for the MFP are similar to last year’s projections, the 2018 MFP is likely to be in the 0.3% to 0.5% range.
Therefore, at this time, my best guess is that the 2018 Ambulance Inflation Factor will be a positive 1.1% to 1.3%.
Please note that this estimate assumes the Bureau of Labor Statistics does not subsequently revise its inflation estimates. Please note further that this projection is based on the MFP being similar to last year. To the extent either of these numbers changes in the coming months (up or down), my estimate of the 2018 AIF would need to be adjusted accordingly. Ultimately, the 2018 AIF will be finalized by CMS by Transmittal, which typically occurs in the early part of the 4th quarter.
Impact on the Medicare Ambulance Fee Schedule
Assuming all other factors remained the same, calculating your 2018 Medicare rates would be a relatively simple exercise, i.e., you would simply add 1.1 to 1.3% to your 2017 rates. However, as part of its 2018 Physician Fee Schedule Proposed Rule (issued July 21, 2017), CMS proposed minor changes to the GPCIs. These changes can be viewed by going to the Physician Fee Schedule page on the CMS website, and clicking the link for the “CY 2018 PFS Proposed Rule Addenda” (located in the Downloads section). You would then need to open the file for “Addendum E_Geographic Practice Cost Indicies (GPCIs).”
If the PE GPCI in your area is proposed to increase, you can expect your 2018 Medicare rates to increase by slightly more than 1.1 – 1.3%. If the PE GPCI in your area is proposed to decrease, you can expect your 2018 Medicare rates to increase by slightly less than 1.1 to 1.3%.
If you are looking for a more precise calculation of your rates, you will need to use the following formulas:
Ground Ambulance Services
Medicare Allowable = (UBR x .7 x GPCI) + (UBR x .3)
Air Ambulance Services
Medicare Allowable = (UBR x .5 x GPCI) + (UBR x .5)
In this formula, the “UBR” stands for the unadjusted base rate for each HCPCS code. These are calculated by multiplying the national conversation factor by the relative value unit assigned to each base rate. To save some time, estimates for the 2018 unadjusted base rates are reproduced below (using the low-end estimate for the AIF):
| Base Rate (HCPCS Code) | 2018 Unadjusted Base Rate |
| BLS non-Emergency (A0428) | $224.74 |
| BLS emergency (A0429) | $359.58 |
| ALS non-emergency (A0426) | $269.68 |
| ALS emergency (A0427) | $427.00 |
| ALS-2 (A0433) | $618.02 |
| Specialty Care Transport (A0434) | $730.39 |
| Paramedic Intercept (A0432) | $393.29 |
| Fixed Wing (A0430) | $3,049.69 |
| Rotary Wing (A0431) | $3,545.72 |
Plugging these UBRs into the above formulas will result in adjusted base rates for each level of ground and air ambulance service. The final step is to apply whatever temporary adjustments are in effect under the Medicare Ambulance Fee Schedule. For example, in 2017, there were adjustments in place for urban (2%), rural (3%) and super-rural (22.6% over the corresponding rural rate) transports. Note: these temporary adjustments are currently set to expire on December 31, 2017. Therefore, absent further legislation, they should not be added to the adjusted base rates for 2018.
2018 Projected Rates for Mileage:
At this time, I am estimating the following rates for Medicare mileage:
| Base Rate (HCPCS Code) | 2018 Unadjusted Base Rate |
| Ground Mileage – Urban | $7.23 |
| Ground Mileage – Rural Miles 1 – 17 | $10.84 |
| Ground Mileage – Rural Miles 18+ | $7.23 |
| Fixed Wing Mileage – Urban | $86.5 |
| Fixed Wing Mileage – Rural | $12.98 |
| Rotary Wing Mileage – Urban | $23.09 |
| Rotary Wing Mileage – Rural | $34.64 |
Please keep in mind that a number of assumptions went into these projections. The Bureau of Labor Statistics can revise its inflation figures in the coming months. CMS may announce an MFP projection that differs from what we expect. CMS may also announce that it is electing not to finalize its proposed changes to the GPCI (highly unlikely). If any of these assumptions was to change, these projections would need to be revised. Therefore, I would suggest that you view these as rough estimates at best. The AAA will update members as more information becomes available in the coming months.
Have an issue you would like to see discussed in a future Talking Medicare blog? Please write to me at bwerfel@aol.com.
CMS Announces 2017 Inflation Factor
The Centers for Medicare and Medicare Services (CMS) issued Transmittal 3625 officially announcing that the inflation factor for payments under the Medicare ambulance fee schedule for 2017 will be 0.7%.
The calculation for determining the Medicare ambulance inflation factor is as follows: Consumer Price Index – Urban (which is the change in the CPI-U from June to June) minus the non-farm business multi-factor productivity adjustment (MFP) as projected by the Secretary of HHS (10-year average). The CPI-Urban for 2017 is 1.0% with a MFP of 0.3% which equals the 0.7% inflation factor. As part of the Affordable Care Act, a productivity adjustment is subtracted from the CPI-Urban for the final inflation update.
2016 AIF: A Step Backward
By Brian S. Werfel, AAA Medicare Consultant | Updated November 25, 2015
Each year, the Centers for Medicare and Medicaid Services (CMS) determine the following year’s Ambulance Inflation Factor (AIF), a figure that has deep revenue implications for ambulance services of all sizes. CMS recently announced that the 2016 AIF will be a disappointing – 0.4%.
In this inaugural edition of the Talking Medicare blog, I explore the ins and outs of the AIF, including the impact of the Multi-Factor Productivity Index on our industry’s Medicare payments.
Background
First, some background. The Affordable Care Act revised the formula by which CMS calculates the annual adjustment to Medicare’s reimbursement rates for ambulance services. Prior to 2011, Medicare’s payment for ambulance services increased each year by an amount equal to the percentage increase in the consumer price index for all urban consumers (CPI-U) for the 12-month period ending in June of the previous year (i.e., for 2016, the 12-month period ending on June 30, 2015). Starting in 2011, the CPI-U increase is reduced by the so-called Multi-Factor Productivity Index (MFP).
What to Expect Next Year
For 2016, the change in the CPI-U was equal to 0.1%. In a transmittal issued November 17, 2015, CMS indicated that it estimates the MFP will be 0.5% next year. As a result, CMS calculated the Ambulance Inflation Factor (AIF) to be – 0.4% next year.
Yes, you read that correctly. Your Medicare reimbursement rates will decrease next year!
MFP’s Impact Over Time
The MFP represents a permanent reduction in the amounts paid by the Medicare Program for ambulance services. And, unlike other recent reimbursement hits our industry has faced, this reduction compounds itself over time.
What do I mean by that? Quite simply, I mean that the lower rates become part of the baseline against which the next year’s AIF is calculated. As a result, the gap between our industry’s costs of providing ambulance services and Medicare’s reimbursement for those services grows larger every year.
To give you a sense of the impact of MFP over time, this chart shows the payment of an ALS emergency transport in New York City over the past several years. In 2010, the Medicare allowable rate for this transport was $491.06. In 2016, the Medicare allowable rate for that same transport will be $517.02, an increase of 5.3%. However, without the MFP, the Medicare allowable would have been $544.22, or 10.8%. In other words, our Medicare increase would have been more than twice as much in the absence of the MFP.
Keep in mind that the AIF was created to ensure that Medicare reimbursement keeps pace with the increased costs of providing ambulance services to your community. By that yardstick, the current process for calculating the Ambulance Inflation Factor is clearly inadequate.
One of the key issues facing our industry is our ongoing fight for permanent Medicare ambulance relief. The recent AIF simply highlights the need for a better method of ensuring that Medicare’s payments keep pace with our costs.
Have an issue you would like to see discussed in a future blog post? Please write to bwerfel@aol.com.
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Preliminary Calculation of 2016 Ambulance Inflation Update
Section 1834(l)(3)(B) of the Social Security Act mandates that the Medicare Ambulance Fee Schedule be updated each year to reflect inflation. This update is referred to as the “Ambulance Inflation Factor” or “AIF”.
The AIF is calculated by measuring the increase in the consumer price index for all urban consumers (CPI-U) for the 12-month period ending with June of the previous year. Starting in calendar year 2011, the change in the CPI-U is now reduced by a so-called “productivity adjustment”, which is equal to the 10-year moving average of changes in the economy-wide private nonfarm business multi-factor productivity index (MFP). The MFP reduction may result in a negative AIF for any calendar year. The resulting AIF is then added to the conversion factor used to calculate Medicare payments under the Ambulance Fee Schedule.
For the 12-month period ending in June 2015, the federal Bureau of Labor Statistics (BLS) has calculated that the CPI-U has increased by 0.12%.
CMS has yet to release its estimate for the MFP in calendar year 2016. However, assuming CMS’ projections for the MFP are similar to last year’s projections, the number is likely to be in the 0.6% range.
Accordingly, the AAA is currently projecting that the 2016 Ambulance Inflation Factor will be approximately ~0.5%.
Members should be advised that the BLS’ calculations of the CPI-U are preliminary, and may be subject to later adjustment. The AAA further cautions members that CMS has not officially announced the MFP for CY 2016. Therefore, it is possible that these numbers may change. However, at this point in time, it appears likely that the 2016 AIF will result in a decrease in Medicare payments for air and ground ambulance services.
The AAA will notify members once CMS issues a transmittal setting forth the official 2016 Ambulance Inflation Factor.