CMS Publishes Final Rule on Fractional Mileage

On November 29, 2010, the Centers for Medicare and Medicaid Services (CMS) published in the Federal Register the official Final Rule that will implement changes to many Medicare Part B payment policies, including the Ambulance Fee Schedule (AFS).   The published version of the Final Rule mirrors the advance copy obtained by PWW on November 2nd.  

CLICK HERE to review the ambulance-specific excerpts of this Final Rule.  The full regulation is hundreds of pages.  We have included the ambulance-only excerpts.

CLICK HERE to review the new CMS Transmittal with instructions to carriers/MACs on processing the new changes.
CLICK HERE to review CMS's MLN Matters article on the new fractional mileage requirement.
Significantly, this Final Rule announces that CMS will require ambulance services to report loaded mileage to the nearest tenth of a mile for all Medicare claims with mileage totaling up to 100 miles as of January 1, 2011. In addition, the Rule also comments about the reprocessing of claims that are subject to the urban, rural and super rural bonuses. The Rule also implements the new “productivity adjustment” from the Healthcare Reform Bill, effectively reducing future AFS reimbursement rates, and mandates new enrollment requirements primarily for air ambulance services.
The provisions affecting ambulance services are buried in a lengthy Final Rule entitled “Payment Polices Under the Physician Fee Schedule and Other Revisions to Part B for CY 2011.”   

The Final Rule is open for comment until January 3, 2011.  CLICK HERE for instructions for submitting comments to CMS regarding the Final Rule.
However, we do not expect CMS to change its stance regarding the ambulance provisions. This means that all ambulance services should be preparing to comply with CMS’s new fractional mileage policy in the upcoming weeks. 
Summary of the Final Rule
Reporting Fractional Mileage
For all Medicare claims with dates of service on and after January 1, 2011, CMS states that ambulance services will be required to report mileage to the nearest tenth of a mile. The policy will apply to all claims with mileage up to 100 loaded miles. For example, if a Medicare patient was in the ambulance for 10.1 miles, the ambulance service would report 10.1 miles on the claim form, instead of rounding up to 11 miles (as CMS had previously instructed providers to do). CMS also states that ambulance services that track hundredths of miles should always round up the hundredths place. So, for example, if the tracked mileage was 1.43 miles, the provider would bill 1.5 miles. 
All Medicare claims with mileage over 100 loaded miles will continue to be rounded up to the nearest whole number. For example, if the patient was in the ambulance for 100.3 miles, the ambulance service would report 101 miles on the claim form, as it had previously done. The new policy applies to both ground and air ambulance mileage and to both paper and electronic claims. 
In the past CMS instructed ambulance services to round up mileage to the next whole mile (See, Change Request 1281, Transmittal AB-00-88, issued on September 18, 2000), because the claims processing system lacked the capability to process fractional mileage. The Final Rule states that that CMS’s system has now evolved to a point where rounding is no longer necessary. CMS also claims that the new policy will allow providers to more accurately report mileage and they believe that most providers have the capability to track mileage to the nearest tenth of a mile through odometers or GPS equipment. 
CMS maintains that while the “basic digital odometer” in some ambulance models does not have record tenths, the “trip odometer” generally does. So, CMS clarifies that mileage may be measured using the “trip odometer” as well. With respect to providers that, for whatever reason, cannot currently track tenths of a mile, CMS states that they “believe that tools used to measure distance traveled (such as GPS navigation equipment) are readily available to the average consumer at a low cost.” According to CMS, such providers are “responsible for ensuring that they have the necessary equipment to measure fractional mileage to the tenth of a mile, and ensuring that onboard vehicle gauges measuring trip mileage are in working order.” Hence, CMS is now placing the burden on all ambulance services to obtain, and maintain in working order, equipment to track fractional mileage. Such equipment includes, but is not limited to: digital or analog odometers, trip odometers, GPS navigation, onboard trip computers or navigation systems. 
CMS received 131 comments on this proposed policy change from all types of organizations in the ambulance industry. However, despite legitimate concerns raised by Page, Wolfberg & Wirth and others, CMS has decided to proceed in implementing the new policy without change. CMS will be revising instructions in its Claims Processing Manual to reflect the revised billing procedures. Notwithstanding, providers must comply by January 1, 2011. The only exception is for institutional providers that utilize paper Form UB-04. CMS is delaying the implementation date of this new policy for such providers until August 1, 2011 since the current form does not accommodate fractional unit amounts.
The “Productivity” Adjustment
The annual Medicare reimbursement update in the Ambulance Fee Schedule (AFS) will now be decreased by the “multifactor productivity” (MFP) adjustment, a/k/a, the “productivity adjustment,” as a result of the Healthcare Reform Bill. This adjustment will be applied to the AFS for calendar year 2011 and every year thereafter and will have the effect of decreasing reimbursement adjustments to the AFS. 
According to Congress, the MFP adjustment is supposed to take into account “efficiencies” that are supposedly realized by providers through things like new technologies and economies of scale. In other words, Congress believes that providers and suppliers will become more efficient as they continue to operate (and therefore require less Medicare reimbursement to run their operations).  The MFP Adjustment is meant to account for such efficiencies and now the AFS update amount will be decreased by the “productivity” adjustment.   This will have a net negative effect on reimbursement updates, and it could result in decreases in reimbursement rates from one year to the next. 
Here’s how it would work. CMS annually publishes the AFS rates, based upon the “Ambulance Inflation Factor” (AIF). The AIF is a figure that is updated by the percentage yearly “increase” in the consumer price index for all urban consumers (CPI-Urban). Currently, the AFS rates are annually increased by the AIF amount and Medicare reimbursement rates can never decrease from year to year (although they could stay the same if the CPI-U is zero or a negative number). 
Beginning in 2011, the AIF will be “reduced” by the MFP adjustment figure. If that figure is greater than the AIF, then reimbursement rates could actuallydecrease from the previous year.  Here is an example from the Final Rule illustrating how the Application of the MFP adjustment would work:
Adjustment to the Ambulance Fee Schedule
Bonus Payments
CMS is also revising pertinent Medicare regulations to include language regarding the retroactive bonus payments implemented under the Healthcare Reform Bill.  The Healthcare Reform Bill extended the increased fee schedule amounts from the Medicare Improvements for Patients and Providers Act (MIPPA) until December 31, 2010.  The regulations will now provide that ambulance services originating in urban areas are to be paid on a rate that is 2% higher than the established AFS amount, and ambulance services originating in rural areas must be paid on a rate that is 3% higher than established AFS through December 31, 2010.  The Final Rule also includes the 22.6% adjustment for ground ambulance services with "super-rural" points of pick up.
These increased payments were made retroactive to January 1, 2010 and CMS states that it is “currently developing the best course of action for addressing past claims that were processed under the [pre-Healthcare Reform Bill rates].” CMS maintains that the volume of claims that must be adjusted is “unprecedented” and they will provide instructions to contractors once a process has been developed. Page, Wolfberg & Wirth will send an alert as soon as we have further information regarding the reprocessing of these claims. In the meantime, we believe that best advice is to refrain from resubmitting, reprocessing or appealing these claims. 
Finally, the Final Rule revises the regulations to state that any area designated as rural as of December 31, 2006 for air ambulance services will continue to be treated as rural until December 31, 2010.
Enrollment Requirements
CMS is also implementing two changes for enrolling and maintaining active enrollment status in the Medicare program that are primarily intended for air ambulance services.    
First, CMS is adding a requirement that all ambulance services provide “certifications including, but not limited to, Federal Aviation Administration and Clinical Laboratory Improvement Act certifications” when enrolling with the Medicare program. Currently, all ambulance services are required to provide all documentation, including applicable federal and state licenses that are related to providing health care services when applying for enrollment. The Rule now expressly requires all ambulance services to furnish to CMS any state or federal “certifications” that they are required to have in order to provide health care services. Most providers already provide such “certifications” to Medicare. However, air providers are not expressly required to include FAA and CLIA certifications with their enrollment applications.   
Secondly, CMS is requiring that all air ambulance suppliers notify their Medicare contractor of any revocation or suspension of a federal or state license or certification, including FAA and CLIA certifications.  Air ambulance suppliers have to do this as a condition of maintaining active enrollment status in the Medicare program. 
Stay tuned to for more information.