CMS Releases AIF and PUF for Calendar Year 2019
AIF Announced
The Centers for Medicare and Medicaid Services (CMS) issued Transmitttal 4172 (Change Request 11031) on November 30th to announce the Ambulance Inflation Factor (AIF) for Calendar Year 2019 (CY 2019). The ambulance industry will benefit from a positive gain again this year with the factor sifting out to be the highest it has been in a few years and over double last year’s 1.1% boost.
Let’s take a look at how the AIF is calculated.
CPI-U – MFP = AIF
Two factors are put together to come up with the annual adjustment.
The first element contributing to the calculations is the Consumer Price Index for all urban consumers (CPI-U) for the 12-month period ending with June of the previous year. Once that value is recorded then a productivity adjustment equal to the 10-year moving average of changes in economy-wide private non-farm business multi-factor productivity beginning January 1, 2011 is subtracted as an adjustment.
CPI-U – MFP = AIF
The end-product of this formula combining those two factors is the percentage that is referred to as the AIF as represented by the formula displayed above.
The CPI-U for 2019 has been calculated at 2.9% while the MFP is checking in at 0.6%. The result is an AIF that checks in at 2.3% in the new year.
2.9% – 0.6% = 2.3%
We’ll help by breaking down the calculations below.
CPI-U
The CPI-U or the Consumer Price Index for all urban consumers is the statistical metric developed by the Bureau of Labor Statistics used to monitor the change in the price of a set list of products. Simply, it is an inflation pseudo-tracking device. While not directly measuring inflation, the value gives the Federal Government a good idea of whether the nation is in a period of inflation or deflation and predicts how severe that change may be.
By monitoring the fluctuations in price it costs a consumer to purchase a set basket of goods, the government then uses those numbers to track the cost of living for person living in those statistically geographical areas. Urban consumers represent approximately 80% of the population in the United States.
Over 200 categories of goods and services purchased for consumption by the population studied are included in the calculations and those 200 categories are arranged into eight major groups that include: Food and Beverages, Housing, Apparel, Transportation, Medical Care, Recreation, Education and Communication and a category called Other Goods and Services (tobacco and smoking products, personal care products and services such as hair care, funeral expenses, etc.)
MFP
The MFP or the Multifactor Productivity adjustment measures changes in output per unit of combined inputs.
Indices of MFP are produced in the United States for private business, private non-farm business and manufacturing sectors of the economy. The AIF calculation uses the MFP for private non-farm business.
Multifactor productivity measures reflect output per unit of some combined sets of inputs. Multifactor productivity measures reflect the joint effects of many variables including new technologies, economies of scale, managerial skills and changes in the organization of production. In other words, the government is suggesting that while they recognize the result of inflation on the ambulance industry, they also believe that we tend to become smarter and work more efficiently over time, which offsets inflationary impact. In their wisdom, the supposition is that we do not need as many extra dollars as inflation may indicate to balance the books because we have more efficiency building into our systems.
Public Use File Released
On the heels of releasing the AIF, CMS has already released the Public Use File (PUF). The file contains the amounts allowed by the Medicare ambulance fee schedule in CY 2019 for all ambulance base rate services levels plus mileage. This is good news, as many EMS agency billing administrators prefer to preload expected payment levels into their systems to reflect the new payment approvals.
Last year, while the PUF was released, it was not complete as the industry awaited the results of legislation to extend the payment add-ons.
More is More
While we all long for the days of yearly increases equal to much more in times of yesteryear, we’re happy to report this increase. More is more. Additional dollars is always a good thing, especially when for many EMS agencies Medicare accounts for at least half or more of the percentage of reimbursement dollars that flow in to support individual EMS systems.
