Medicare Payment Adjustments Announced for 2024
By Chuck Humphrey, B.A., EMT-B, CAC, CACO, CADS*
Good News!
I love to begin a blog post about Medicare with “Good News”!
While not yet formally published, CMS has announced that the “add-on” payment adjustments to the national Ambulance Medicare Fee Schedule have been carried over for yet another year through calendar year 2024.
What this means is for ambulance transports that original in urban-designated zip codes, an additional 2% will be added to the Medicare reimbursement. For transport originated in rural-designated zip codes, an additional 3% reimbursement amount will be added and for transports originated in the most rural areas of the United States, designated by the term super-rural, an additional 22.6% will be added.
Along with these additional payments, also comes an extra 50% mileage payment increase per mile on rural and super-rural transports when the Medicare Administrative Contractors pay for the first seventeen miles of each transport.
As Inflation Cools, so does the AIF
2023 afforded ambulance services an over 8% AIF, tied largely to red hot inflation. But as inflation cools so does the Ambulance Inflation Factor (AIF).
The Centers for Medicare and Medicaid Services has announced that the Ambulance Inflation Factor (AIF) for 2024 will be 2.6%. The increase will be applied to the national Medicare Ambulance Fee Schedule with payments made on claims with a date of service of January 1, 2024, and after.
Two factors…
Let’s take a look at how the AIF is calculated.
Two factors are combined to arrive at the annual ambulance adjustment factor. 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’s June 2022 was the cutoff). Once that value is calculated, then the productivity adjustment is configured, this is equal to the 10-year moving average of changes in the economy-wide private non-farm business Total Factor Productivity (TFP), and begins January 1, 2014 and is subtracted as an adjustment.
Those of you who have followed our annual blog on this topic will take note that the TFP replaces the Multifactor Productivity (MFP). There is no change in the calculation, it simply is a change in the factor’s label.
And so, the resulting calculation is represented by the following formula:
CPI-U – TFP = AIF
What does CPI-U Mean?
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 and predicts the severity of any pending inflation or deflation.
Using a cross-section of 8 major groups across 200 different types of goods, government statisticians pull the data to arrive at the CPI-U factor. The 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 (ie. Tobacco and smoking products, personal care items and services such as funerals expenses etc.)
The monitoring of the fluctuations in the prices urban residents pay to purchase certain sets of “basket” goods ensures that the government can effectively follow the cost of living for those persons residing in the sample statistical areas.
Of course, remember that approximately 80% of the population of the United States resides in an urban setting. So, this particular data set is a very useful tool.
Total Factor Productivity Defined
The TFP or Total Factor Productivity adjustment is the calculation measuring changes in economic output per unit of combined units.
Indices of TFP adjustments are pulled within the United States based on private non-farm business and manufacturing sectors of the economy.
TFP measurements reflect the joint effects of many variables including the effect on the economic efficiently from things like new technologies, economies of scale, managerial skill ratchet, plus changes in organizational factors surrounding production. What this means is the government is tempering any notion of rising costs by our ability to work smarter and more efficiently over time which they believe offsets the impact of inflation .
The end decision since the TFP was added to the AIF formula, is for the government to determine that the ambulance industry does not require a full inflationary boost because our own efficiency offsets the impact of inflation.
The Formula for 2024
For the 12-month period ending in June 2022, the federal Bureau of Labor Statistics has calculated the CPI-U at 3.0%.
the TFP has remained fairly steady over the past few years and lands at 0.4%.
The formula is…
CPI-U 3.0% – MFP 0.4% = AIF 2.6%
What Comes Next?
Now that the AIF is final, the ambulance industry awaits the application to the final National Medicare Ambulance Fee Schedule for 2024. The fee schedule is annually released by CMS using the Public Use File (PUF).
The 2.6% increase may not mean a direct 2.6% dollar increase for next year’s ambulance payments from Medicare. Final fee schedule values will not be known until the AIF is applied while factoring in the other elements of the fee schedule calculation including Relative Value Units (RVUs) which remain constant and the potential for Geographic Practice Cost Indices changes (GPCIs), where regional adjustments are implemented in the final fee schedule calculation.
Of course, we all are anxiously awaiting the results of the Ground Ambulance Data Collection System (GADCS) results to be published and review by Congress in their quest to once and for all decide on what, if any, tweaks will be made to the ambulance fee schedule. In theory, the hope of the industry is that Congress will gain a key insight into the costs of providing EMS, nationwide, adjust the fee schedule appropriately and rid the need – or indefinitely extend – the add-on payments.
By either fixing or making add-on payments, even possibly increasing the add-ons as advocated by the American Ambulance Association, would negate the annual finger-nail-biting process we all go through until we collectively learn that the add-on payments have been extended again and again and again!
*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 active EMT credentials in Pennsylvania, he is also a Certified Ambulance Coder, Certified Ambulance Compliance Officer, and Certified Ambulance Documentation Specialist via the National Academy of Ambulance Compliance. Humphrey is a periodic guest contributor to the QMC blog and podcast space.
