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P\ / S. Hrg. 103-227 ^' AMBULANCE COSTS UNDER MEDICARE ^^^^^^^^^^ Y 4, AP 6/2: S, HRG. 103-227 [ I Anbulance Costs Under fledicarei S.H... HEARING BEFORE A SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE ONE HUNDRED THIRD CONGRESS SECOND SESSION SPECIAL HEARING Printed for the use of the Committee on Appropriations •i-»t.1:I t^-, JUL f 8 199i U.S. GOVERNMENT PRINTmG OFFICE 88-269cc WASHINGTON : 1995 ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments,CongressionalSalesOffice,Washington.DC 20407 ISBN 0-16-047055-2 .N\ / S. Hrg. 103-227 AMBULANCE COSTS UNDER MEDICARE Y 4. AP 6/2: S, HRG. 103-227 Anbulance Costs Under Kedicarei S.H... HEARING BEFORE A SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE ONE HUNDRED THIRD CONGRESS SECOND SESSION SPECIAL HEARING Printed for the use of the Committee on Appropriations --'';< lit n M J mb 8 1 :«^l\;fS J U.S. GOVERNMENT PRINTING OFFICE 88-269cc WASHINGTON : 1995 ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments,CongressionalSalesOffice,Washington.DC 2040? ISBN 0-16-047055-2 COMMITTEE ON APPROPRIATIONS ROBERT C BYRD, West Virginia, Chairman DANIEL K. INOUYE, Hawaii MARK 0. HATFIELD, Oregon ERNEST F. ROLLINGS, South Carolina TED STEVENS, Alaska J. BENNETT JOHNSTON, Louisiana THAD COCHRAN, Mississippi PATRICKJ. LEAHY, Vermont ALFONSE M. D'AMATO, New York JIM SASSER, Tennessee ARLEN SPECTER, Pennsylvania DENNIS DeCONCINI, Arizona PETE V. DOMENICI, New Mexico DALE BUMPERS, Arkansas DON NICKLES, Oklahoma FRANK R. LAUTENBERG, New Jersey PHIL GRAMM, Texas TOM HARKIN, Iowa CHRISTOPHER S. BOND, Missouri BARBARA A. MIKULSKI, Maryland SLADE GORTON, Washington HARRY REID, Nevada MITCH McCONNELL, Kentucky J. ROBERT KERREY, Nebraska CONNIE MACK, Florida HERB KOHL, Wisconsin CONRAD BURNS, Montana PATTY MURRAY, Washington DLySTNE FEINSTEIN, California James H. English, StaffDirector Mary S. Dewald, ChiefClerk J. Keith Kennedy, Minority StaffDirector Subcommittee on Departments of Labor, Health and Human Services, and Education, and Related Agencies TOM HARKIN, Iowa, Chairman ROBERT C. BYRD, West Virginia ARLEN SPECTER, Pennsylvania ERNEST F. ROLLINGS, South CaroUna MARK 0. HATFIELD, Oregon DANIEL K. INOUYE, Hawaii TED STEVENS, Alaska DALE BUMPERS, Arkansas THAD COCHRAN, Mississippi HARRY REID, Nevada SLADE GORTON, Washington HERB KOHL, Wisconsin CONNIE MACK, Florida PATTY MURRAY, Washington CHRISTOPHER S. BOND, Missouri Majority Professional Staff Ed Long, James J. SouRwiNE, Carol C. Mitchell, and Susan McGovern Minority Professional Staff CCi-i Craig A. Higgins and Bettilou Taylor Administrative Support Gladys Clearwaters (II) CONTENTS Page Openingremarks ofSenatorTom Harkin 1 Statement of Hon. June Gibbs Brown, Inspector General, Department of Health andHuman Services 4 Prepared statement 8 ALS pajTnents 12 Statement of Hon. Kathleen A. Buto, Associate Administrator for Policy, Health CareFinancingAdministation 13 Prepared statement 18 ALS services 21 StatementofMartin Yenawine, president,AmericanAmbulanceAssociation .. 35 Prepared statement 38 (III) 1 AMBULANCE COSTS UNDER MEDICARE FRroAY, DECEMBER 16, 1994 U.S. Senate, Subcommittee on Labor, Health and Human Services, Education, and Related Agencies, Committee on Appropriations, Washington, DC. The subcommittee met at 9:30 a.m., in room SD-192, Dirksen Senate Office Building, Hon. Tom Harkin (chairman) presiding. Present: Senator Harkin. DEPARTMENT OF HEALTH AND HUMAN SERVICES Office of Inspector General statement ofhon.june gibbsbrown, inspectorgeneral accompanied by george grob, deputy inspector general FORevaluationAND INSPECTION Health Care Financing Administration statement of kathleen a. buto, associate administrator forpoucy opening remarks of senator tom harkin Senator Harkin. The appropriations Subcommittee on Labor, Health and Human Services, and Education, and Related Agencies, will come to order. This morning's hearing continues the subcommittee's longstanding efforts to reduce waste and abuse in programs within its oversight responsibilities. Our first panel will be the Honorable June Gibbs Brown, Insp—ec- tor General, U.S. Department of Health and Hum—an Services if you would like to come to the table, Ms. Brown and Kathleen Buto, the Associate Administrator for Policy for the Health Care Financing Administration. This will be our first panel, and the second panel will be Martin Yenawine, president ofthe American Am- bulance Association. Since I took over chairmanship ofthis subcommittee in 1989, we have identified a wide range of wasteful and abusive spending practices throughout the Departments of Labor, Health and Human Services, and Education. And I am pleased to say that we have had some success in saving taxpayers' money where waste was exposed. For example, we cracked down on student loan de- faulters, saving millions of dollars and allowing more middle-class students a chance at an affordable college education. We have (1) stopped the outrage of convicted felons continuing to receive Fed- eral workman's compensation payments while being supported by taxpayers in iail. We have made it more difficult for abusers who have been debarred from participation in Federal grant programs from getting other Federal contracts. We have ended the wasteful practice of Medicare paying for alcohol and lobbying expenses of health corporations. Some 17 wasteful or no longer necessary programs under ourjurisdiction have been eliminated, and there have been reductions in absurdly high Medicare payments for trans- cutaneous electrical nerve stimulator [TENS] units, seat-lift chairs, bodyjackets, intraocular lenses, and other items. This morning's hearing will focus on a critical component of our health care system, ambulance services. Quality ambulance services are an essential component ofgood health care. They can mean the difference between life and death. Coming from a largely rural State like Iowa where many people live long distances from hospitals, I am especially aware of the need for quality ambulance services. In Iowa and around the Nation, we have thousands of dedicated professionals and community volunteers providing these needed services night and day in an honest and very high quality manner. We have a lot of charts here this morning. It may appear to be a battle ofthe charts, but I think they are all complementary. As the chart to my far right indicates, starting with "Total ambulance costs under Medicare part B," we see that they have sky- rocketed just in the past 6 years. Ambulance claims for Medicare beneficiaries have more than tripled, from $566 million in 1988 to an estimated $1.7 billion this year. That is an average rate of growth of 33 percent a year. Now, while some of this may have been needed to provide access to emergency care in underserved areas, I just cannot believe that anything warrants that kind of a growth rate of33 percent per year. Simply put, the American taxpayer is being taken for a very expensive ride. They will lose over $500 million to waste and abuse in the next 5 years unless corrective action is taken and taken soon. There are a number of factors contributing to this huge loss. First, Medicare rules condone, even encourage ambulance companies billing for more expensive ambulance services than are needed. Medicare pays nearly twice as much for advanced life support, ALS, ambulance trips as they do for trips by basic life support, BLS. Medicare often pays the ALS rate even if the person did not need it. The level of service provided seldom enters into the Gov- ernment's decision about how much to pay. Again, I want to compliment and congratulate the inspector general's office for doing a great job in this. This blatantly wasteful practice was first identified in October 1992 by the inspector general and the Health Care Financing Administration has yet to stop it, and it has been 2 years. Another major contributor to the waste in Medicare ambulance payments is the great number ofunnecessary trips provided by ambulance services. I am sure that the inspector general will talk about that. Medicare's basic method of payment for ambulance services also contributes to significant waste, and we are going to have to get to that. As the second chart over there shows. Medicare payments to different ambulance companies for the same trip, the same exact trip, varies from $130 to $183, one of them 40 percent more than the other. Again, Medicare just pays the bill, no incen- tive to economize. It should be noted that the average taxpayers are not the only ones getting taken for a ride. Senior citizens and the disabled are being ripped off in two ways. First, the monthly Medicare part B premiums paid by those on Medicare are being increased due to skyrocketing ambulance costs. Second, those on Medicare using ambulance services have to pay 20 percent ofthe cost ofevery trip. So for many, their cost, if not covered by private supplemental in- surance, can be in the thousands of dollars. So, I look forward to hearing from our distinguished panelists, June Gibbs Brown, Health and Human Services Inspector General, and Kathleen Buto, the Associate Administrator for Policy at HCFA. As I said, their testimony will be followed by Martin Yenawine, president ofthe American Ambulance Association. There are some simple changes that can be made. We have got to make them. We cannot continue to put this off. I will be inter- ested in trying to find out from the Health Care Financing Admin- istration why, when this was identified 2 years ago, nothing has been done yet. I would like to first begin with Inspector General Brown. We wel- come you back to the subcommittee. Again, I appreciate the fine work that you are doing down there. Your statement will be made a part ofthe record in its entirety and please proceed as you so de- sire. Totalambulancecosts undermedicarepartB Millions 1988 $566 1989 689 1990 880 1991 1,159 1992 1,336 1993 1,522 1994 (estimate) 1,700 Medicarepayments to differentambulance companiesforsame trip CompAany: Costperride $130 B 150 C 183 — Change inannualMedicaresavingsfrom ambulanceservices Health and Human ServicesInspector Generalestimates OverpaymentsforALS/BLS: MiUions Old estimate (1989) $15.9 New estimate (1993) 47.1 Overpayments fordialysis transports: Old estimate (1991) 44.0 Newestimate (1993) 65.7 — FiveyearpotentialMedicare savingsfrom ambulanceservices projectionsfrom Health andHuman Services Inspector Generalestimates Millions Overpayments forALS/BLS $235.5 Overpayments for dialysis transports 328.5 Total overpayments 564.0 SUMMARY STATEMENT OF HON. JUNE GIBBS BROWN Ms. Brown. Good morning, Mr. Chairman. I am June Gibbs Brown, Inspector General for the Department of Health and Human Services, and with me today is George Grob, Deputy In- spector General for evaluation and inspection. I am pleased to be here to discuss the Medicare payments for ambulance services. We believe that Medicare needs to revise its payment practices to better ensure that payment is made only for services which are medically necessary. These reforms are especially needed for ambulance transports provided to end stage renal disease beneficiaries. Most ambulance benefits are covered under Medicare part B and have very strict limits. Ambulance transport must be reasonable and medically necessary. No payments may be made in any case in which some means of transportation other than an ambulance could be utilized without endangering the individual's health whether or not such other transportation is actually available. Gen- erally ambulance transport is covered for patients whose condition requires emergency medical attention or whose condition makes it impossible to sit and it requires transfer by stretcher. Total Medicare carrier allowances for ambulance transportation under Medicare part B were $1.52 billion in 1993 on behalf of over 3 million beneficiaries. Our work on ambulance payments leads us to two conclusions. First, many payments for ambulance transports taking Medicare beneficiaries to and from dialysis violate Medicare guidelines and should never have been made. Second, Medicare has a problem in the way it reimburses for ambulance transports, not just for dialysis patients, but all Medicare beneficiaries. As a result it pays too much. Let me talk about each of these in turn, first on dialysis transport. In 1991 Medicare part B covered medical services for over 190,000 end stage renal disease, or [ESRD], beneficiaries. In general, ESRD beneficiaries obtain their dialysis treatments three times a week, often for many years, at hospital-based or freestanding dialysis facilities. These dialysis treatments are scheduled in advance for particular times and days. ESRD beneficiaries sometimes use ambulances not only for medical emergencies and transport to hospitals, as any other Medicare beneficiary, but also for transportation to hospital-based dialysis facilities and approved freestanding facilities. When ESRD beneficiaries are regularly transported to dialysis by ambulance, costs can mount quickly. The most recent data available shows that in 1988 Medicare car- riers allowed $36 million for ESRD ambulance transportation. By