On Jan. 4, 2016, CMS implemented and furnished (in CR 9412 (PDF, 60 KB)) the calendar year (CY) 2016 ambulance inflation factor (AIF) for determining the payment limit by Medicare in a CY for ambulance services required by Section 1834(l)(3)(B) of the Social Security Act (the Act). It also clarifies the “Medicare Claims Processing Manual”, Chapter 15 (Ambulance), Section 20.3 (Air Ambulance) and updates Section 20.4 (Ambulance Inflation Factor [AIF]). For CY 2106, the AIF is -.04%. You will find these updated Manual chapters as an attachment to CR 9412 (PDF, 60 KB).

As discussed in CR 9412 (PDF, 60 KB), the following items help explain how the AIF for CY 2016 was determined.

  • Section 1834(l)(3)(B) of the Act provides the basis for an update to the payment limits for ambulance services that is equal to the percentage increase in the consumer price index for all urban consumers (CPI-U) for the 12-month period ending with June of the previous year. Section 3401 of the Affordable Care Act amended Section 1834(l)(3) of the Act to apply a productivity adjustment to this update equal to the 10-year moving average of changes in economy-wide private nonfarm business multi-factor productivity beginning Jan. 1, 2011. The resulting update percentage is referred to as the AIF.

  • Section 3401 of the Affordable Care Act requires that specific Prospective Payment System and Fee Schedule update factors be adjusted by changes in economy-wide productivity. The statute defines the productivity adjustment to be equal to the 10-year moving average of changes in annual economy-wide private nonfarm business multi-factor productivity (MFP).as projected by the Secretary of Health and Human Services for the 10-year period ending with the applicable fiscal year, cost reporting period, or other annual period.

  • Multi-factor productivity for calendar year (CY) 2016 is 0.5% and the CPI-U for 2016 is 0.1%. According to the Affordable Care Act, the CPI-U is reduced by the MFP, even if this reduction results in a negative AIF update. Therefore, the AIF for CY 2016 is -0.4%.

  • Part B coinsurance and deductible requirements apply to payments under the ambulance fee schedule. The 2016 ambulance fee schedule file became available in November 2015. It may be retrieved at any time and will reside indefinitely for your access. It may be updated with each quarterly Common Working File (CWF) update.

The following section from the CY16 Physician Fee Schedule covers the ambulance fee schedule for CY 2016.

Ambulance Fee Schedule¹

CMS continues to recognize the urban and rural boundaries based on the population migration that occurred over a 10-year period, between 2000 and 2010. In addition, none of the super rural areas will lose their status based on CMS’s continued implementation of the revised Office of Management and Budget (OMB) delineations and updated RUCA codes. CMS estimates that their continued implementation of the revised OMB delineations and updated RUCA codes for CY 2016 and subsequent CYs will result in a minimal fiscal impact on the Medicare program as compared to CY 2015. They also estimate that their continued implementation of these geographical delineations will result in a minimal impact on ambulance providers and suppliers as compared to CY 2015, because they will be continuing implementation of the same revised OMB delineations and updated RUCA codes that were in effect in CY 2015.  They do note that there may be minimal impacts due to change in zip codes based on updates by the USPS that CMS receives every two months. For more information on the impact of these changes, Table 23 of the rule sets forth an analysis of the number of ZIP codes that changed urban/rural status in each U.S. state and territory after CY 2014.

For an overview of and link to CR 9412 and the AIF for CY 2016 and productivity adjustment, please see Medicare Learning Network (MLN) Matters® article MM9412 (PDF, 59 KB).

¹ Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2016; Final Rule. Nov. 16, 2015. 42 CFR Part 405, 410, 411, et al. Page 71361.