Each year, millions of ambulance trips are billed to Medicare and other health insurance organizations by fire departments across the country. While specialized employees might process the ems claims in larger departments, a clerk may process ems claims as an ancillary duty in smaller organizations.

However, regardless of the size of the organization, the requirements for all departments are the same: You must bill in strict accordance with the myriad complex requirements from various agencies, most notably Medicare. Failure to process your ems claims in accordance with these regulations leaves your department open to charges of fraud, payment of significant penalties and reimbursement of collected monies.

Health care is currently the largest expenditure in the federal budget. The sheer number of claims processed each year by a vast array of providers makes the health-care field ripe for fraud. Current estimates have placed the annual cost of health-care fraud to the U.S. government alone at more than $100 billion. Given both the sheer size of the total health-care expenditure and the extreme estimates of fraud, the government has stepped up its fraud investigations of providers of all types.

In mid-May, the Justice Department announced that hospital giant Columbia/HCA had agreed to pay a record $745 million fine for systematically defrauding the Medicare program over a several-year period. While it's unlikely that a fire department or private ambulance provider would ever be faced with such a significant penalty, it clearly shows that the government is serious about investigating and eliminating fraud.

In most cases involving Medicare or insurance fraud charges filed against a fire department, the problem is traced mainly to errors in the billing process. What departments often fail to realize is that honest mistakes and ignorance of current regulations don't provide a valid defense against prosecution.

Therefore, to protect against possible fraud investigations, fire department managers need to understand the current regulations, as well as the common errors that are encountered when billing for ambulance transport services. The most common errors come from:

fee schedules,

coding and

internal procedures.

Fee schedule errors. These relate to problems with the structure or adoption of the ambulance fee schedule. The most common fee schedule errors made by fire departments are in adoption, choosing a billing method and billing for inappropriate charges.

In nearly all fire departments, every fee schedule or charge must be formally adopted by the governing body, whether it's the board of directors of a fire district or the city council of a municipal department. However, in many areas of the country the local ems agency or county government handles the establishment of the ambulance fee schedule.

While there's nothing wrong with this regional approach, if the governing body of the fire department doesn't formally adopt the ems agency or county fee schedule, then it wouldn't be in compliance with their own charter or requirements. In the event that a patient challenges the validity of an ambulance bill, the fact that the fee schedule wasn't formally adopted could cause the bill to be nullified and the charges refunded.

Billing methods are another problem. Medicare carriers currently require each provider to bill for services using only one of four methods. If your fee schedule is fully itemized and you're limited by your carrier, or if you chose at one time to bill by the method that allows only a base rate and mileage, then you can't bill for disposable supplies, medications or other itemized charges.

Unless your base rate was established with the expectation that the itemized charges were bundled into it, then you won't be able to maximize your reimbursement from Medicare. If you bill for itemized supplies in spite of your previous choice or carrier direction, you most likely will be charged with violating Medicare regulations. If you have any doubt as to which method you're supposed to be using, you need to call your Medicare carrier before you propose any changes to your fee schedule.

This leads us to inappropriate charges. Medicare regulations require that all ambulance providers bundle routine and reusable supplies into the base rate. Items such as backboards, linens and disposable gloves are all considered by Medicare to be part of the base rate charge. If your department charges a separate fee for these services, you are violating Medicare regulations.

Additionally, in 1995 Medicare eliminated the once-common practice of a separate reimbursement for responses after 7 p.m., bundling payment for these services into the base rate. Once the change became effective, any department continuing to bill Medicare patients for a separate night charge would be in violation of regulations.

Coding errors. Medicare and the private insurance companies reimburse for ambulance transportation services only when the transport is determined to be "medically necessary." The Medicare Carrier Manual states that "medical necessity is established when the patient's condition, at the time of transport, is such that the use of any other method of transportation is contraindicated."

In an effort to automate the billing process and make it easier for them to determine the medical necessity of the ambulance transport, nearly every Medicare carrier now requires that all claims be submitted with one or more of the diagnosis codes found in the International Classification of Disease manual. Carriers and insurance companies use these standardized codes to filter their ambulance claims into those that are obviously medically necessary, such as cardiac arrest; those that require additional documentation or review, such as syncope or falls; and those that are obviously not medically necessary.

Since the icd codes were developed primarily as final diagnosis codes for use by physicians, their use in coding ambulance transports is a complex process at best and, in the worst-case scenario, an easy way for a department to commit fraud.

Unless the billing staff is adequately trained to interpret the run sheets and choose the proper code(s), it's quite possible for transports to be innocently coded to identify that the patient's condition was far worse than it actually was. In other instances, the billing staff may be using codes that are too vague - most often only three digits in length - to justify the transport.

Both of these examples will cost a fire department a lot of money in the long run, one by having to pay fines and forfeit reimbursements and the other by losing out on collecting for transports that were truly necessary. It's important to remember that coding problems are the main reason many fraud investigations are initiated. Additionally, it's a routine practice for Medicare and insurance auditors to look for trends or exaggerations in coding whenever they embark on any agency review.

The best way to avoid coding errors is to educate both your billing staff and your field personnel. Billing staff need to have enough knowledge of medical terminology and direction from management on how to handle questionable or vague run reports. Field personnel need to understand that their documentation is the basis for getting the claim paid or denied. If the documentation is inadequate to support the use of the proper code or too vague to allow for accurate coding by the billing staff, the door to coding problems is opened.

Procedural errors. These are the most common type of error encountered by fire departments. They're caused primarily by a lack of familiarity with the applicable Medicare and insurance regulations regarding ambulance transport services. Unfortunately, Medicare doesn't consider ignorance of the regulations to be an appropriate defense.

In fact, the agency considers publication of information in the carrier billing manuals, newsletters and the Federal Register as satisfactory notice of appropriate charges and billing procedures. Therefore, it's important for each department that bills for ambulance service to have an up-to-date copy of its carrier's manuals and to carefully review the appropriate sections of the carrier's regular newsletter.

The lack of a signature authorization form is probably the most common procedural error made by fire departments. Medicare and private insurance companies both require that the beneficiary provides written authorization to the ambulance provider before a bill can be submitted for payment.

If a fire department submits its claims directly to Medicare and insurance companies, the signature authorization line on the hcfa 1500 and 1491 claim forms must be either signed by the beneficiary or printed with the statement "signature on file." If a department fails to receive the signature authorization but continues to bill as if authorization was received, then this clearly would be considered Medicare or insurance fraud - and most likely mail fraud as well.

If a fire department fails to produce an individual signature authorization form after being asked for one by a Medicare carrier or insurance company, then any monies received for that claim will most likely have to be refunded.

However, if a Medicare carrier audits a fire department and finds that these forms are routinely not obtained, the carrier will most likely forward a request to the Office of Inspector General for further investigation. Medicare also has the authority to request repayment of any monies received for each and every Medicare transport for a period up to and including three years prior to the investigation.

When authorization hasn't been obtained, departments often say that the patient was in no condition to sign an authorization form or that it's poor public relations to discuss financial arrangements with a patient who's just arrived at the hospital. While there may be circumstances where the first reason is true, there's never an appropriate excuse for the willful violation of Medicare regulations.

Several methods exist to obtain the required signature authorization. For example, your transport personnel can try to obtain it from the patient or guardian on delivery to the hospital. Another method is to enclose an authorization form with the initial statement, directly billing Medicare or the insurance company only after it has been returned. A more novel approach is to see if your local hospital would add your department to the release/authorization forms that are signed before the patient is released.

The second most common procedural error is the routine billing for itemized supplies or services. Medicare regulations are very specific in stating that only services or supplies actually provided to the beneficiary are covered. If your department routinely bills all patients for disposable supplies, oxygen or other charges, regardless of whether they were provided, then you're in clear violation of these regulations.

There have been several instances where fire departments and private ambulance providers have been audited for their near-constant charging of certain itemized supplies. The most notable case was when New York City ems was investigated by Medicare and forced to pay a multimillion-dollar fine for, in part, the routine charging of supplies and services to almost every patient.

Another procedural problem arises from the ability to build default codes or settings into the tables or fields of most software programs. While these defaults save considerable keystrokes and time, departments need to be cautious about their use in billing for ambulance transport services.

Medicare regulations require that a set series of questions be answered about each transport. Called an Ambulance Certification Record, these questions cover topics such as type of transport, whether restraints were used, and whether the patient was unconscious or in shock at the time of transport.

Because most of the questions can be answered yes or no, many departments set their default to the most common answer. While this may be a good form of fraud prevention if "no" is chosen as the most common answer, that can also lead to a denial of payment for valid ambulance claims if the field isn't checked appropriately.

The opposite end of the spectrum is encountered when "yes" is chosen as the default answer. Wrongly answering yes will lead to charges of fraud and misrepresentation if the patient's condition doesn't support the claim. Since it's possible to harm your revenue and program with either answer, fire department managers need to take a hard look at whether they want to use default answers at all.

Altogether, ambulance billing is probably the most complex reimbursement program in the modern fire department. With continuous changes in the already voluminous Medicare regulations looming in 2001 and health-care fraud a hot topic in government circles, chiefs need to continuously monitor their billing for compliance and accuracy.

However, with a basic understanding of Medicare regulations and a regular review of the common problem areas, most fire departments will never face a Medicare audit or charges of fraud.