At its March meeting, the Medicare Payment Advisory Commission (MedPAC) analyzed the adequacy of Medicare payments for ground ambulance services and discussed reforming the methodology for physician fee schedule (PFS) updates.
The Bipartisan Budget Act of 2018 requires that MedPAC submit a report on the adequacy of and geographic variation in Medicare payments for ground ambulance services. The Commission’s preliminary analysis revealed a strong inverse relationship between ambulance response volume and cost per response (i.e., high-volume providers have a low average cost per response and low-volume providers have a high average cost per response) and significant variation in costs based on ownership status and service area location. Medicare covers ambulance transport costs through two components: mileage and services provided during transport with adjustments for factors such as rural status, service complexity, and geographic differences in labor costs. MedPAC’s future efforts will include comparing Medicare payments to costs, reducing administrative burdens tied to data collection, and exploring ways to streamline data collection processes.
The Commission also presented draft recommendations on PFS payment updates, building on its June 2024 Report to the Congress and discussion from the January meeting on PFS payment adequacy. PFS payment rate updates are currently determined by the Medicare Access and CHIP Reauthorization Act of 2015. Starting in 2026, providers participating in advanced alternative payment models will receive a 0.75% update while all other clinicians will receive a 0.25% update. MedPAC evaluates payment adequacy by assessing access to care, care quality, and efficiency of care delivery.
Although it continues to find Medicare beneficiary access comparable to that of privately insured beneficiaries, MedPAC expressed concerns that the Medicare Economic Index (MEI)—an inflation metric for clinician services—will significantly exceed PFS updates under current law, which could reduce future access to care. To address this, the Commission proposed to continue to recommend replacing the current PFS update with an annual update based on a portion of MEI growth (such as MEI minus 1 percentage point). MedPAC also raised concerns about the accuracy of the PFS’s relative payment rates and proposed new draft recommendations to regularly update cost data and ensure that payment rate methodologies appropriately reflect clinical practice settings. The Commission plans to vote on these draft recommendations in April and include final recommendations in its June 2025 Report to the Congress.