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Member Advisory: CMS Imposes Moratorium on New Ambulance Providers in Houston, Texas

July 29, 2013
TO: AAA Membership
BY: Kathy Lester

Late Friday afternoon, CMS published a notice in the federal register that it would impose a 6-month moratorium on new ambulance suppliers in Houston, Texas, concluding that “ambulance companies in Houston and the surrounding area pose a significant risk of fraudulent activity.” The moratorium will apply to Medicaid (including CHIP) as well.

The moratorium is consistent with the recommendation the AAA has advocated as a way to address the problem of fraud and abuse related to non-emergency BLS dialysis transports. It also follows the recommendations of MedPAC in its June 2013 report that called on the Secretary of the Department of Health and Human Services to use her existing authority to address this problem.

The moratorium also applies to the following counties in and around the City of Houston:  Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery, and Waller. The Agency determined that it was necessary to impose the moratorium to bordering counties as well “to prevent potentially fraudulent providers and suppliers from enrolling their practices in a neighboring county with the intent of providing services in a moratorium-targeted area.”  

The Agency may extend the moratorium through notice after the end of the 6-month period as well. The moratorium could also be lifted during national disasters. CMS will continue to monitor activity and consult with law enforcement to evaluate the spread of any “significant risk of fraud” beyond the designated areas.  

While there is no judicial review, suppliers will be able to appeal a determination through the existing appeals process.

The moratorium will not apply to changes in practice locations, changes to provider or supplier information such as phone number, address, or changes in ownership. It also does not apply to an enrollment application that a CMS contractor has already approved, but has not yet entered into the Provider Enrollment Chain and Ownership System (PECOS) at the time the moratorium is imposed.  

In determining the enrollment moratorium, CMS examined “qualitative and quantitative factors suggesting a high risk of fraud, waste, or abuse.” The notice indicates that “since April 2012, the US Attorney’s Office for the Southern District of Texas has filed 6 cases in Houston alleging that the companies submitted fraudulent claims totaling over $9.5 million to Medicare for ambulance transports, and 7 individuals have been charged in connection with these cases resulting in 3 guilty pleas and 1 trial conviction.”  

Consistent with data shared by the AAA with CMS, the Agency found that the average number of ambulance suppliers in Harris County far exceeded the national average.  

In the comparison counties in 2012, there was an average of 0.8 ambulance suppliers per 10,000 Medicare FFS beneficiaries. In Harris County, there were 9.5 ambulance suppliers per 10,000 Medicare FFS beneficiaries. This means that the ratio of ambulance suppliers to Medicare FFS beneficiaries was 1,065 percent greater in Harris County than in the 25 comparison counties. Harris County had the highest ratio of ambulance suppliers to Medicare FFS beneficiaries compared to the comparison counties. 

The moratorium does not apply to ambulances owned or operated by Medicare providers, unless they are enrolled as suppliers under the Medicare program. However, under Texas law, provider-based ambulance services must enroll as suppliers, so the moratorium extends to Medicaid enrollment as well for these providers. It also does not apply to air ambulance.

Guaranteed cash flow during transition.