The Centers for Medicare & Medicaid Services, stung by abuse in its reimbursement for ambulance transport to dialysis clinics and other outpatient facilities, is launching a pilot study this fall in three states that would require prior authorization of ambulance transport services before a contractor can bill Medicare.

The agency held open door forums on August 5 and September 15 to explain the rules for the new pilot, which will take place in Pennsylvania, New Jersey, and South Carolina––states where abuse of Medicare payment for ambulance charges has been particularly rampant. A U.S. Inspector General report released in 2013 indicated the number of dialysis-related ambulance rides increased 857% in New Jersey from 2002 to 2011, more than three times the national average. A Government Accountability Office report, “Cost and Medicare Margins Varied Widely; Transports of Beneficiaries Have Increased” showed the number of Basic Life Support non-emergent transports for Medicare fee-for-service beneficiaries increased by 59% from 2004 to 2010. “This increase is a cause for concern,” CMS says.

Transports to and from dialysis facilities have grown noticeably in recent years and represent a large share of non-emergent ambulance claims, CMS says. In 2011, ambulance transports to and from dialysis facilities accounted for nearly $700 million in Medicare spending, or approximately 13% of Medicare expenditures on ambulance services.

The Prior Authorization of Repetitive Scheduled Non-Emergent Ambulance Transport model will test whether prior authorization helps reduce expenditures, while maintaining or improving quality of care. CMS believes a prior authorization process will help ensure services are provided in compliance with applicable Medicare coverage, coding, and payment rules before services are rendered and before claims are submitted for payment.