Stealing the hospital industry's argument, HHS' inspector general's office called the Medicare reimbursement system for ambulances illogical.
The complexity of the reimbursement system even encourages fraud and abuse, according to federal regulators, who found vastly different reimbursement and coverage policies that could be overly generous to providers.
Over the past five years, inspector general investigations have led to more than 100 convictions involving ambulance suppliers.
Meanwhile, as the agency blames the complexity of the system for ambulance reimbursement problems, hospitals are complaining to the inspector general that billing problems in its industry are due to complex reimbursement systems, too.
The ambulance findings were detailed in a report dated Nov. 3.
But while federal regulators pointed out problems in an industry that received almost $2 billion in Medicare payments in 1995, they also acknowledged that help may already be on the way.
A law passed by Congress this summer requires HCFA to establish a fee schedule for Medicare ambulance payments, a move that should simplify the system.
The change is applauded by the American Ambulance Association, a national trade group of 750 ambulance companies.
"There's much more waste in the system than fraud and abuse," said David Nevins, executive vice president of the Sacramento, Calif.-based group. "The problem is that the current regs are complex."
In its study, the inspector general's office looked at more than 189,000 Medicare claims submitted by ambulance companies for payment in 1995 and 1996. That total represents a 1% random sample of all ambulance claims submitted during the period. The agency found:
In 26 states, Medicare pays more for routine, nonemergency transportation than for advanced life-support emergency service.
In 1995 one fiscal intermediary allowed a per-mile reimbursement that was five times the cost of a gallon of gas.
The average amount paid per ambulance trip, about $500, doesn't relate to the actual cost of doing business in a locale.
Because of past abuses, the report said, some Medicare fiscal intermediaries have begun manually reviewing ambulance billings.
"A complex payment system encourages fraud and abuse and thwarts efforts to control expenditures," according to the inspector general's report.
Nevins, of the ambulance association, said the fee schedule should be in place by 2000. He expects negotiations with HCFA to begin shortly so the schedule can be developed.
"Our position has been since the early 1990s that the system needed to be reformed," he said.