Updated: May 2
On August 17, 2022, the Centers for Medicare and Medicaid Services (“CMS”) issued an informational bulletin confirming the application of longstanding cost principles to the provision of ground emergency medical transportation (“GEMT”) by public entities. Unlike institutional providers like hospitals and skilled nursing centers that have standard Medicare forms, rules and annual audits of their cost reports, there is no standard form or rule applicable to GEMT providers because Medicare does not pay based on allowable costs. As a result, states that have opted to offer Medicaid rates primarily to public providers based on costs have developed their own rules for the reporting and calculation of costs for GEMT providers. This new informational bulletin sets forth some of CMS’ expectations with respect to GEMT cost finding.
As part of CMS’ review of any cost-based reimbursement methodology for GEMT providers, it expects that states will “comprehensively describe the cost identification and reconciliation methodology[,]” including the allowable direct and indirect cost associated with furnishing Medicaid-covered GEMT services and the cost identification and allocation processes to determine the portion of provider costs claimed for Medicaid payment. As part of its review, CMS will review the state’s cost report template and instructions to confirm compliance with federal cost regulations.
The informational bulletin highlights certain specific concerns regarding costfinding for state and local units of government due to CMS’ prior review of proposals that may have “shift[ed] costs to the Medicaid program that are not related to a Medicaid-covered service… or allocate[d] costs to Medicaid without using an appropriate allocation statistic to identify the portion of GEMT cost eligible for Medicaid payment.”
CMS emphasizes that only the costs incurred in the provision of a Medicaid-covered service may be claimed, e.g., the personnel vehicle and equipment used to transport a beneficiary to a facility for treatment. By contrast, “fire and rescue personnel and equipment are generally not directly or indirectly related to Medicaid covered services.” These costs can only be claimed to the extent they are incurred by personnel who meet applicable Medicaid provider qualifications and are providing Medicaid-covered services at an emergency site to beneficiaries. These costs must be appropriately tracked to substantiate the claiming of direct costs and the allocation of overhead costs. GEMT providers and states must be careful to claim only indirect costs to the “Medicaid cost objective [of] the transportation of a Medicaid beneficiary to a facility to receive emergently needed medical care.” These direct and indirect costs charged to Medicaid must exclude costs assignable to fire and rescue objectives.
The informational bulletin emphasizes that state Medicaid rates must be consistent with efficiency, economy, access and quality of care. CMS suggests that payments above the “reasonable cost” – a cost that “does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost – may run afoul of CMS’ expectations.
This informational bulletin serves as a reminder to providers that the submission of cost reports as a basis for payment are claims for payment. The knowing submission of false information can trigger various administrative and other risks for providers. CMS reminds publicly operated GEMT providers that they must retain sufficient records to disclose the extent of services the provider furnishes to Medicaid beneficiaries, and suggests that they should retain claims data by payer status for all individuals who receive GEMT services.
Lastly, the informational bulletin serves as an important reminder of the importance of utilizing accurate data to establish cost-based provider fee, certified public expenditure or intergovernmental transfer programs to avoid disallowances of federal financial participation.
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For more information on the informational bulletin, GEMT cost reports or Medicaid financing programs, please contact Felicia Sze at For more information on the informational bulletin, GEMT cost reports or Medicaid financing programs, please contact Felicia Sze or Kyle Brierly.