Facilities and Payment- Medicare Rules

Destination Facility

Our billing office often receives questions from our clients regarding facilities as an origin yet mostly a destination for transport. For the purpose of this discussion we are going to focus on the destination.

Facilities and Payment- Medicare Rules

A facility or institution is defined as a hospital or skilled nursing home as a location where patients are cared for the illness or injury they have suffered.


The Medicare Benefit Policy Manual provides the guidelines that we most frequently refer to when determining if the destination facility- or the facility where the ambulance crew ends the transport and delivers a patient- is the “appropriate” facility.

The Center for Medicare and Medicaid Services (CMS) defines the term “appropriate facilities” in Chapter 10 (10.3.6) of the Medicare Benefit Policy Manual as…

“…the institution is generally equipped to provide the needed hospital or skilled nursing care for the illness or injury involved. In the case of a hospital, it also means that a physician or a physician specialist is available to provide the necessary care required to treat the patient’s condition.”

The cliff notes on this subject are; if the patient can be adequately cared for at a hospital that is the closest in ground miles to the origin of the ambulance trip, then transport to a more distant institution is not warranted.

However, if the patient’s condition requires a higher level of trauma care of other specialty service and that service is only available at a more distant facility, then Medicare and, often many other insurance payers, will pay for the additional mileage to transport the patient or they will pay for a second “transfer trip” from one facility to the another facility.

Additionally, if the closest appropriate facility could reasonably care for the patient but the facility is on diversion status and/or has no beds available to care for your patient then transport to a more distant facility is appropriate for your scenario and full payment can be made for the claim.

The guidance CMS gives to its contractors that pay the claims is to assume that beds are available at local, closest, institutions unless the ambulance service can furnish evidence in writing that the closer institution had no beds available. Here’s where complete and specific documentation is important in the Patient Care Report (PCR) to explain the exception to the rule.


It is important for the billing office to know the hospitals that are in “locality”.

Looking at the same Medicare Benefit Policy Manual, again in Chapter 10 (10.3.5) we find that Medicare allows for the patient to basically have a choice of institutions where they can receive treatment, regardless of whether or not the ground miles are actually the closest facility.

This allowance means that surrounding your EMS agency’s immediate service area are institutions to which individuals from your community normally travel or are expected to travel to receive hospital or even skilled nursing services.

CMS provides an excellent example in the Manual…

“Mr. A becomes ill at home and requires ambulance service to the hospital. The small community in which he lives has a 35-bed hospital. Two large metropolitan hospitals are located some distance from Mr. A’s community and both provide hospital services to the community’s residents. The community is within the “locality” of both metropolitan hospitals and direct ambulance service to either of these (as well as to the local community hospital) is covered.”


At this point we feel it necessary to caution our readers to not wholesale apply these rules liberally without investigation and concrete documentation to explain each scenario on its merit.

For example, your EMS agency may provide inter-facility transport services between one hospital to another hospital and the sending hospital is transferring patients to the second facility for specialty care because they have a working and/or contractual referral relationship with the second facility. But a closer hospital without that relationship could care for the patient, it may be that Medicare and other insurances may not pay for miles that exceeds the mileage to the closest facility in ground miles.

On a similar note, if the local or sending facility could reasonably care for the patient but the patient decides he/she wishes to be cared for by a physician that does not have staff privileges at the sending facility and requests transport, it is almost certain that Medicare and possibly other insurance payers will not pay for that inter-facility transport to the second facility in its entirety.

The Ambulance Billing Services blog is brought to you as an educational tool by Enhanced Management Services, Inc. Enhanced Management Services, Inc. is an all-EMS third-party billing contractor serving Fire/EMS agencies across the United States. To learn more about who we are and what we do, please visit our website at www.enhancedms.com and click on the “Get Started” button on any landing page.

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