Fraud crackdown drives 11 New Jersey ambulance operators out of business

A federal pre-authorization program designed to prevent Medicare overpayments made to ambulance providers has forced the closure of 11 companies in New Jersey, according to Officials from the state health department say that New Jersey normally averages three closures a year.

Health officials told that the closures are linked directly to the pre-authorization program implemented by the Centers for Medicare & Medicaid Services (CMS) in December 2014 in New Jersey, Pennsylvania, and South Carolina. In those states, which demonstrated large spikes in ambulance billing, patients must receive prior authorization from Medicare for non-emergency transportation.

The program reflects the government's effort to curb overbilling and overutilization within the ambulance industry. Under Medicare regulations, a patient qualifies for non-emergency transportation if he or she requires a stretcher. Medicare will not reimburse for patients who require a wheelchair.  

Ambulance owners and patients claim that the program lacks consistency, adding that legitimate pre-authorization requests have been rejected for issues such as ineligible doctor's notes or insufficient details in medical documentation.

However, one anonymous ambulance operator told the that authorization requests are frequently approved by an administrative law judge upon appeal. "I have a ton of claims that have to go through this process," the unnamed owner told "We're basically hanging on by a thread."

This is not the first time that New Jersey patients and ambulance operators have complained about inconsistencies within preauthorization programs, claiming that preauthorization requirements do more harm than good by rejecting authorization for legitimate providers. Last week, a CMS representative told that the agency has no plans to expand the program beyond the three current states.

On the other hand, previous reports show that ambulance fraud contributes to as much as $350 million in Medicare overpayments, FierceHealthPayer: AntiFraud previously reported, with some companies operating as a "glorified taxi service." Already this year, the general manager of a Southern California ambulance company was sentenced to seven years in prison for a $5.5 million fraud scheme, while four hospitals and an ambulance company in Florida settled with federal authorities to absolve allegations of $5 million in overpayments.

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