Reading an EOB/SOB for EMS Ambulance Insurance Billing

If you are manually entering a paper EOB from Medicare or Medicaid, you must be aware of the CO-253 reduction and how AngelTrack handles it.

A Typical Paper EOB from Medicare

Here is a very typical paper EOB received from your MAC, in this case Novitas:

Sample Medicare EOB

This EOB shows a BLS non-emergent stretcher call (A0428), from nursing home to hospital (NH), with 8 miles ground ambulance transport (A0425) and oxygen service (A0422). For this service, the EMS provider claimed $415.15. Medicare allowed a total charge of $285.17, refusing the oxygen charge (CO-97) as is customary.

Of the $285.17 allowed charge, Medicare cut a check for $233.58 and left $57.03 as the patient's responsibility (aka "Coinsurance").

Oxygen claims are approved but do not pay anything

Notice the $105.00 claim for oxygen (A0422) was discounted to $0.00, with CO-97 given as the Claim Adjustment Reason [CAR] code. CO-97 means:

"The benefit for this service is included in the payment/allowance for another service/procedure that has already been adjudicated."
This is Medicare's way of saying that oxygen is already priced into the A0428 BLS rate, so they aren't going to pay it as a separate line item. Thus the claim for oxygen is approved (a denial would be confusing) but not paid anything.

Understanding CAR Codes

The dollar amounts in the rightmost columns are each accompanied by a "Claim Adjustment Reason" [CAR] code, explaining the reason for the adjustment. The code consists of two parts: the group and the reason.

The group takes one of five possible values, called "Claim Adjustment Group" [CAG] codes or just CAGCs:

After the group is the reason code, giving specific details. In the oxygen example above, the CARC was CO-97, meaning the reduction was per contract, and the Medicare "contract" (i.e. the regulations) say that oxygen is already included in the pickup charge.

There are hundreds of different reason codes defined. You can find the full CARC list online. AngelTrack knows all of them, and will decode them for you automatically.

The Numbers Don't Add Up

Look closer at the numbers in the sample EOB given above:

Allowed amount:   $285.17
Amount paid: - $223.58
Patient responsibility:   $57.03 ←error!

The math is wrong. There is $4.56 missing from that equation. The missing money is the CO-253 reductions:

Allowed amount:   $285.17
Amount paid: - $223.58
CO-253 reduction (pickup): - $3.63
CO-253 reduction (mileage): - $0.93
Patient responsibility:   $57.03

The CO-253 reductions, totalling $4.56, ought to be reflected in the "Allowed amount", so that the numbers balance... but they aren't. You must manually subtract them from the allowed amount in order to figure the true allowed price.

AngelTrack's Record a Payment Event page, which is used to input paper EOBs, has a popup calculator to assist you in typing and subtracting the amounts.

Sample Medicare EOB

Affects Only Paper EOBs

The issue with the math affects paper EOBs only. AngelTrack handles it automatically when importing EOBs electronically.

CO-253 Reductions Explained

CO-253 is a Claim Adjustment Reason [CAR] code that officially means "Sequestration - reduction in federal payment".... or simply "the sequestration".

The sequestration is an across-the-board federal spending cut affecting a broad swath of programs, including Medicare. In the case of EMS, this means a flat percentage reduction in all amounts owed to EMS providers. There is no chance of appeal; you simply get paid less than what you are owed.

Supposedly, the sequestered amounts will eventually be repaid... but that is probably just a pleasant fiction.

The sequestration is listed separately on an EOB, rather than being automatically factored in to the allowed amount, so as not to confuse people and software programs that are comparing the Medicare rate tables against the allowed amount to check for discrepancies. By listing the sequestration amount separately, the allowed amount will still match the rate tables, and the rate tables do not need to be re-adjusted whenever the sequestration is increased or decreased.

Unfortunately, this means that anyone typing in their EOBs must perform the subtraction themself, in order to balance the allowed amount, the amount paid, and the patient responsibility.

AngelTrack has the Medicare rate tables onboard

AngelTrack knows the current Medicare rate tables, and will show them to you. From Billing Home you can open the Medicare Rate Browser to look up the rates for all covered services for any ZIP code.

Medicare pays for EMS services based on the origin ZIP code, i.e. based on the ZIP code where the patient is picked up.

Tax Treatment of CO-253 Reductions

If you use cash accounting then the following does not apply to you; it only applies to those using accrual accounting.

AngelTrack stores the sequestration amounts as reductions in the adjudicated price... because, from the point of view of EMS, that is exactly what they are. Concomitantly, the popup calculator writes the total directly into the "Price allowed" field.

As a result, AngelTrack's Taxes and Commissions calculator will include the sequestration amounts in its calculation of the total contractual reduction. That means that the sequestered amounts will be reported on your taxes just like all other Medicare writedowns.

To learn more, read the Taxes and Collections guide.

Clear it With Your Legal Team First

Before using any data from AngelTrack concerning revenue, collections, or writeoffs, you should consult your legal team and your accountant. Taxes and deductions in the healthcare industry are complex, especially when Medicare/Medicaid writedowns are in play. It is easy to make a serious and costly mistake, so don't proceed without first talking to experts.

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