To grasp Medicare's staggering bill for ambulance rides in New Jersey, just visit the busy parking lot of the DaVita St. Joseph's dialysis clinic in the town of Paterson.
More than 20 ambulances and a handful of wheelchair vans were parked outside on a recent morning there. Emergency medical technicians wheeled patients in and out on stretchers. As soon as one ambulance departed, another took its place.
For each one-way ride, Medicare pays ambulance companies nearly $200, plus $6 a mile. The program only covers ambulance rides if a doctor certifies that other modes of transportation would endanger a patient's health. That happens rarely in most parts of the country. But not here.
Dozens of New Jersey ambulance companies—most of them headquartered within 15 miles of Paterson—billed Medicare for unusually large numbers of non-emergency ambulance rides in 2012, a ProPublica analysis of recently released Medicare payment data found.
Some 37 operators claimed an average of 50 trips or more per patient, collecting more than $46.5 million from Medicare that year. By comparison, in 33 other states, not a single ambulance company billed Medicare for that many rides per patient, the analysis showed.
In interviews, New Jersey ambulance providers insisted they followed Medicare's eligibility rules, but several acknowledged hearing of others who inflate the bill for rides by signing up patients who don't need the service—a form of fraud. Competition for rides has become so cutthroat, one operator said, that some providers pay patients up to $4,000 in cash to switch to their companies.
"A couple of providers have said that there's other providers who are paying patients," said Robert Davis, owner of Alert Ambulance Service in Lakewood, N.J., and president of the Medical Transportation Association of New Jersey, an industry trade group. "That would be illegal."
Davis' company bills for fewer rides per patient than many. "The patients we won't take by stretcher, you see somebody else doing it," he said.
Evidence has been building for years that Medicare is likely overpaying for ambulances to ferry New Jersey dialysis patients to and from their thrice-weekly treatments. The number of dialysis-related ambulance rides increased 857 percent in the state from 2002 to 2011, more than three times the national average, according to a report from the U.S. Department of Health and Human Services' inspector general.
The Centers for Medicare and Medicaid Services (CMS) announced recently that it would begin requiring prior authorization for certain types of ambulance rides in New Jersey, Pennsylvania and South Carolina, states with unusually high utilization rates and costs.
But the new program won't begin until the fall—and for now, business continues as usual.
The DaVita center in Paterson is the state's largest, with 60 treatment stations that sometimes run 19 hours a day. By 9 a.m. on a recent day, ambulances were coming and going every few minutes as the first shift of patients was departing and the second arriving. Patients were wheeled in, some with blue bags labeled "DaVita" sitting beside or behind them.
Ambulance usage appears substantially higher at the Paterson facility than at other large clinics, including those run by DaVita, the nation's second-largest dialysis chain. Ambulance companies dominate the list of service providers that most frequently see Paterson patients within 30 days of a treatment there, Medicare data shows. That's not the case at large DaVita centers outside of Northern New Jersey, where doctors, labs and hospitals are more likely to see patients after treatments.
In a statement, DaVita said it does not "have a financial interest in how a patient is transported to and from treatments," but acknowledged it was aware of concerns with ambulance providers' practices.
"We understand that this particular geographic area has a fiercely competitive ambulance services market and that some of these companies have resorted to aggressive and questionable tactics in the fight for market share," DaVita's statement said. "As a matter of fact, we have sent cease-and-desist letters to companies that have attempted to solicit business inside our centers."
Doctors who oversee dialysis clinics in other regions called the ambulance traffic jam at DaVita St. Joseph's highly unusual.
At Kennedy Dialysis Center, a hospital-based facility in southern New Jersey, just 12 of the clinic's 170 patients arrive for their appointments by ambulance, said Dr. Joseph Pitone, its medical director, and Jeffrey Jin, its lead social worker. Only a dialysis facility whose patients come predominantly from nursing homes would need so many ambulances—an unlikely scenario, Pitone noted.
Philadelphia nephrologist Joel Glickman, medical director at one of Penn Medicine's dialysis centers, agreed.
"That really, really sounds excessive," he said of the ambulances outside DaVita St. Joseph's in Paterson. "I'll tell you that one of our facilities has 36 stations, and three or four ambulances at a time is what I'll see outside. We don't have room for 25. That sounds shocking to me, that number, shocking."
People typically qualify for Medicare because of their age or disabilities, but because of a special provision established by the federal government in 1972, dialysis patients qualify because of their diagnosis, end-stage kidney disease.
Medicare spent almost $24 billion on their care in 2011, of which more than $890 million was for ambulance rides.
The bill for ambulances varied widely by state. According to the U.S. Renal Data System, Medicare spent about $3,300 per hemodialysis patient nationally on ambulance rides in 2011. It spent $10,000 per patient in New Jersey.
ProPublica's analysis showed Freedom Emergency Medical Services of Hillsborough, N.J., billed for the most rides per patient in the country in 2012, frequently taking people to and from the DaVita St. Joseph's clinic. Freedom transported only 14 Medicare patients that year, but each received an average of 275 rides, the data shows. Medicare paid the company $829,000.
"My patients are all qualified to ride in an ambulance because of the kind of illness they have," said Sunny Ewere, the company's chief executive. "I have sick patients."
But Ewere said some patients switch companies and give vague reasons for doing so. Rumors abound about inducements, though he says he has no direct knowledge of this. "The rate at which patients switch to other companies is alarming. What happens, why they change, nobody will tell you."
He said he does not pay patients to choose his company. "As a Christian, I will never, never give a dime to a patient to follow me because it means I'm taking food from somebody else's table...don't know what they are doing, but I will never do that."
In a follow-up statement, Ewere said his company had been audited four times by Medicare and found to meet its requirements.
Speedy Mobility Services also ranked among the top billers for ambulance rides per person in 2012. The company's owner, Faiz Abdulatif, said its rides were all legitimate, but acknowledged he's heard of other companies giving cash to patients in exchange for business. He said he lost a patient earlier this year when an EMT he fired for drinking on the job signed the patient on with his new company.
"A patient will cost you up to $4,000 to switch from one to another," he said, adding he does not pay patients.
Speedy Mobility collected $561,000 from Medicare in 2012 for providing 14 patients with an average of 186 rides apiece.
Abdulatif and other ambulance company owners said the competition for Medicare patients partly reflects changes in New Jersey's Medicaid program, for which many dialysis patients also qualify because of low income and disability.
In 2009, state Medicaid officials hired an outside contractor to administer the benefit for ambulance rides. Ambulance owners say the contractor lowered reimbursement rates and embraced cheaper modes of transportation, such as liveries, causing some transport companies to drop out of Medicaid and focus on Medicare.
Over roughly the same period, the number of licensed EMS agencies and companies in New Jersey has increased rapidly, jumping from 350 in 2008 to 472 this year, according to the state Department of Health.
Medicare officials said in a statement that the agency's billing contractors "analyze claims to determine provider compliance with Medicare coverage, coding and billing rules and take appropriate corrective action when providers are found to be non-compliant." That includes educating providers and trying to "correct the behavior."
Davis, president of the Medical Transportation Association of New Jersey, said he supports Medicare's new push to verify that patients need the rides the program is covering.
"The ones that need it will get it and the ones that don't won't," he said.
Medicare has reined in ambulance rides elsewhere. About five years ago, in Puerto Rico, it began requiring that two physicians agree that ambulance transportation was needed. Medicare's average cost per patient for rides plummeted from $25,401 in 2009 to $3,409 in 2011, U.S. Renal Data System records show. The requirement remains in place.
Separately, a Medicare contractor limited dialysis patients in Texas to 12 transports a year to and from clinics beginning in 2010. Ambulance transports dropped 64 percent from 2007 to 2011, compared to an 18 percent increase nationally, the Medicare Payment Advisory Commission (MedPAC) reported.
CMS also has issued a moratorium preventing new ambulance companies from signing up for Medicare in and around Houston and Philadelphia, citing widespread allegations of fraud.
In Philadelphia, the U.S. Attorney's office has filed eight criminal cases against transport companies and/or their employees, accusing some of paying patients to bill for unneeded rides to dialysis. All but two of the defendants have pleaded guilty or have been sentenced. One person was acquitted and the other had charges dropped against him.
Prosecutors had video showing some patients walking to and from ambulances, or even being driven to dialysis in personal vehicles instead of the ambulances for which Medicare was billed, Assistant U.S. Attorney Beth Leahy said.
"It's direct evidence that these patients are ambulatory," she said, "that they don't need to be transported by ambulance, yet the companies are submitting claims to Medicare stating that the transport by ambulance is medically necessary for their wellbeing."