GAO-03-986, Ambulance Services: Medicare Payments Can Be Better Targeted to Trips in Less Densely Populated Rural Areas


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Report to Congressional Committees:

September 2003:

Ambulance Services:

Medicare Payments Can Be Better Targeted to Trips in Less Densely 
Populated Rural Areas:

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-986] GAO-03-986:

GAO Highlights:

Highlights of GAO-03-986, a report to congressional committees 

Why GAO Did This Study:

The Centers for Medicare & Medicaid Services (CMS) recently 
implemented a Medicare ambulance fee schedule in which providers are 
paid a base payment per trip plus a mileage payment. An adjustment is 
made to the mileage rate for rural trips to account for higher costs. 
CMS has stated that this rural adjustment may not sufficiently target 
providers serving sparsely populated rural areas. The Medicare, 
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 
(BIPA) directed GAO to examine rural ambulance costs. GAO identified 
factors that affect ambulance costs per trip, examined how these 
factors varied across geographic areas, and analyzed whether Medicare 
payments account for geographic cost differences. GAO used survey data 
on ambulance providers and Medicare claims data. 

What GAO Found:

Trip volume is the key factor affecting differences in ambulance 
providers’ cost per trip. Ambulance providers’ total costs primarily 
reflect readiness—the need to have an ambulance and crew available 
when emergency calls are received. Readiness-related costs are fixed, 
meaning that they do not increase with the number of trips provided, 
as long as a provider has excess capacity. As a result, providers that 
make fewer trips tend to have a higher cost per trip than those that 
make more trips. We also found that the length of providers’ trips had 
little effect on their cost per trip. 

The modest variation in Medicare payments to ambulance providers that 
serve rural counties probably does not fully reflect their differences 
in costs because the key factor affecting provider costs—the number of 
trips—varies widely across rural counties. In 2001, the least densely 
populated quarter of rural counties averaged far fewer trips than the 
most densely populated quarter. This suggests that the cost per trip 
is likely higher for providers serving the least populated rural 
counties. On average ambulance providers are paid somewhat more for 
trips in the least densely populated rural counties than for those in 
other rural counties. However, those payment differences are dwarfed 
by the difference in trip volume. Because trip volume is a strong 
indicator of costs, the Medicare payment differences across rural 
counties likely do not fully reflect differences in providers’ cost 
per trip. 

In implementing the fee schedule, CMS adjusted the mileage rate for 
rural trips to account for the higher cost per trip of providers 
serving rural areas. However, trip volume is a better indicator of 
providers’ cost per trip than is trip length. Thus, adjusting the base 
rates for rural trips—the portion of Medicare’s payment that is 
designed to pay for providers’ fixed costs—is a more appropriate way 
of accounting for rural low-volume providers’ higher cost per trip 
than adjusting the mileage rate.

What GAO Recommends:

GAO recommends that CMS better target the rural adjustment to trips in 
less densely populated rural counties by adjusting the base rates for 
ground ambulance services provided in those counties. CMS stated that 
the report will be useful as the agency develops a proposed rule to 
address appropriate payment for ambulance services furnished in rural, 
low-volume areas. 

www.gao.gov/cgi-bin/getrpt?GAO-03-986.

To view the full product, including the scope and methodology, click 
on the link above. For more information, contact Laura A. Dummit, 
(202) 512-7114.

[End of section]

Contents:

Letter: 

Results in Brief: 

Background: 

Ambulance Providers' Trip Volume Is the Main Factor Affecting Their 
Cost Per Trip: 

Medicare Ambulance Payments for Trips in Rural Counties Are Unlikely to 
Fully Reflect Differences in Providers' Cost Per Trip: 

Conclusions: 

Recommendation for Executive Action: 

Agency and External Reviewer Comments and Our Evaluation: 

Appendixes:

Appendix I: Data and Methods: 

Appendix II: Characteristics of Rural Counties Grouped by Medicare 
Population Density: 

Appendix III: Comments from the Centers for Medicare & Medicaid 
Services: 

Appendix IV: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Acknowledgments: 

Related GAO Products:

Tables: 

Table 1: Ground Ambulance Services Covered by Medicare's Ambulance Fee 
Schedule: 

Table 2: Ambulance Providers' Cost Components, 1998: 

Table 3: Relative Cost Per Trip for Full Cost Ambulance Providers, 1998: 

Table 4: Characteristics of Urban and Rural Counties, 2001: 

Table 5: Average Number of Medicare Ambulance Trips, Population and Land 
Area, by Counties Grouped by Population Density, 2001: 

Table 6: Characteristics of Rural Counties and Their Ambulance 
Providers, by Counties Grouped by Population Density, 2001: 

Table 7: Average Number of Medicare Ambulance Trips, Trip Length, and 
Estimates of Average Medicare PaymentA per Ambulance Trip, by Rural 
Counties Grouped by Population Density: 

Table 8: Full Cost Ambulance Providers by Average Number of Trips Per 
Day, 1998: 

Table 9: Full Cost Ambulance Providers by Average Number of Trips Per 
Year, 1998: 

Table 10: Rural Counties Grouped by Total Population Density and by 
Medicare Population Density, 2001: 

Table 11: Average Number of Medicare Ambulance Trips, Population and 
Land Area, by Counties Grouped by Medicare Population Density, 2001: 

Table 12: Characteristics of Rural Counties and Their Ambulance 
Providers, by Counties Grouped by Medicare Population Density, 2001: 

Table 13: Average Number of Medicare Ambulance Trips, Trip Length, and 
Estimates of Average Medicare PaymentA per Ambulance Trip, by Rural 
Counties Grouped by Medicare Population Density: 

Figures: 

Figure 1: The Relationship between Cost Per Trip and Total Ambulance 
Trip Volume for Full Cost Providers With 5,000 or Fewer Annual Trips, 
1998: 

Abbreviations: 

ALS: advanced life support:

ARF: Area Resource File:

BBA: Balanced Budget Act of 1997:

BIPA: Medicare, Medicaid, and SCHIP Benefits Improvement and Protection 
Act of 2000: 

BLS: basic life support: 

CMS: Centers for Medicare & Medicaid Services: 

EMT: emergency medical technician:

HCFA: Health Care Financing Administration:

HHS: Department of Health and Human Services:

HRSA: Health Resources and Services Administration:

MSA: metropolitan statistical area: 

OMB: Office of Management and Budget:

RUCA: rural-urban commuting area:

RUCC: rural-urban continuum code:

SCT: specialty care transport:

UIC: urban influence code:

Y2K: Year 2000: 

Letter September 19, 2003:

Congressional Committees:

In 2001, Medicare paid over $2 billion for over 10 million ambulance 
trips for its 40 million elderly and disabled beneficiaries. Ambulance 
providers[Footnote 1] that deliver Medicare-covered services range from 
small community, one-vehicle operations staffed entirely by volunteers 
to large privately owned firms or government agencies that operate many 
vehicles and rely on paid staff. Medicare covers medically necessary 
ambulance services when other means of transportation, such as a 
wheelchair van or a taxi, are inadvisable, given the beneficiary's 
medical condition at the time. Medically necessary ambulance trips 
include both emergency care, such as responses to 911 calls, and 
nonemergency care, such as transfers from one hospital to another.

In 2002, the Centers for Medicare & Medicaid Services (CMS) implemented 
a congressionally mandated ambulance fee schedule that substantially 
changed the way Medicare pays for ambulance services. Under the fee 
schedule, providers receive a base payment per trip, which varies by 
the kind of service provided, and a mileage payment, which varies by 
the length of the trip. A rural adjustment, which is applied to the 
mileage payment, increases the payment for trips that begin in rural 
areas, generally defined as areas outside of metropolitan areas. CMS 
has stated that this approach to a rural adjustment was the only one 
feasible at the time the agency was developing the fee schedule. 
However, as we have stated before[Footnote 2] and as CMS has 
acknowledged, this adjustment may not sufficiently target the increased 
payments to providers serving sparsely populated rural areas. These 
providers may incur higher per trip costs than other providers because 
of their low volume of ambulance trips. We have recommended that CMS 
develop a more refined rural adjustment, and CMS is exploring 
alternative approaches to adjusting payments for rural ambulance trips.

Developing a Medicare payment method for ambulance services that 
maintains beneficiary access to these services has been complicated by 
the wide variation in ambulance providers, their volume of trips, and 
the areas they serve. For example, ambulance providers in rural areas 
where there are few people are likely to be idle more often than 
providers in more densely populated areas, and may need to earn more 
per trip to maintain ambulances and crews. As a result, payments that 
are appropriate for providers serving densely populated urban areas may 
not be appropriate for those serving less densely populated rural 
areas. Recognizing cost differences across providers in the payment 
method is important because many providers rely on Medicare revenue and 
their continuing availability is critical to ensuring beneficiaries' 
access to services.

The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection 
Act of 2000 (BIPA) directed us to examine the cost of ambulance 
services in rural areas.[Footnote 3] This report (1) identifies the 
factors that account for differences in ambulance providers' costs per 
trip, and (2) analyzes the geographic differences, particularly among 
rural areas, in the factors affecting ambulance providers' costs and 
whether Medicare's payments for ambulance services under the fee 
schedule account for geographic differences in costs.

Our analysis focused on ground ambulance services and did not include 
air ambulance services, which account for less than 1 percent of annual 
Medicare-covered ambulance trips. To identify the factors that 
influence ambulance providers' costs, we used data from the 1999 
National Survey of Ambulance Providers, conducted by the Project HOPE 
Center for Health Affairs.[Footnote 4] This survey, the sole national 
data source on the costs of providing ambulance services, obtained 
responses from a nationally representative sample of 421 ground 
ambulance providers that participated in Medicare. To determine how the 
factors affecting ambulance providers' costs vary geographically, we 
used data from the 2001 Area Resource File (ARF), which is maintained 
by the Health Resources and Services Administration (HRSA), to examine 
the characteristics of urban and rural counties, such as their 
population and land area. In addition, we used Medicare claims data for 
2001 to determine the number and length of Medicare-covered ambulance 
trips delivered in urban and rural counties, and the number of 
providers that served those areas.[Footnote 5] We also used these data 
to estimate Medicare's average payments for ambulance trips under the 
fee schedule. Finally, we interviewed experts from eight industry and 
professional organizations as well as several ambulance providers. 
These data were adequate for addressing the issues in this report. 
Where appropriate, we examined the data for implausible values and 
tested the data for internal consistency. For more details on our data 
and methods, see appendix I. We performed our work from November 2001 
through September 2003 in accordance with generally accepted government 
auditing standards.

Results in Brief:

Ambulance trip volume is the key factor affecting differences in 
ambulance providers' average cost per trip. The majority of ambulance 
providers' total costs are related to their need to have ambulances and 
crew available when an ambulance is required. As long as a provider has 
excess capacity, these readiness-related costs are fixed and do not 
increase with the number of trips. Consequently, providers that make 
fewer trips tend to have a higher cost per trip than those that make 
many trips. For example, providers surveyed by Project HOPE that 
averaged 3 or fewer trips per day had a cost per trip that was nearly 
twice as high as the average cost per trip among providers that 
averaged 9 to 12 trips per day.

The modest variation in Medicare payments to ambulance providers that 
serve rural counties probably does not fully reflect their differences 
in cost per trip because the key factor affecting provider costs--the 
number of trips--varies widely across rural counties. In 2001, trip 
volume was much lower in the least densely populated quarter of rural 
counties than in the most densely populated quarter. Medicare per-trip 
payments are somewhat higher on average for trips provided in the least 
densely populated rural counties than for trips in other rural 
counties. However, the modestly higher payments are unlikely to fully 
account for the higher cost per trip of low-volume providers, which are 
most likely to serve the least densely populated rural counties. The 
Medicare payment differences are due to the greater length and the 
resulting higher mileage payments for trips in the least densely 
populated rural counties. The cost differences, however, are due to a 
higher fixed cost per trip, for which Medicare's base rates are 
intended to compensate.

We recommend that the Administrator of CMS better target the Medicare 
rural payment adjustment to trips provided in rural counties with 
particularly low population density by adjusting the base rates, rather 
than the mileage rate, for ground ambulance services provided in those 
counties.

In written comments on a draft of this report, CMS stated that the 
report will be useful as the agency develops a proposed rule to address 
appropriate payment for ambulance services furnished in rural, low-
volume areas. The eight ambulance associations that commented on the 
draft report generally agreed with our findings and recommendation. 
However, four of the associations raised concerns about using counties 
to identify rural areas when targeting rural payments.

Background:

In recent years, the ambulance industry has experienced several 
changes. In 2002, CMS implemented a new Medicare fee schedule for 
ambulance services, replacing the previous system that paid providers 
on a reasonable cost or reasonable charge basis. In addition, according 
to industry experts, many volunteer providers have reported greater 
difficulty maintaining adequate staff. Rural providers in particular 
have begun to rely more heavily on paid staff. Experts also told us 
that while many rural volunteer providers have not billed Medicare--or 
have billed nominal amounts--more of these providers have begun billing 
for services.

Characteristics of Medicare Ambulance Providers:

Recently, both the number of ambulance providers that bill Medicare and 
the number of ambulance trips paid for by Medicare have increased. From 
1998 to 2001, the number of ambulance providers that billed Medicare 
increased from just under 9,300 to over 9,700, and the total number of 
trips paid for by Medicare rose from roughly 8 million to over 10 
million.

Medicare ambulance providers include a wide variety of provider types. 
In 1998, about 8,200 freestanding providers and 1,100 hospitals and 
other institution-based providers billed Medicare for ground trips. 
Freestanding providers are a diverse group, including private for-
profit, not-for-profit, and public entities. They range from small 
community one-vehicle operations to large fire and rescue departments 
serving major metropolitan areas. They include operations staffed 
almost entirely by community volunteers, public ventures that include a 
mix of volunteer and paid professional staff, and private firms that 
use only paid staff. In 1998, volunteer staff accounted for 80 percent 
or more of full-time equivalent personnel for over one-third of 
Medicare ambulance providers.[Footnote 6] About one-third of 
freestanding Medicare ambulance providers are managed by local fire 
departments.

Medicare ambulance providers also vary in the types of services they 
provide. Some deliver only basic life support (BLS) while others 
deliver advanced life support (ALS) services.[Footnote 7] In addition 
to responding to emergencies, ambulance providers may provide 
nonemergency transportation, such as transfers from one hospital to 
another. For some ambulance providers, nonemergency trips account for a 
significant share of their trips; for others, such trips account for 
few or none of their trips. Some ambulance providers are the sole 
providers serving their communities, while others operate in areas with 
multiple ambulance providers.

Medicare ambulance providers also differ in the percentage of their 
trips covered by Medicare and in their reliance on Medicare revenue. In 
1998, Medicare beneficiaries on average accounted for about half of the 
total trips by providers that billed Medicare. However, Medicare 
beneficiaries accounted for less than one-quarter of trips for 13 
percent of Medicare providers, and accounted for over 80 percent of 
annual trips for 9 percent of providers. On average, Medicare revenue 
accounted for 41 percent of providers' cash receipts.[Footnote 8] Other 
sources of ambulance providers' revenue include local tax subsidies and 
payments from private insurers, Medicaid, and individuals.

Requirements affecting ambulance providers vary by location. States and 
localities may require certain training for ambulance staff, establish 
maximum payment rates that licensed providers are allowed to charge, or 
specify response times through contracts with providers. Some 
jurisdictions--such as those that provide financial support to 
ambulance providers--prohibit providers from billing for services. In 
addition, some communities require all ambulance providers to maintain 
ALS capacity on all vehicles.

Medicare Payment for Ambulance Services:

CMS recently implemented a Medicare fee schedule that changed the way 
Medicare pays for ambulance services.[Footnote 9] The fee schedule, 
mandated by the Balanced Budget Act of 1997 (BBA), recognizes seven 
levels of ground ambulance services, ranging from BLS services to 
specialty care transports. (See table 1.) Under the previous payment 
system, Medicare paid institutional providers on a reasonable cost 
basis and freestanding providers on a reasonable charge basis. This 
approach led to wide differences in payments across providers for the 
same services. The new fee schedule standardized payment rates across 
provider types by applying the same payment rates to both institutional 
and freestanding providers.[Footnote 10] The fee schedule's payment 
rates are updated annually. Medicare's payment is based on the lesser 
of the actual charge or the applicable fee schedule amount.

Table 1: Ground Ambulance Services Covered by Medicare's Ambulance Fee 
Schedule:

Level of ambulance service: Basic life support (BLS); Definition: 
Transportation by ambulance and the provision of medically necessary 
supplies and services, including the provision of BLS ambulance 
services as defined by the state; Staffing requirements: The ambulance 
must be staffed by an individual who is qualified in accordance with 
state and local laws as an emergency medical technician-basic (EMT-
Basic); Base rate (2003)[A]: $172.42.

Level of ambulance service: BLS-emergency; Definition: BLS level of 
service provided in immediate response to a 911 call or the 
equivalent; Staffing requirements: Same as BLS; Base rate (2003)[A]: 
$275.87.

Level of ambulance service: Advanced life support, level 1 (ALS1); 
Definition: Transportation by ambulance and the provision of medically 
necessary supplies and services, including an ALS assessment by ALS 
personnel or the provision of at least one ALS intervention.[B]; 
Staffing requirements: ALS personnel are individuals trained to the 
level of the emergency medical technician-intermediate (EMT-
Intermediate) or EMT-Paramedic.[C]; Base rate (2003)[A]: $206.90.

Level of ambulance service: ALS1-emergency; Definition: ALS level of 
service provided in immediate response to a 911 call or the 
equivalent; Staffing requirements: Same as ALS1; Base rate (2003)[A]: 
$327.60.

Level of ambulance service: ALS2; Definition: Transportation by 
ambulance and the provision of medically necessary supplies and 
services, including (1) at least three separate administrations of one 
or more medications by intravenous push/bolus or by continuous 
infusion,[D] or (2) the provision of at least one of seven ALS2 
procedures.e; Staffing requirements: Same as ALS1; Base rate (2003)[A]: 
$474.16.

Level of ambulance service: Paramedic ALS intercept; Definition: EMT-
Paramedic services furnished by a provider that does not furnish the 
ground ambulance transport, provided the services meet certain 
requirements.[F]; Staffing requirements: EMT-Paramedic; Base rate 
(2003)[A]: $301.74.

Level of ambulance service: Specialty care transport (SCT); Definition: 
Hospital-to-hospital transportation of a critically injured or ill 
patient, including the provision of medically necessary supplies and 
services, at a level of service beyond the scope of the EMT-Paramedic; 
Staffing requirements: SCT is necessary when a patient's condition 
requires ongoing care that must be furnished by one or more health 
professionals in an appropriate specialty area, such as nursing or 
respiratory care, or a paramedic with additional training; Base rate 
(2003)[A]: $560.37.

Source: CMS.

Note: GAO summary based on information in CMS's final rule as published 
in the Federal Register, a subsequent program memorandum regarding 
definitions of ambulance services, and the ambulance fee schedule 
public use file for calendar year 2003. See 67 Fed. Reg. 9100, CMS's 
Program Memorandum AB-02-130 (Sept. 27, 2002).

[A] This is the base rate for each level of service prior to the 
geographic adjustment for differences in wages across areas.

[B] An ALS assessment is an assessment performed by an ALS crew as part 
of an emergency response that was necessary because the patient's 
reported condition at the time of dispatch was such that only an ALS 
crew was qualified to perform the assessment. An ALS assessment does 
not necessarily result in a determination that the patient requires an 
ALS level of service. An ALS intervention is a procedure that is, in 
accordance with state and local laws, beyond the scope of practice of 
an EMT-Basic.

[C] An EMT-Intermediate is an individual who is qualified, in 
accordance with state and local laws, as an EMT-Basic and who is also 
certified, in accordance with those laws, to perform essential advanced 
techniques and to administer a limited number of medications. An EMT-
Paramedic is an individual who has the qualifications of an EMT-
Intermediate and, in accordance with state and local laws, has enhanced 
skills that include being able to perform additional interventions and 
administer additional medications.

[D] This excludes certain solutions.

[E] These include chest decompression, cardiac pacing, surgical airway, 
and other procedures.

[F] Paramedic ALS intercept services are most often furnished for an 
emergency ambulance trip in which a local volunteer ambulance that can 
furnish only BLS services is dispatched to transport a beneficiary. If 
the beneficiary needs ALS services, another provider dispatches a 
paramedic to meet the BLS ambulance at the scene or enroute to the 
hospital. The ALS paramedics then provide ALS services for the 
beneficiary. In general, Medicare payment may be made only to the 
provider furnishing the trip. However, the BBA provided that payments 
also could be made for the ALS provider under limited circumstances. 
CMS has stated that New York is the only state in which providers meet 
the statutory requirements for Medicare payment.

[End of table]

For most ambulance services, the fee schedule payment is the sum of a 
base payment and a payment for mileage.[Footnote 11]

* The base payment for a trip, which is intended to pay for fixed costs 
such as staff and equipment, reflects both a base rate and a geographic 
modifier. The base rate varies by the level of ambulance service 
provided. The geographic modifier, which is applied to 70 percent of 
the base rate, is intended to account for wage differences across 
areas.[Footnote 12]

* The mileage payment reflects both the length of a trip and the per-
mile payment rate. For trips in which the beneficiary is picked up in 
an urban area, the per-mile rate is $5.53. Because of the fee 
schedule's rural adjustment, the per-mile rate for rural trips is 150 
percent of the urban mileage rate for each of the first 17 miles 
($8.30) and 125 percent of the urban mileage rate for miles 18 through 
50 ($6.91).[Footnote 13] The urban mileage rate applies to every mile 
over 50 miles. The mileage payment applies only to "loaded miles"--the 
miles the beneficiary is transported by ambulance.

Under the fee schedule, rural areas are defined as areas outside of 
metropolitan statistical areas (MSA) and New England County 
Metropolitan Areas, as well as parts of MSAs that are identified as 
rural by the Goldsmith modification.[Footnote 14] MSAs are groups of 
counties containing a core of at least 50,000 people, together with 
adjacent areas that have a high degree of economic and social 
integration with that core.[Footnote 15] The Goldsmith modification 
identifies small towns and rural areas within large metropolitan 
counties that are isolated from central areas by distance or other 
features, such as mountains. About one-quarter of the roughly 3,100 
counties in the United States are in MSAs, and about 75 of those 
counties have areas that are identified as rural under the Goldsmith 
modification.

The ambulance fee schedule will be phased in over several years. During 
this period, payments will be based in part on the fee schedule's 
service-specific payment rates and in part on the amounts that Medicare 
would have paid under the prior payment system. The proportion of the 
payment based on the fee schedule will increase each year until 2006, 
when provider payments will be based entirely on the fee 
schedule.[Footnote 16] In 2003, payments are based on 40 percent of the 
fee schedule payment and 60 percent of the rates under the prior 
system.[Footnote 17]

Ambulance Providers' Trip Volume Is the Main Factor Affecting Their 
Cost Per Trip:

Trip volume is the major determinant of differences across providers in 
the average cost per trip. Ambulance providers' total costs primarily 
reflect readiness--having an ambulance and crew available when 
emergency calls are received. These readiness-related costs are fixed 
costs, meaning that they do not increase with the number of trips 
provided, as long as the provider has the excess capacity to make 
additional trips. Consequently, providers that can spread these fixed 
costs across more trips have a lower average cost per trip than 
providers that make fewer trips.

Providers' Total Costs Are Predominantly Readiness Related, and Do Not 
Vary With Trip Volume:

The majority of ambulance providers' total costs are related to 
readiness--the need to have an ambulance and crew available when 
emergency calls are received. Readiness-related costs include costs of 
labor, vehicles, building space, and administration, as well as the 
cost of any back-up vehicles and crew, which constitute a reserve that 
permits responses to multiple simultaneous calls as well as scheduled 
maintenance on other vehicles. (See table 2.) Readiness-related costs 
are fixed, meaning that they do not vary with the number of trips a 
provider makes, as long as the provider has excess capacity. For 
example, total vehicle costs do not increase significantly when a 
provider makes more trips. Likewise, building and administrative costs 
are largely unaffected by trip volume. However, if a provider were to 
add another ambulance and crew to respond to higher volume, its fixed 
costs would rise substantially.

Table 2: Ambulance Providers' Cost Components, 1998:

Cost component: Labor costs; Percentage of total costs: 65.

Cost component: Administrative costs; Percentage of total costs: 14.

Cost component: Vehicle and equipment costs; Percentage of total costs: 
11.

Cost component: Building costs; Percentage of total costs: 6.

Cost component: Supply costs; Percentage of total costs: 3.

Cost component: Total costs; Percentage of total costs: 100.

[End of table]

Source: Project HOPE.

Note: GAO analysis of data from Project HOPE's National Survey of 
Ambulance Providers. Fuel costs are included in the vehicle and 
equipment costs category. These data are for full cost providers. Those 
that did not report costs for all five components were excluded. Full 
cost providers are defined as those that have 80 percent or more of 
their staff comprised of paid employees rather than volunteers, and 
that pay for 80 percent or more of their garage and office space. These 
data are for the fiscal year preceding the survey, which for most 
providers included 6 months or more of calendar year 1998. Cost 
component categories do not add to 100 percent due to rounding.

[End of table]

In contrast, an ambulance provider's costs for fuel and supplies (such 
as drugs and oxygen) are variable because they increase with the number 
of trips. These costs, however, account for a small fraction of 
ambulance providers' total costs.[Footnote 18]

Fewer Trips Linked to a Higher Cost Per Trip:

Providers that make fewer trips tend to have a higher cost per trip 
than those that make more trips. Figure 1 illustrates the average 
relationship between ambulance providers' cost per trip and their total 
trip volume, for providers that made 5,000 or fewer trips.[Footnote 19] 
As trip volume increases, the cost per trip decreases. Our statistical 
analysis considered other factors that affect providers' costs, notably 
trip length, but trip volume was most strongly related to the cost per 
trip.

Figure 1: The Relationship between Cost Per Trip and Total Ambulance 
Trip Volume for Full Cost Providers With 5,000 or Fewer Annual Trips, 
1998:

[See PDF for image]

Note: GAO analysis of data from Project HOPE's National Survey of 
Ambulance Providers. The curve represents the predicted average cost 
per trip, based on our statistical analysis of providers' total costs, 
controlling for variation in type of service and trip volume, both of 
which were statistically significant. Total trip volume includes all of 
a provider's trips, not just those covered by Medicare. These data are 
for full cost providers. Full cost providers are defined as those that 
have 80 percent or more of their staff comprised of paid employees 
rather than volunteers, and that pay for 80 percent or more of their 
garage and office space. Providers with over 5,000 trips were excluded. 
We found similar results when we analyzed all full cost providers. 
These data are for the fiscal year preceding the survey, which for most 
providers included 6 months or more of calendar year 1998.

[End of figure]

In addition, we found that providers surveyed by Project HOPE that 
averaged 3 or fewer trips per day had an average cost per trip that was 
nearly twice as high as the cost per trip among those that averaged 9 
to 12 trips per day.[Footnote 20] (See table 3.) Providers that 
averaged 4 to 8 trips per day had a cost per trip that was 1.3 times as 
high as the average cost among providers with 9 to 12 trips per day.

Table 3: Relative Cost Per Trip for Full Cost Ambulance Providers, 
1998:

Providers' average number of total trips per day (range): 3 or fewer; 
Cost per trip relative to the average for providers with 9 to 12 trips 
per day: 1.94.

Providers' average number of total trips per day (range): 4 to 8; Cost 
per trip relative to the average for providers with 9 to 12 trips per 
day: 1.30.

Providers' average number of total trips per day (range): 9 to 12; Cost 
per trip relative to the average for providers with 9 to 12 trips per 
day: 1.00.

Source: Project HOPE.

Note: GAO analysis of data from Project HOPE's National Survey of 
Ambulance Providers. The relative cost per trip is the ratio of the 
average cost per trip for each group of providers to the average cost 
per trip of providers that averaged 9 to 12 trips per day. Total trip 
volume includes all of a provider's trips, not just those covered by 
Medicare. These data are for full cost providers. Full cost providers 
are defined as those that have 80 percent or more of their staff 
comprised of paid employees rather than volunteers, and that pay for 80 
percent or more of their garage and office space. Providers that had 
daily trip volumes outside the ranges shown above were excluded. The 
cost differences are statistically significant at the .05 level between 
the 3 trips or fewer group of providers and the other two groups (4 to 
8 trips and 9 to 12 trips). The cost difference between the second and 
third groups was statistically significant at the .10 level. 
Significance was assessed using a one-tailed test. These data are for 
the fiscal year preceding the survey, which for most providers included 
6 months or more of calendar year 1998.

[End of table]

Medicare Ambulance Payments for Trips in Rural Counties Are Unlikely to 
Fully Reflect Differences in Providers' Cost Per Trip:

Although Medicare's payments generally are higher for trips originating 
in the least densely populated rural counties than in other counties, 
the payment differential is probably not large enough to account for 
the higher costs incurred by low-volume providers likely to serve these 
areas. Far fewer Medicare-covered ambulance trips are typically 
provided in rural counties than in urban counties. Trip volume also 
varies widely across rural counties, with the least densely populated 
generally having substantially fewer trips than the most densely 
populated. This suggests that the cost per trip is likely higher for 
providers serving the least densely populated rural counties. Ambulance 
providers on average are paid more for trips originating in the least 
densely populated rural counties than for those in the most densely 
populated rural counties, but the payment differences are modest and 
unlikely to reflect the higher cost per trip of low-volume providers.

Rural and Urban Counties Differ in Ambulance Trip Volume and Population 
Density:

Rural counties, as defined by Medicare's ambulance fee schedule, tend 
to have a much lower volume of ambulance trips than counties defined as 
urban.[Footnote 21] In 2001, rural counties averaged about 1,200 
Medicare-covered trips (both emergency and nonemergency), while urban 
counties averaged about 9,100 trips. The lower number of trips in rural 
counties suggests that providers that serve these areas likely have a 
higher cost per trip than other providers.

The difference in the volume of Medicare ambulance trips provided in 
rural and urban counties largely reflects differences in their 
population density. Not surprisingly, the number of Medicare ambulance 
trips in a county is strongly related to its population, with counties 
with fewer residents having fewer trips. Trip volume is also related to 
a county's land area, although to a lesser extent.[Footnote 22] 
Population density--the ratio of population to land area--reflects both 
of these measures. (See table 4.):

Table 4: Characteristics of Urban and Rural Counties, 2001:

Urban counties; Average number of Medicare ambulance trips: 9,144; 
Average length of Medicare ambulance trips (miles): 14; Average 
population density (persons/ sq. mile): 747; Average population: 
276,791; Average land area (sq. miles): 844.

Rural counties; Average number of Medicare ambulance trips: 1,153; 
Average length of Medicare ambulance trips (miles): 23; Average 
population density (persons/ sq. mile): 47; Average population: 
23,942; Average land area (sq. miles): 1,132.

Sources: HRSA and CMS.

Note: GAO analysis of HRSA and CMS data. We classified counties as 
urban if they were in an MSA and as rural if they were not in an MSA. 
The roughly 75 urban counties that contain rural areas as identified by 
the Goldsmith modification are included in the urban county group. We 
used the beneficiary's address as a proxy for where each trip 
originated.

[End of table]

Dominant Providers in Less Densely Populated Rural Counties Provide 
Fewer Trips:

The number of Medicare ambulance trips provided in rural counties 
varies markedly with population density, with the least densely 
populated rural counties tending to have fewer trips than other rural 
counties. For example, the quarter of rural counties that are the most 
densely populated, with 52 or more persons per square mile, averaged 
over 2,200 Medicare trips in 2001.[Footnote 23] (See table 5.) In 
contrast, only about 300 Medicare trips, on average, were made in the 
quarter of rural counties that are the least densely populated, with 11 
or fewer persons per square mile. Even fewer Medicare trips--only about 
200--were made in frontier counties, which are counties with 6 or fewer 
persons per square mile.[Footnote 24] This suggests that the cost per 
trip is likely higher for providers serving the least densely populated 
rural counties.

Table 5: Average Number of Medicare Ambulance Trips, Population and 
Land Area, by Counties Grouped by Population Density, 2001:

County categories: Urban counties; Number of counties: 854; Average 
number of Medicare ambulance trips: 9,144; Average population: 276,791; 
Average land area (sq. miles): 844.

County categories: Rural counties; Number of counties: 2,273; Average 
number of Medicare ambulance trips: 1,153; Average population: 23,942; 
Average land area (sq. miles): 1,132.

County categories: 52+ persons/sq. mile; Number of counties: 569; 
Average number of Medicare ambulance trips: 2,254; Average population: 
45,612; Average land area (sq. miles): 502.

County categories: 30-51 persons/sq. mile; Number of counties: 568; 
Average number of Medicare ambulance trips: 1,290; Average population: 
25,351; Average land area (sq. miles): 654.

County categories: 12-29 persons/sq. mile; Number of counties: 568; 
Average number of Medicare ambulance trips: 771; Average population: 
16,744; Average land area (sq. miles): 898.

County categories: 0-11 persons/sq. mile; Number of counties: 568; 
Average number of Medicare ambulance trips: 296; Average population: 
8,021; Average land area (sq. miles): 2,477.

County categories: 7-11 persons/sq. mile; Number of counties: 182; 
Average number of Medicare ambulance trips: 470; Average population: 
12,288; Average land area (sq. miles): 1,491.

County categories: 0-6 persons/sq. mile; Number of counties: 386; 
Average number of Medicare ambulance trips: 214; Average population: 
6,009; Average land area (sq. miles): 2,942.

Sources: HRSA and CMS.

Note: GAO analysis of HRSA and CMS data. We classified counties as 
urban if they were in an MSA and as rural if they were not in an MSA. 
The roughly 75 urban counties that contain rural areas as identified by 
the Goldsmith modification are included in the urban county group. 
Rural counties are grouped by quartiles of total county population 
density. The first quartile (0-11 persons per square mile) is further 
divided into frontier counties (0-6 persons per square mile) and 
nonfrontier (7-11 persons per square mile). We used the beneficiary's 
address as a proxy for where each trip originated.

[End of table]

The dominant providers in the least densely populated rural counties 
tend to have far fewer trips than the dominant providers serving other 
rural counties. Overall, rural counties vary little in the number of 
providers serving them. However, in most rural counties, one or two 
providers dominate, delivering the bulk of Medicare trips, with others 
having a much smaller share. We found that in 2001, about 70 percent of 
the trips in a rural county were typically supplied by two providers. 
The number of trips made by these dominant providers varied with 
counties' population density. In the quarter of rural counties with the 
lowest population density, the median number of Medicare trips made by 
each of the top two providers--in all of the counties they served--was 
275.[Footnote 25] (See table 6.) In contrast, the median number of 
Medicare trips made by the top two providers was much higher--over 
2,100 trips--in the quarter of rural counties that were the most 
densely populated.[Footnote 26]

Table 6: Characteristics of Rural Counties and Their Ambulance 
Providers, by Counties Grouped by Population Density, 2001:

County categories: Rural; Number of counties: 2,273; Number of Medicare 
providers serving a county[A] (median): 5; Percentage of a county's 
Medicare ambulance trips covered by the top 2 providers in a county 
(median): 70; Number of Medicare ambulance trips in all counties for 
each of the top 2 providers (median): 1,100.

County categories: 52+ persons/sq. mile; Number of counties: 569; 
Number of Medicare providers serving a county[A] (median): 8; 
Percentage of a county's Medicare ambulance trips covered by the top 2 
providers in a county (median): 68; Number of Medicare ambulance trips 
in all counties for each of the top 2 providers (median): 2,168.

County categories: 30-51 persons/sq. mile; Number of counties: 568; 
Number of Medicare providers serving a county[A] (median): 6; 
Percentage of a county's Medicare ambulance trips covered by the top 2 
providers in a county (median): 70; Number of Medicare ambulance trips 
in all counties for each of the top 2 providers (median): 1,422.

County categories: 12-29 persons/sq. mile; Number of counties: 568; 
Number of Medicare providers serving a county[A] (median): 6; 
Percentage of a county's Medicare ambulance trips covered by the top 2 
providers in a county (median): 69; Number of Medicare ambulance trips 
in all counties for each of the top 2 providers (median): 832.

County categories: 0-11 persons/sq. mile; Number of counties: 568; 
Number of Medicare providers serving a county[A] (median): 4; 
Percentage of a county's Medicare ambulance trips covered by the top 2 
providers in a county (median): 74; Number of Medicare ambulance trips 
in all counties for each of the top 2 providers (median): 275.

County categories: 7-11 persons/sq. mile; Number of counties: 182; 
Number of Medicare providers serving a county[A] (median): 5; 
Percentage of a county's Medicare ambulance trips covered by the top 2 
providers in a county (median): 71; Number of Medicare ambulance trips 
in all counties for each of the top 2 providers (median): 433.

County categories: 0-6 persons/sq. mile; Number of counties: 386; 
Number of Medicare providers serving a county[A] (median): 4; 
Percentage of a county's Medicare ambulance trips covered by the top 2 
providers in a county (median): 75; Number of Medicare ambulance trips 
in all counties for each of the top 2 providers (median): 215.

Sources: HRSA and CMS.

Note: GAO analysis of HRSA and CMS data. We classified counties as 
rural if they were not in an MSA. Rural counties are grouped by 
quartiles of total county population density. The first quartile (0-11 
persons per square mile) is further divided into frontier counties (0-
6 persons per square mile) and nonfrontier counties (7-11 persons per 
square mile). We used the beneficiary's address as a proxy for where 
each trip originated.

[A] Providers that delivered less than 1 percent of their total 
Medicare trips in a county were excluded from the count of providers 
serving that county.

[End of table]

Medicare Ambulance Payments Are Somewhat Higher for Trips in Less 
Densely Populated Rural Counties:

Ambulance providers on average are paid 16 percent more for trips 
originating in the least densely populated quarter of rural counties 
than for trips in the most densely populated quarter.[Footnote 27] (See 
table 7.) Payments for those trips are higher because the trips are 
generally longer, resulting in a higher mileage payment. In 2001, while 
trips that began in the most densely populated quarter of rural 
counties averaged 18 miles, trips in the least densely populated 
quarter averaged 30 miles. The rural adjustment, which provides a 
higher per-mile rate for the first 50 miles of rural trips, also 
contributed to the higher mileage payments.

The modest difference in Medicare payment across rural counties is 
dwarfed by the difference in trip volume: The difference in trip volume 
between the least and most densely populated quarters of rural counties 
is nearly eightfold.[Footnote 28] Because trip volume is an indicator 
of costs, the Medicare payment differences likely do not fully reflect 
differences across rural counties in providers' cost per trip.[Footnote 
29]

Table 7: Average Number of Medicare Ambulance Trips, Trip Length, and 
Estimates of Average Medicare PaymentAper Ambulance Trip, by Rural 
Counties Grouped by Population Density:

County categories: Rural counties; Number of counties: 2,273; Average 
number of Medicare ambulance trips: 1,153; Average length of Medicare 
ambulance trips (miles): 23; Average Medicare payment per ambulance 
trip: $463.

County categories: 52+ persons/sq. mile; Number of counties: 569; 
Average number of Medicare ambulance trips: 2,254; Average length of 
Medicare ambulance trips (miles): 18; Average Medicare payment per 
ambulance trip: $434.

County categories: 30-51 persons/sq. mile; Number of counties: 568; 
Average number of Medicare ambulance trips: 1,290; Average length of 
Medicare ambulance trips (miles): 21; Average Medicare payment per 
ambulance trip: $446.

County categories: 12-29 persons/sq. mile; Number of counties: 568; 
Average number of Medicare ambulance trips: 771; Average length of 
Medicare ambulance trips (miles): 25; Average Medicare payment per 
ambulance trip: $465.

County categories: 0-11 persons/sq. mile; Number of counties: 568; 
Average number of Medicare ambulance trips: 296; Average length of 
Medicare ambulance trips (miles): 30; Average Medicare payment per 
ambulance trip: $505.

County categories: 7-11 persons/sq. mile; Number of counties: 182; 
Average number of Medicare ambulance trips: 470; Average length of 
Medicare ambulance trips (miles): 27; Average Medicare payment per 
ambulance trip: $490.

County categories: 0-6 persons/sq. mile; Number of counties: 386; 
Average number of Medicare ambulance trips: 214; Average length of 
Medicare ambulance trips (miles): 31; Average Medicare payment per 
ambulance trip: $512.

Sources: HRSA and CMS.

Note: GAO analysis of HRSA and CMS data. We classified counties as 
urban if they were in an MSA and as rural if they were not in an MSA. 
The roughly 75 urban counties that contain rural areas as identified by 
the Goldsmith modification are included in the urban county group. 
Rural counties are grouped by quartiles of total county population 
density. The first quartile (0-11 persons per square mile) is further 
divided into frontier counties (0-6 persons per square mile) and 
nonfrontier counties (7-11 persons per square mile). We used the 
beneficiary's address as a proxy for where each trip originated.

[A] Payment estimates were calculated by applying 100 percent of the 
2003 Medicare ambulance fee schedule rates to Medicare ground ambulance 
trips delivered in 2001. These estimates reflect the mix of ambulance 
services provided in the different county categories as well as the 
geographic adjustment to account for wage differences across areas.

[End of table]

Conclusions:

Refining Medicare's ambulance fee schedule to adequately account for 
cost differences in providing ambulance services across various 
geographic areas is important to ensuring beneficiaries' access to 
services. Access is a particular concern in rural areas, since 
providers' cost per trip is likely to be higher because they provide 
fewer trips. Moreover, our analysis shows that the cost per trip is 
likely to be highest in the least densely populated rural counties. 
While the fee schedule incorporates a rural adjustment to raise 
payments for trips provided in rural areas, its definition of "rural" 
is broad. As a result, the fee schedule's rural payment adjustment does 
not sufficiently target trips provided in the least densely populated 
rural counties.

In implementing the fee schedule, CMS adjusted the mileage rate for 
rural trips to account for the higher cost per trip of providers 
serving rural areas. However, trip volume is a better indicator of 
providers' cost per trip than is trip length. Thus, adjusting the base 
rates for rural trips--the portion of Medicare's payment that is 
designed to pay for providers' fixed costs--is a more appropriate way 
of accounting for rural low-volume providers' higher cost per trip than 
adjusting the mileage rate.

Recommendation for Executive Action:

To help ensure that Medicare beneficiaries' access to ambulance 
services is adequate, we recommend that the Administrator of CMS better 
target the rural payment adjustment to trips provided in rural counties 
with particularly low population density by adjusting the base rates, 
rather than the mileage rate, for ground ambulance services provided in 
those counties.

Agency and External Reviewer Comments and Our Evaluation:

We received written comments on a draft of this report from CMS. We 
also received comments from eight ambulance associations: American 
Ambulance Association,[Footnote 30] American Hospital Association, 
Association of Air Medical Services, National Association of State 
Emergency Medical Services Directors, National Volunteer Fire Council, 
Rural EMS Advocate, American College of Emergency Physicians, and the 
National Association of EMS Physicians.

CMS:

CMS stated that the report will be useful as the agency develops a 
proposed rule to address appropriate payment for ambulance services 
furnished in rural, low-volume areas. CMS also noted that the report 
reflects the complexity of the issues and the need for careful analysis 
to ensure that payment adjustments are made only for those ambulance 
providers that require additional payment because of their low volume, 
rather than, for example, inefficiency or competition from another 
provider. CMS's comments appear in appendix III. CMS also provided 
technical comments, which we incorporated as appropriate.

:

Ambulance Associations:

The associations that reviewed the draft report generally agreed with 
our findings and recommendation. All of the associations agreed with 
the need to address the higher cost of providing ambulance services in 
rural areas. Six agreed that an area's ambulance trip volume reflects 
its population density, while the remaining two associations did not 
address this issue. The majority of the associations agreed that CMS 
should adjust the base rates to recognize the higher cost per trip of 
providing ambulance services in areas with low population density. 
However, three associations went further, proposing to use both mileage 
and base rates to address the higher costs in rural areas. While 
supporting the principle of paying higher base rates to providers in 
rural areas where costs are high, the state EMS directors' and EMS 
physicians' associations were concerned that higher payments for rural 
providers could be at the expense of other providers.

Four associations raised concerns about using counties as the 
geographic areas for applying the adjustment. These associations said 
that a system that used counties would not accurately target rural 
ambulance payments. Three of these associations noted that, because 
counties may include both densely and sparsely populated areas, a 
system that used counties could overpay some providers and underpay 
others. They proposed using zip codes as the geographic areas for 
assessing population density and applying the adjustment. The rural 
ambulance association, in particular, also advocated the use of 
multiple rural categories based on population density to adjust 
payments for rural trips. The fourth association emphasized the need 
for a system that ensures that all areas with sufficiently low 
population density are eligible for an appropriate payment adjustment.

Our Response:

GAO and the ambulance associations agree with the need to adjust 
payments for rural trips and that the adjustment should be applied to 
the base rate. With respect to adjusting payments for rural trips in 
low population density areas, we believe the adjustment should be 
applied to the base rate. We believe that the mileage rate for any 
trip, rural or urban, is best suited to compensating ambulance 
providers for costs that vary with trip length. As stated in the 
report, a base rate adjustment is a more appropriate way of accounting 
for rural low-volume providers' higher costs per trip because base 
rates reflect fixed costs, and because trip volume is a better 
indicator of providers' cost per trip than is trip length. With respect 
to possible payment reductions for other providers, implementing our 
recommendation could have this effect. If a revised rural adjustment is 
implemented in a way to keep total Medicare expenditures the same, some 
providers could face lower payments.

With respect to the geographic unit used to identify trips for the 
rural adjustment, we agree that, since counties are relatively large 
geographic units, it is possible for trips in some areas to be overpaid 
and others underpaid. Moreover, in principle, a rural classification 
system that uses a smaller geographic unit, such as zip codes, might 
better target payments to trips in areas with low population density. 
Yet our analysis indicates that zip codes do not explain variation in 
trip volume as well as counties. Further, county boundaries tend to be 
more stable over time than zip code boundaries. In addition, a variety 
of technical difficulties hinder the use of zip codes for ambulance 
payments, including the absence of zip codes for some rural areas. With 
respect to multiple adjustment categories, we did not address whether 
there should be a single adjustment or whether there should be multiple 
adjustment amounts to reflect differing levels of population density. A 
decision on single or multiple categories would require balancing 
increased precision with increased complexity.

We are sending copies of this report to the Administrator of CMS, 
appropriate congressional committees, and other interested parties. We 
will also make copies available to others upon request. This report is 
also available at no charge on GAO's Web site at [Hyperlink, http://
www.gao.gov] http://www.gao.gov.

If you or your staffs have any questions, please call me at (202) 512-
7114. Other GAO contacts and staff acknowledgments are listed in 
appendix IV.

Signed by:

Laura A. Dummit 
Director, Health Care--Medicare Payment Issues:

List of Committees:

The Honorable Charles E. Grassley 
Chairman 
The Honorable Max Baucus 
Ranking Minority Member 
Committee on Finance 
United States Senate:

The Honorable W.J. "Billy" Tauzin 
Chairman 
The Honorable John D. Dingell 
Ranking Minority Member 
Committee on Energy and Commerce 
House of Representatives:

The Honorable William M. Thomas 
Chairman 
The Honorable Charles B. Rangel 
Ranking Minority Member 
Committee on Ways and Means 
House of Representatives:

[End of section]

Appendixes: 

Appendix I: Data and Methods:

1999 National Survey of Ambulance Providers. To identify the factors 
that influenced ambulance provider costs, we used the 1999 National 
Survey of Ambulance Providers. This survey, conducted by the Project 
HOPE Center for Health Affairs under the sponsorship of the American 
Ambulance Association, is the only nationally representative source for 
ambulance providers' costs. Project HOPE selected a stratified random 
sample of providers that had billed Medicare in 1997, obtained 421 
completed questionnaires, and reported a response rate of 56 
percent.[Footnote 31] The survey included questions on costs, total 
number of trips by type of service, geographic location, and total 
mileage.

We took several steps to ensure that the Project HOPE data were 
suitable for our analysis. We examined the accuracy and completeness of 
the data by testing for implausible values and internal consistency. In 
addition, we questioned an anomalous result in Project HOPE's initial 
analysis of its data, which raised concerns about the credibility of 
the data: emergency advanced life support (ALS) trips cost less than 
nonemergency basic life support (BLS) trips.[Footnote 32] In response, 
Project HOPE provided us with information about its subsequent 
analysis, which showed the expected result--ALS trips cost more than 
BLS trips, after controlling for providers' volume. This result 
resolved our major concern about the data.

We limited our analysis of the factors affecting differences in 
providers' costs to full cost providers--those providers that paid for 
80 percent or more of their staff and paid for 80 percent or more of 
their office and garage space. The costs reported by these providers 
are more likely to reflect the full cost of providing ambulance 
services. We also excluded ambulance providers that were part of fire 
departments, because about half could not separate ambulance costs from 
other costs. Finally, we excluded one provider that reported 
implausible values. After these exclusions, we had 114 cases for 
analysis. Certain analyses that did not pertain to all full cost 
providers used a smaller number of cases. (See tables 8 and 9.):

Table 8: Full Cost Ambulance Providers by Average Number of Trips Per 
Day, 1998:

Providers' average number of total trips per day: 3 or fewer; 
Percentage of full cost providers: 22.

Providers' average number of total trips per day: 4 to 8; Percentage of 
full cost providers: 27.

Providers' average number of total trips per day: 9 to 12; Percentage 
of full cost providers: 9.

Providers' average number of total trips per day: 13 to 20; Percentage 
of full cost providers: 7.

Providers' average number of total trips per day: 21 or more; 
Percentage of full cost providers: 35.

Providers' average number of total trips per day: Total; Percentage of 
full cost providers: 100.

Source: Project HOPE.

Note: GAO analysis of data from Project HOPE's National Survey of 
Ambulance Providers. Total trip volume includes all of a provider's 
trips, not just those covered by Medicare. Full cost providers are 
defined as those that have 80 percent or more of their staff comprised 
of paid employees rather than volunteers, and that pay for 80 percent 
or more of their garage and office space. These data are for the fiscal 
year preceding the survey, which for most providers included 6 months 
or more of calendar year 1998. The number of full cost providers is 
114.

[End of table]

Table 9: Full Cost Ambulance Providers by Average Number of Trips Per 
Year, 1998:

Providers' average number of total trips per year: 5,000 or fewer; 
Percentage of full cost providers: 58.

Providers' average number of total trips per year: 5,001 to 10,000; 
Percentage of full cost providers: 20.

Providers' average number of total trips per year: More than 10,000; 
Percentage of full cost providers: 22.

Providers' average number of total trips per year: Total; Percentage of 
full cost providers: 100.

Source: Project HOPE.

Note: GAO analysis of data from Project HOPE's National Survey of 
Ambulance Providers. Total trip volume includes all of a provider's 
trips, not just those covered by Medicare. Full cost providers are 
defined as those that have 80 percent or more of their staff comprised 
of paid employees rather than volunteers, and that pay for 80 percent 
or more of their garage and office space. These data are for the fiscal 
year preceding the survey, which for most providers included 6 months 
or more of calendar year 1998. The number of full cost providers is 
114.

[End of table]

Area Resource File. The Area Resource File (ARF), which is maintained 
by the Health Resources and Services Administration (HRSA), is a 
county-based health resources information database that contains data 
from many sources, including the U.S. Census. From the 2001 ARF, we 
obtained county data on land area in 1990 and total population in 2000, 
which we used to calculate population density. We also obtained data on 
the number of persons age 65 and over in each county in 1999, which we 
used as a proxy for Medicare beneficiaries. The ARF is a standard data 
source that is well documented and widely used, so we did not 
independently verify its accuracy or completeness.

Medicare claims files. We used Medicare claims data to determine the 
volume and length of all ground-based Medicare-covered trips, as well 
as Medicare's payments for those trips. We used the 2001 national 
claims history 100 percent nearline file for physicians and suppliers 
to identify claims for ambulance services by freestanding providers, 
and the 2001 outpatient 100 percent standard analytic file to identify 
claims for ambulance services by institutional providers. We used the 
zip code of the beneficiary's primary address as a proxy for the point 
where the ambulance picked up the beneficiary because the point of 
pickup is not recorded in the 2001 data.[Footnote 33] Although we did 
not independently verify the reliability of the national claims files, 
we screened the files and excluded claims that were denied, claims that 
were superseded by an adjustment claim, and claims for services in 
other years. We retained all final claims for 2001.

Provider interviews. To gain an understanding of the ambulance 
industry, we interviewed experts from eight industry and professional 
organizations. We also interviewed several individual ambulance 
providers.

Factors affecting ambulance providers' costs. To examine the effect of 
selected factors on ambulance providers' costs, we analyzed the Project 
HOPE survey data using a simplified version of a model reported by 
Project HOPE.[Footnote 34] In our model, the natural logarithm of total 
costs is a function of the number of trips, the number of trips 
squared, and the proportion of the total trips that are ALS.[Footnote 
35] We tested a number of additional terms, including length of trips, 
but they were all either statistically insignificant or significant but 
with very small effects. We restricted our model to providers with 
5,000 or fewer total trips per year because we were primarily 
interested in rural providers, which generally have fewer 
trips.[Footnote 36] However, our sensitivity analyses showed that the 
results were broadly similar when the model was applied to all full 
cost providers.[Footnote 37] Our model has an adjusted R2 of 0.48, 
indicating that the model explains 48 percent of the variance in costs. 
In general, when trip volume declines, the estimated cost per trip 
increases, although less than proportionately. That is, a 10 percent 
decrease in trip volume is associated with an increase in cost per trip 
of less than 10 percent.

Analysis of variation in factors affecting costs across geographic 
areas. To examine differences between urban and rural areas in factors 
affecting ambulance costs, we grouped counties with similar 
characteristics. We followed CMS in classifying counties in 
metropolitan statistical areas (MSA) as urban counties and counties 
outside MSAs as rural.[Footnote 38] However, for our analysis we did 
not apply the Goldsmith modification that CMS uses to identify as rural 
certain areas within MSAs.[Footnote 39] These rural areas are typically 
small, so we did not treat them as rural counties because that would 
distort our urban and rural comparisons. Our sensitivity analyses 
determined that our findings would have been generally the same if we 
had considered these areas as rural counties, although in some cases 
the differences between urban and rural counties would have been 
heightened.

To examine differences among rural counties, we grouped them based on 
their population density. Population density--the ratio of population 
to land area--is a commonly used measure of rurality. We used 
population density to group counties into quartiles, and then divided 
the least densely populated quartile of rural counties into frontier 
counties--those with six or fewer persons per square mile--and 
nonfrontier counties, because of our interest in the most sparsely 
populated rural areas. Using this grouping, we found that ambulance 
trip volume decreased steadily from the most densely populated rural 
counties to the least densely populated. We also examined several other 
classification systems: urban influence codes (UIC), which classify 
counties based on each county's largest city and its proximity to other 
areas with large, urban populations; rural-urban continuum codes 
(RUCC), which classify metropolitan counties by the size of the urban 
area and nonurban counties by the size of the urban population and 
proximity to a metropolitan area; and rural-urban commuting areas 
(RUCA), which classify census tracts using patterns of urbanization, 
population density, and daily commuting patterns, and then map the 
census tracts into zip codes.[Footnote 40] These systems are more 
complex than the system we used, and we found that they did not help 
explain variation in trip volume as well as counties grouped by 
population density.

To confirm the effect of population density on trip volume, we did 
several additional analyses. We regressed counties' annual volume of 
Medicare trips (expressed as natural logarithms) on population and land 
area (expressed as natural logarithms). Population had a positive 
effect on the number of trips, while land area had a negative effect. 
An increase of 1 percent in population increased the number of trips by 
about 1 percent in a county, while an increase of 1 percent in land 
area decreased the number of trips by about 0.1 percent.[Footnote 41] 
Population density combines the two effects: a 1 percent increase in 
population density increases the number of trips by 0.7 
percent.[Footnote 42]

[End of section]

Appendix II: Characteristics of Rural Counties Grouped by Medicare 
Population Density:

Total population density is strongly related to Medicare population 
density. (See table 10.) For example, 525 rural counties with the 
lowest total population density were also lowest in terms of Medicare 
population density. In total, 83 percent of all rural counties were in 
the same density quartile, regardless of whether total population or 
Medicare population was used to group rural counties. Our results with 
respect to county characteristics and ambulance services would have 
been similar had we used Medicare population density to group counties 
rather than total population density. (See tables 11, 12, and 13.):

Table 10: Rural Counties Grouped by Total Population Density and by 
Medicare Population Density, 2001:

Total population density: 52+ people/sq. mile; Medicare population 
density: 7.6 + Medicare beneficiaries/sq. mile: 505; Medicare 
population density: 4.3-7.5 Medicare beneficiaries/sq. mile: 61; 
Medicare population density: 1.8-4.2 Medicare beneficiaries/sq. mile: 
3; Medicare population density: 0-1.7 Medicare beneficiaries/sq. mile: 
0.

Total population density: 30-51 people/sq. mile; Medicare population 
density: 7.6 + Medicare beneficiaries/sq. mile: 64; Medicare population 
density: 4.3-7.5 Medicare beneficiaries/sq. mile: 423; Medicare 
population density: 1.8-4.2 Medicare beneficiaries/sq. mile: 79; 
Medicare population density: 0-1.7 Medicare beneficiaries/sq. mile: 2.

Total population density: 12-29 people/sq. mile; Medicare population 
density: 7.6 + Medicare beneficiaries/sq. mile: 0; Medicare population 
density: 4.3-7.5 Medicare beneficiaries/sq. mile: 83; Medicare 
population density: 1.8-4.2 Medicare beneficiaries/sq. mile: 444; 
Medicare population density: 0-1.7 Medicare beneficiaries/sq. mile: 41.

Total population density: 0-11 people/sq. mile; Medicare population 
density: 7.6 + Medicare beneficiaries/sq. mile: 0; Medicare population 
density: 4.3-7.5 Medicare beneficiaries/sq. mile: 0; Medicare 
population density: 1.8-4.2 Medicare beneficiaries/sq. mile: 43; 
Medicare population density: 0-1.7 Medicare beneficiaries/sq. mile: 
525.

Source: HRSA.

Note: GAO analysis of the 2001 Area Resource File. Bolded numbers refer 
to the number of counties that fall in the same quarter of rural 
counties--whether rural counties are grouped by total population 
density or Medicare population density. We used the number of persons 
age 65 and over in each county in 1999 as a proxy for the number of 
Medicare beneficiaries.

[End of table]

Table 11: Average Number of Medicare Ambulance Trips, Population and 
Land Area, by Counties Grouped by Medicare Population Density, 2001:

County categories: Urban counties; Number of counties: 854; Average 
number of Medicare ambulance trips: 9,144; Average population: 276,791; 
Average land area (sq. miles): 844.

County categories: Rural counties; Number of counties: 2,273; Average 
number of Medicare ambulance trips: 1,153; Average population: 23,942; 
Average land area (sq. miles): 1,132.

County categories: 7.6+ Medicare beneficiaries/sq. mile; Number of 
counties: 569; Average number of Medicare ambulance trips: 2,279; 
Average population: 45,362; Average land area (sq. miles): 517.

County categories: 4.3-7.5 Medicare beneficiaries/sq. mile; Number of 
counties: 567; Average number of Medicare ambulance trips: 1,265; 
Average population: 24,836; Average land area (sq. miles): 646.

County categories: 1.8-4.2 Medicare beneficiaries/sq. mile; Number of 
counties: 569; Average number of Medicare ambulance trips: 752; 
Average population: 16,584; Average land area (sq. miles): 841.

County categories: 0-1.7 Medicare beneficiaries/sq. mile; Number of 
counties: 568; Average number of Medicare ambulance trips: 315; 
Average population: 8,961; Average land area (sq. miles): 2,527.

Sources: HRSA and CMS.

Note: GAO analysis of HRSA and CMS data. We classified counties as 
urban if they were in an MSA and as rural if they were not in an MSA. 
The roughly 75 urban counties that contain rural areas as identified by 
the Goldsmith modification are included in the urban county group. We 
used the beneficiary's address as a proxy for where each trip 
originated. We used the number of persons age 65 and over in each 
county in 1999 as a proxy for the number of Medicare beneficiaries.

[End of table]

Table 12: Characteristics of Rural Counties and Their Ambulance 
Providers, by Counties Grouped by Medicare Population Density, 2001:

County categories: Rural counties; Number of counties: 2,273; Number of 
Medicare providers serving a county[A] (median): 5; Percentage of a 
county's Medicare ambulance trips covered by the top 2 providers in a 
county (median): 70; Number of Medicare ambulance trips in all counties 
for each of the top 2 providers (median): 1,100.

County categories: 7.6+ Medicare beneficiaries/sq. mile; Number of 
counties: 569; Number of Medicare providers serving a county[A] 
(median): 9; Percentage of a county's Medicare ambulance trips 
covered by the top 2 providers in a county (median): 67; Number of 
Medicare ambulance trips in all counties for each of the top 2 
providers (median): 2,080.

County categories: 4.3-7.5 Medicare beneficiaries/sq. mile; Number of 
counties: 567; Number of Medicare providers serving a county[A] 
(median): 6; Percentage of a county's Medicare ambulance trips 
covered by the top 2 providers in a county (median): 69; Number of 
Medicare ambulance trips in all counties for each of the top 2 
providers (median): 1,366.

County categories: 1.8-4.2 Medicare beneficiaries/sq. mile; Number of 
counties: 569; Number of Medicare providers serving a county[A] 
(median): 6; Percentage of a county's Medicare ambulance trips covered 
by the top 2 providers in a county (median): 71; Number of Medicare 
ambulance trips in all counties for each of the top 2 providers 
(median): 834.

County categories: 0-1.7 Medicare beneficiaries/sq. mile; Number of 
counties: 568; Number of Medicare providers serving a county[A] 
(median): 4; Percentage of a county's Medicare ambulance trips 
covered by the top 2 providers in a county (median): 74; Number of 
Medicare ambulance trips in all counties for each of the top 2 
providers (median): 308.

Sources: HRSA and CMS.

Note: GAO analysis of HRSA and CMS data. We classified counties as 
rural if they were not in an MSA. We used the beneficiary's address as 
a proxy for where each trip originated. We used the number of persons 
age 65 and over in each county in 1999 as a proxy for the number of 
Medicare beneficiaries.

[A] Providers that delivered less than 1 percent of their total 
Medicare trips in a county were excluded from the count of providers 
serving that county.

[End of table]

Table 13: Average Number of Medicare Ambulance Trips, Trip Length, and 
Estimates of Average Medicare PaymentA per Ambulance Trip, by Rural 
Counties Grouped by Medicare Population Density:

County categories: Rural counties; Number of counties: 2,273; Average 
number of Medicare ambulance trips: 1,153; Average length of Medicare 
ambulance trips (miles): 23; Average Medicare payment per ambulance 
trip: $463.

County categories: 7.6+ Medicare beneficiaries/sq. mile; Number of 
counties: 569; Average number of Medicare ambulance trips: 2,279; 
Average length of Medicare ambulance trips (miles): 19; Average 
Medicare payment per ambulance trip: $434.

County categories: 4.3-7.5 Medicare beneficiaries/sq. mile; Number of 
counties: 567; Average number of Medicare ambulance trips: 1,265; 
Average length of Medicare ambulance trips (miles): 21; Average 
Medicare payment per ambulance trip: $448.

County categories: 1.8-4.2 Medicare beneficiaries/sq. mile; Number of 
counties: 569; Average number of Medicare ambulance trips: 752; 
Average length of Medicare ambulance trips (miles): 25; Average 
Medicare payment per ambulance trip: $467.

County categories: 0-1.7 Medicare beneficiaries/sq. mile; Number of 
counties: 568; Average number of Medicare ambulance trips: 315; 
Average length of Medicare ambulance trips (miles): 29; Average 
Medicare payment per ambulance trip: $501.

Sources: HRSA and CMS.

Note: GAO analysis of HRSA and CMS data. We classified counties as 
urban if they were in an MSA and as rural if they were not in an MSA. 
We used the beneficiary's address as a proxy for where each trip 
originated. We used the number of persons age 65 and over in each 
county in 1999 as a proxy for the number of Medicare beneficiaries.

[A] Payment estimates were calculated by applying 100 percent of the 
2003 Medicare ambulance fee schedule rates to Medicare ground ambulance 
trips delivered in 2001. These estimates reflect the mix of ambulance 
services provided in the different county categories as well as the 
geographic adjustment to account for wage differences across areas.

[End of table]

[End of section]

Appendix III: Comments from the Centers for Medicare & Medicaid 
Services:

[See PDF for image]

[End of figure]

[End of section]

Appendix IV: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

Jonathan Ratner, (202) 512-7107; Phyllis Thorburn, (202) 512-7012:

Acknowledgments:

Major contributors to this report were Martha Kelly, Robin Burke, Eric 
Wedum, Michael Kendix, and Jessica Farb.

[End of section]

Related GAO Products:

Ambulance Services: Changes Needed to Improve Medicare Payment Policies 
and Coverage Decisions. [Hyperlink, http://www.gao.gov/cgi-bin/
getrpt?GAO-03-244T] GAO-03-244T. Washington, D.C.: November 15, 2001.

Rural Ambulances: Medicare Fee Schedule Payments Could Be Better 
Targeted. HEHS-00-115. Washington, D.C.: July 17, 2000.

(290155):

FOOTNOTES

[1] The Centers for Medicare & Medicaid Services uses the term 
"provider" to refer to institutional providers of ambulance services, 
including hospitals and skilled nursing facilities, and uses the term 
"supplier" to refer to freestanding ambulance providers--that is, those 
not associated with a hospital, skilled nursing facility, or other 
facility. In this report, unless otherwise indicated, we use the term 
"provider" to refer to all organizations that provide Medicare ground 
ambulance services--both institutional and freestanding.

[2] U.S. General Accounting Office, Rural Ambulances: Medicare Fee 
Schedule Payments Could Be Better Targeted, HEHS-00-115 (Washington, 
D.C.: July 17, 2000). 

[3] Pub. L. No. 106-554, Appendix F, §221(b), 114 Stat. 2763A-463, 486-
87 (2000).

[4] The Project HOPE Center for Health Affairs is a nonprofit health 
policy research organization. 

[5] Our analysis focused on ambulance services paid under Medicare's 
ambulance fee schedule and therefore excluded services paid for by 
Medicare managed care organizations. Further, our analysis did not 
include any ambulance services for Medicare beneficiaries that were not 
billed to Medicare.

[6] See Penny E. Mohr and others, Findings from the 1999 National 
Survey of Ambulance Providers (Bethesda, Md.: 2000), p.13. 

[7] ALS services are provided by personnel with advanced training and 
involve assessments by them or the provision of advanced interventions 
or procedures. 

[8] See Mohr and others, pp. 19-20. 

[9] The fee schedule took effect April 1, 2002. The BBA had directed 
that the fee schedule be effective for services furnished on or after 
January 1, 2000. CMS stated that several factors--other statutory 
obligations, the scope of systems changes required to implement the fee 
schedule, and the need to ensure that its computer systems were 
compliant with Year 2000 (Y2K) requirements--delayed implementation of 
the fee schedule. 67 Fed. Reg. 9100. A federal district court order, 
issued on January 16, 2003, required the Department of Health and Human 
Services (HHS) to adopt a fee schedule for freestanding providers for 
the period of January 1, 2000, through March 31, 2002. Lifestar Amb. 
Serv., Inc. v. U.S., 211 F.R.D. 688 (M.D. Ga. 2003). On April 16, 2003, 
CMS published a notice in the Federal Register stating that Medicare's 
fee schedule would apply to ambulance trips provided by freestanding 
providers during that period. 68 Fed. Reg. 18654. Payments would be 
adjusted retroactively. HHS has appealed the court's decision.

[10] Several other changes to the way ambulance services are paid for 
were introduced with the fee schedule. For example, in accordance with 
the BBA, all providers must accept the Medicare payment amount as full 
payment for covered services and may only collect allowed cost-sharing 
amounts from beneficiaries. In addition, Medicare will pay a BLS rate 
for services furnished at the BLS level even when an ALS vehicle is 
used. This latter provision will be phased in over several years. As 
specified by BIPA, ambulance providers that are critical access 
hospitals or entities owned and operated by them are exempt from the 
fee schedule and paid on a reasonable cost basis if there is no other 
ambulance provider within 35 miles. Critical access hospitals are 
small, isolated hospitals that have an annual average length of stay of 
4 days or less. 

[11] For paramedic ALS intercept services, there is no separate payment 
for mileage. 

[12] The modifier is the same as that applied to the practice expense 
component of Medicare's physician fee schedule.

[13] The mileage rate increase for the first 17 miles was not mandated 
by law, but was specified in CMS's final rule. The increase for miles 
18 through 50 is a temporary increase mandated by law. BIPA required 
that, for miles 18 through 50 of a rural trip, the mileage rate should 
be increased by at least half as much as the mileage rate increase 
established for the first 17 miles of a rural trip. BIPA stated that 
this increase would apply to ground ambulance services provided on or 
after July 1, 2001, and before January 1, 2004. Pub. L. No. 106-554, 
§221, 114 Stat. 2763A-463, 486. 

[14] CMS has stated that it could not easily adopt and implement other 
methods for recognizing geographic differences in population density 
within the constraints necessary to implement the fee schedule in a 
timely manner. 67 Fed. Reg. 9100.

[15] CMS currently uses the MSA definitions established by the Office 
of Management and Budget (OMB) and in effect prior to June 6, 2003, 
when OMB announced revised definitions based on the 2000 census. 

[16] Medicare payment for ambulance services is based on the lesser of 
the actual charge or the applicable fee schedule amount. During the 
transition period, the applicable fee schedule amount is a blended 
payment, not the fee schedule payment. 

[17] In response to the federal district court order that required HHS 
to adopt a fee schedule for freestanding providers for the period of 
January 1, 2000, to March 31, 2002, CMS issued a notice in the Federal 
Register that specified blended payments applicable to 2000, 2001, and 
early 2002. 68 Fed. Reg. 18654-55. 

[18] In the available data on ambulance costs, fuel costs are not 
always reported separately, so they are included in the vehicle and 
equipment costs category.

[19] Total trip volume includes all of a provider's trips, not just 
those covered by Medicare.

[20] These data are for full cost providers, defined as those that have 
80 percent or more of their staff comprised of paid employees rather 
than volunteers, and that pay for 80 percent or more of their garage 
and office space. These data are for the fiscal year preceding the 
survey, which for most providers included 6 months or more of calendar 
year 1998.

[21] We classified counties as urban if they were in an MSA and as 
rural if they were not in an MSA, using 2001 Area Resource File data. 
The roughly 75 urban counties that contain areas identified as rural by 
the Goldsmith modification are included in the urban county group. We 
used the beneficiary's address as a proxy for where each trip 
originated, since the 2001 national claims files did not contain that 
information. (See app. I for details.) 

[22] Larger counties have somewhat fewer trips than smaller counties, 
after accounting for county population. 

[23] We also grouped counties according to their Medicare population 
density. See app. II.

[24] "Frontier" is a term used to describe counties with very low 
population density, and in most cases frontier counties are defined as 
those with six or fewer persons per square mile.

[25] Providers' trips are not necessarily limited to one county, since 
providers may serve multiple counties. 

[26] The total number of trips made by these providers would be 
expected to be double the number of Medicare trips, since Medicare 
beneficiaries account on average for roughly half of providers' total 
trip volume. 

[27] Payment estimates were calculated by applying 100 percent of the 
2003 Medicare ambulance fee schedule rates to Medicare ground ambulance 
trips delivered in 2001. 

[28] There is a similar difference in trip volume for the dominant 
providers serving these counties. 

[29] Differences in trip volume likely result in smaller differences in 
cost per trip. 

[30] The American Ambulance Association represents many types of 
ambulance providers. In this section we refer to it as representing 
ground ambulance providers because they account for the majority of the 
association's members. 

[31] See Penny E. Mohr and others, Findings from the 1999 National 
Survey of Ambulance Providers (Bethesda, Md.: 2000), p.11. 

[32] See Mohr and others, p. 25.

[33] Beginning January 1, 2001, CMS required ambulance providers to 
include the point of pick-up zip code on all claims, and on April 1, 
2002, began using it for payment, to determine whether the rural 
adjustment should be applied. Although the CMS contractors--fiscal 
intermediaries and carriers--that pay the claims have had the point of 
pick-up zip code in their data bases, it was not incorporated into the 
national claims history files until April 1, 2003.

[34] See Mohr and others, pp. A1-A3. 

[35] The Project HOPE model resembles a type of model frequently used 
by health services researchers for analyzing costs of health care. For 
example, see T. Grannemann and others, "Estimating Hospital Costs," 
Journal of Health Economics, vol. 5, no. 2 (1986), and J. Nyman, "The 
Marginal Cost of Nursing Home Care," Journal of Health Economics, vol. 
7, no. 4 (1988).

[36] Although some rural providers have more than 5,000 total trips per 
year, most have less than 5,000 total trips per year.

[37] The coefficients had the same signs, although they differed in 
magnitude.

[38] MSAs are groups of counties containing a core of at least 50,000 
people, together with adjacent areas that have a high degree of 
economic and social integration with that core. New England County 
Metropolitan Areas are considered urban.

[39] The Goldsmith modification identifies small towns and rural areas 
within large metropolitan counties that are isolated from central areas 
by distance or other features, such as mountains. CMS uses a Goldsmith 
modification based on 1980 census data.

[40] For more information on UICs, see http://www.ers.usda.gov/
Briefing/Rurality/urbaninf/; for more information on RUCCs, see http:/
/www.ers.usda.gov/Briefing/Rurality/ruralurbcon/; and for more 
information on RUCAs, see http://www.fammed.washington.edu/wwamirhrc/
rucas/rucas.html.

[41] The adjusted R2 for the model is 0.74. The adjusted R2 is a 
measure of the proportion of the variation in the dependent variable 
(the natural logarithm of trips) accounted for by the independent 
variables (the natural logarithms of land area and population).

[42] The adjusted R2 for the model is 0.60.

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