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New Medicare Locality Rule

August 18, 2017

Effective September 18, 2017, Medicare Administrative Contractors (MACs) in all jurisdictions will have the authority to define locality in their service areas.  As a result, some MACs may not recognize any localities in their jurisdictions while others may establish specific locality determinations for ambulance coverage.

CMS regulations currently state that ambulance transports are covered to the “closest appropriate facility.”  That said, over the years most MACs have not strictly limited mileage reimbursement to the closest facility, specifically when a community is served by several facilities that can sufficiently treat a patient’s condition.

Therefore, Medicare has typically paid the full mileage to any of the facilities that normally serve a community, regardless if one is three miles away or five miles away.

So how will this change affect you?

Now that CMS has given authority to the MACs to define locality in their jurisdictions, some MACs may decide not to define any localities, and will instead strictly apply the “closest appropriate facility” requirement. 

As a result, it’s possible that some ambulance services may face denied mileage claims for mileage that exceeds what’s considered the geographically closest facility.  The denied “excess” mileage could then be billed to the patient.


Some MACs may decide to not define a locality in writing, and will continue to pay excess mileage in accordance with the current CMS Regulations, resulting in no changes to mileage reimbursement. 

If MACs elect to strictly enforce the “closest appropriate facility” requirement, as described above, you can likely anticipate the following:

  • Medicare Beneficiaries will be limited to where they can be transported, specifically in a community with several appropriate facilities available.
  • Beneficiaries may be exposed to increased out-of-pocket expenses, even when being transported to a facility that hasn’t resulted in an excess mileage claim in the past.
  • Ambulance services may begin billing patients for mileage that was previously covered by Medicare, potentially resulting in uncollected reimbursement.

In response to this change, ambulance services may want to consider expanding the use of Advance Beneficiary Notice of Noncoverage (ABN) forms.  This form is often used to help notify Medicare beneficiaries that they may be billed for non-covered mileage charges if transported to a destination beyond the closest appropriate facility.

That said, the use of ABNs is specific to non-emergency transports, and should never be used in an emergency situation.  For more information on ABNs and when it is appropriate to use one, click here, or to access our recommended form, provided courtesy of PWW, click here.

Ambulance services should also make sure to always document the reason for transporting a patient to a more distant facility.  Documenting this information will support the reason for additional mileage and will come in handy if the PCR is reviewed by Medicare.


For example, consider a patient who requires transport to a trauma unit.  In this case, to get to the trauma unit, the ambulance must bypass several other closer facilities, because those facilities do not provide the specialized treatment needed.  As a result, the patient is transported to a more distant facility, yet one that is actually the closest appropriate.  To properly document this, and leave no room for misinterpretation or false impression in the mind of a reviewer, the PCR should be specific and explicit – not only providing the where, but the why.

To view Transmittal 236, which reflects this information updated in the Medicare Policy Manual, click here.  For questions regarding this update, or to learn more about Cornerstone, contact us today!

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