What Is Rebasing, and Why Does It Matter for How Ambulance Services Get Paid?

Written By: Asbel Montes, Co-Founder & Managing Partner, Solutions Group

After my first article in this series, I heard from a lot of people in EMS and ambulance leadership, and underneath their questions was a common thread: how does Medicare actually calculate what it pays for an ambulance ride in the first place? That surprised me a little, and then it didn't. The basic mechanics of ambulance reimbursement, the relative value units, the conversion factor, the whole structure sitting underneath the number on a remittance advice, have gotten lost over time. Most people who bill Medicare every day have never had a reason to look under the hood.

So this piece is less about a bill and more about the plumbing. I want to walk through how Medicare actually prices an ambulance ride today, because that is the piece everything else builds on. Along the way, I will also touch on a provision in the RESCUE Act, the bill I have written about in my last two pieces, that would change part of that plumbing. Whether that change helps or hurts depends entirely on how it gets used, which is really the point of walking through the mechanics first.

Most people who support that bill assume it only adds money to the ambulance fee schedule. That is not guaranteed. The provision in question, called rebasing, can move money in, it can move money around, and under the right conditions, it can move money out. All three outcomes are possible under the same statutory language.

What is an RVU?

Medicare does not pay a flat dollar amount for an ambulance ride. It pays based on a relative value unit, or RVU. Think of an RVU as a score that ranks how intensive one type of ambulance service is compared to another. A basic, non-emergency ride has the lowest score, set at 1.00. A more advanced, higher-acuity ride gets a higher score. Medicare multiplies that score by a dollar amount called the conversion factor to get the actual payment.

There are seven levels of ground ambulance service, from basic life support up through specialty care transport. Each one has its own RVU. Those seven numbers were set in 2002. They have not changed since. Neither has the process used to weigh one against another.

Air ambulance works on a parallel track. Instead of RVUs, fixed-wing and rotary-wing transports each have their own base rate. The RESCUE Act's rebasing provision would cover both tracks at once, in the same regulation, using the same broad discretion. That matters more than it sounds like it should, for reasons I get to below.

What does rebasing mean?

Rebasing means going back into that formula and rebuilding it with new information. Instead of tweaking the existing numbers a little each year, the Secretary of Health and Human Services would review the RVUs, conversion factor, base rates, and mileage rates and reset them based on current cost data. That is what the RESCUE Act requires starting in 2028, and again every three years after that.

The bill's language gives the Secretary authority to make, in the statute's own words, such adjustments as are necessary to ensure the fee schedule reflects the actual costs of providing ambulance services. That phrase, such adjustments as are necessary, is doing a lot of work. It does not say adjustments can only go up. It does not set a floor. It does not guarantee any single service level, region, or type of provider comes out ahead.

Why is this different from anything the industry has dealt with before?

Since 2002, the ambulance fee schedule has updated automatically using the Consumer Price Index. There was no real discretion involved. And that automatic update has almost always meant more money, not less. A productivity adjustment was added to the formula in 2011, and it is the only part of the formula that can push the annual update below zero. In the fifteen years since, that has happened exactly once, in 2016, when payments actually dropped by four-tenths of one percent. Every other year going back to 2002, including 2023, when the update hit 8.7 percent, the largest increase since the current fee schedule began, ambulance payments went up. Whatever people expect from rebasing, they are used to a system that almost never takes money away.

Rebasing replaces that autopilot with a judgment call. The Secretary decides what the new cost data shows and adjusts the formula accordingly. That is a legitimate and, frankly, overdue exercise. The current formula is built on cost assumptions from 1998. But handing that much judgment to one office, with few guardrails written into the statute, means the outcome depends heavily on how that judgment gets exercised.

Here is where it gets real.

Picture this scenario. New cost data shows that advanced life support transports, once assumed to require significantly more resources than basic life support transports, are actually closer in cost than the current RVUs assume. Under a rebasing exercise built to reflect real costs, the RVU gap between ALS and BLS would likely narrow. That means the relative value assigned to ALS could go down, even while the value assigned to BLS goes up, and even if total ambulance spending stays roughly flat.

Nobody is predicting that specific outcome. The point is that the formula is built to respond to whatever the data actually shows, not to whatever outcome the industry expects going in. RVUs are, by definition, relative to each other. Moving one changes the picture for the rest, at least in part, whether or not the total pot of money grows.

This has happened before, just not in ambulance services.

In 2021, Medicare significantly increased the RVUs for common office visit codes under the physician fee schedule, the same kind of RVU-based system, but for doctors instead of ambulances. Because that fee schedule includes a legal requirement to stay budget neutral, meaning the total amount Medicare spends cannot simply rise on its own, the increase for office visits triggered an automatic cut to the conversion factor for everyone else. The proposed cut to the anesthesia conversion factor alone was about 10 percent. Anesthesiologists, radiologists, and surgeons all took a real hit that year because a different set of codes went up. Congress ultimately stepped in with a one-time funding patch to soften the blow, but the underlying mechanism, one group's increase becoming another group's cut, played out exactly as the budget neutrality rule was designed to allow.

It is worth being precise here. The RESCUE Act does not include a budget neutrality requirement the way the physician fee schedule does. That might sound like good news, and in one sense it is. Nothing in the ambulance statute automatically forces a cut somewhere else just because one number goes up. But that also means there is no built-in mechanism, no known formula, governing how trade-offs get made if the data points in different directions for different services. The physician fee schedule at least tells you the rule in advance. The ambulance fee schedule, as written, does not.

The data this will run on has its own limits, and that's truer for air ambulance than for ground.

The same MedPAC report I have referenced throughout this series found that the cost data now available through the Ground Ambulance Data Collection System, or GADCS, is useful but still new. Most agencies had never reported this kind of cost and revenue information before 2022. MedPAC itself cautioned that the numbers likely contain reporting errors and should not yet be treated as a final, settled picture. That is the same data this rebasing exercise would lean on to make real, binding decisions about ground ambulance's relative value starting in 2028.

Air ambulance has no equivalent. There is no GADCS for air ambulance services, and there has been no independent review of air ambulance cost data anywhere close to what MedPAC just did for the ground side. The RESCUE Act would require air ambulance providers to start reporting cost information, but it leans on reporting requirements built under the No Surprises Act, a law written to address surprise billing, not to support fee-schedule rate-setting. If that data turns out to be incomplete, the bill allows the Secretary to fall back on, in the statute's words, other comparable information, with no further definition of what that means. So the same broad rebasing authority would apply to both ground and air ambulance base rates, but the two tracks are not starting from the same place. Ground has an imperfect but real dataset that has already been through one round of independent scrutiny. Air ambulance rebasing would happen on a foundation nobody outside of CMS has actually tested yet.

What I am not saying.

I am not saying rebasing is a bad idea. The current formula is genuinely outdated, and MedPAC's own analysis backs that up. I am also not predicting that any specific service level, region, or type of provider will lose money. I do not know that, and neither does anyone else yet, because the data that will drive the outcome has not finished being collected.

What I am saying is that this is a piece of ambulance reimbursement worth understanding on its own, with or without a bill attached to it. Rebasing is not a guaranteed increase. It is a reset, built on real data, with real discretion attached, and very few rules written down in advance about how that discretion gets used. The RESCUE Act just happens to be the reason enough of us are finally looking closely enough at the fee schedule to ask how it actually works.

That is worth knowing before anyone assumes they already know how the story ends.