Bottom Line Up Front (BLUF): If you have ever sat through a meeting where someone started talking about GEMT, CPEs, IGTs, FMAPs, UPLs, SDPs, provider taxes, supplemental payments or Medicaid financing and found yourself quietly wondering whether everyone else understood what was being said, this article is for you.
These terms matter because they help explain how ambulance services are funded and why many EMS agencies receive reimbursement that often falls well below the actual cost of providing care. Understanding the language will not make you a Medicaid finance expert overnight, but it will help you participate in conversations that increasingly influence the financial future of EMS. So to help all understand the menu of alphabet reimbursement soup, here is a quick explainer.
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Why are these funding acronyms important now?
Recent discussions surrounding proposed CMS rule changes have drawn attention to GEMT and other supplemental payment programs, and EMS leaders need to understand how their systems are funded.
For decades, EMS has been exceptionally good at discussing clinical care, response times, equipment and operations, and we have often been less comfortable discussing reimbursement.
This has to change, because whether you operate a public ambulance service, a private ambulance service, a hospital-based service or a fire-based EMS system, funding ultimately determines your ability to provide care.
Centers for Medicare & Medicaid Services (CMS)
The Centers for Medicare & Medicaid Services is the organization behind the curtain. Think of CMS as the federal agency responsible for administering and regulating Medicare and Medicaid. If Medicare and Medicaid were a football (or soccer!) game, CMS would be the league office responsible for writing the rule book. Most major reimbursement changes eventually pass through CMS.
Medicare and Medicaid: Not the same thing
Many people use these terms interchangeably. They are not the same.
Medicare
Medicare is primarily a federal program that provides healthcare coverage for people aged 65 and older, along with certain individuals with disabilities. Ambulance reimbursement under Medicare is generally based on a national Ambulance Fee Schedule.
Medicaid
Medicaid is a joint federal and state program that provides healthcare coverage for lower-income individuals and families. In California, Medicaid is known as Medi-Cal. Every state operates its own Medicaid program within federal guidelines established by CMS. For many ambulance services, Medicaid reimbursement is often significantly lower than the actual cost of providing service. That funding gap is where many of the following programs come into play.
Ambulance Fee Schedule (AFS) The Ambulance Fee Schedule is the Medicare payment system used to determine how much ambulance providers are paid for transporting Medicare patients. The schedule assigns a fixed payment based on the type of transport, mileage and geographic adjustments, but does not fully account for the costs of maintaining ambulance readiness and emergency response capability.
Ground Emergency Medical Transportation (GEMT)
The acronym everyone talks about — At its simplest, GEMT is a Medicaid supplemental payment program. The purpose is straightforward: if an ambulance provider can document that caring for Medicaid patients costs more than Medicaid paid, the provider may be eligible to receive additional reimbursement.
That additional reimbursement is intended to reduce some of the gap between cost and payment. Contrary to some misconceptions, GEMT is not a bonus program, free money or a windfall. Nor is it an attempt to reimburse providers for documented costs they have already incurred.
Supplemental payments
You will often hear the phrase “supplemental payments.” This simply refers to payments made in addition to the normal Medicaid reimbursement. The original Medicaid payment might cover only a portion of the actual cost and supplemental payments are intended to help close some of the remaining gap. At this moment in time, many EMS reimbursement discussions ultimately revolve around supplemental payments.
Certified public expenditure (CPE)
Now we enter the world of true government acronyms. A certified public expenditure is exactly what it sounds like — a governmental provider documents money it has already spent delivering services and those expenditures are certified and used to obtain federal matching funds.
The important point is that the provider has already incurred the expense. Think of it this way:
- We spent this money providing care to Medicaid patients.
- We can document it.
- We would now like to receive the federal share available for those costs.
Many traditional public-sector GEMT programs operate using this methodology.
Intergovernmental transfer (IGT)
Intergovernmental transfer refers to a mechanism in which one government agency transfers money to another government agency, usually to the state Medicaid program. The state can then use those funds to qualify for additional federal Medicaid matching dollars. More simply, think of an IGT as the local government’s contribution to a funding partnership. The local agency puts money into the pot, the state administers the program, and the federal government adds matching funds.
If CPEs are based on documenting money already spent, IGTs are based on moving government dollars within the governmental system.
Federal medical assistance percentage (FMAP)
FMAP stands for federal medical assistance percentage, i.e., the federal match. It sounds intimidating, but the concept is simple. FMAP determines how much of a Medicaid expenditure will be paid by the federal government and how much must be paid by the state. If the state spends eligible Medicaid dollars, the federal government contributes additional matching dollars according to the FMAP formula.
Think of FMAP as the federal government’s contribution rate. Whenever people discuss “drawing down federal funds,” they are usually talking about leveraging FMAP.
Upper payment limit (UPL)
CMS places limits on how much Medicaid can pay certain categories of providers. States often design supplemental payment programs that operate within these limits. In simple terms, think of upper payment limits as the maximum ceiling established by federal rules.
State-directed payment (SDP)
A state-directed payment is a payment arrangement in which a state directs Medicaid managed care plans to make additional payments to specified provider groups. Many newer supplemental payment arrangements operate through managed care systems and SDPs.
The concept is more complicated than the acronym.
The simple explanation is that the state is directing how additional Medicaid dollars should flow through managed care plans.
Managed care plan (MCP)
A managed care plan is a health insurance organization that receives money from Medicaid (or Medi-Cal in California) to arrange and pay for healthcare services for enrolled members. Rather than the state paying every doctor, hospital or ambulance service directly, the state pays the managed care plan, which then contracts healthcare providers and manages the delivery of care. Think of it as the middleman between Medicaid and the healthcare providers who deliver patient care.
Provider assessments (sometimes called provider taxes)
This is one of the most misunderstood concepts in healthcare financing. A provider assessment is a mechanism in which healthcare providers contribute funds into a state program and the state can then use those funds to leverage additional federal matching dollars.
The word “tax” often creates confusion. The objective is generally not to collect revenue for unrelated government purposes, but to create a financing structure that generates additional federal Medicaid funding.
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Understanding the finance language
EMS is not simply a transportation service; it is a readiness-based healthcare and public safety system, and many of the strange acronyms that populate reimbursement discussions exist because policymakers have spent decades trying to bridge the gap between what ambulance service costs and what traditional reimbursement systems pay.
You do not need to become a Medicaid financing expert, but understanding GEMT, CMS, Medicaid, CPEs, IGTs, FMAPs, UPLs, SDPs and supplemental payments will help you understand one of the most important conversations shaping the future of EMS. And the next time someone starts throwing around three-letter acronyms (TLAs) in a reimbursement meeting, you will at least know what language they are speaking, and it won’t be clear as mud.
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