Health Law Daily Wrap Up, MEDICAID PAYMENT—OIG REPORTS: Texas to address errors in ambulance provider supplemental payments through procedural improvements, (Nov 17, 2025)

By Patricia K. Ruiz, J.D.

In FY 2021, four ambulance providers received 42 percent of all ASSPP federal funds paid to ambulance providers in Texas.

Texas’s claims for federal reimbursement for payments under the Ambulance Services Supplemental Payment Program (ASSPP) for three of the four audited ambulance providers did not comply with federal and state requirements, according to a report by the HHS Office of Inspector General (OIG). Specifically, the OIG identified an adjustment error in one provider’s ASSPP cost report and identified unallowable and potentially unallowable costs in three providers’ ASSPP cost reports. The Texas Department of Health and Human Services agreed with the OIG on necessary improvements to its cost report review procedures (OIG Report, A-06-23-01003 (Nov. 3, 2025)).

ASSPP payments. Under the Texas Healthcare Transformation and Quality Improvement Program 1115 demonstration waiver, the state established the ASSPP to provide Medicaid payments to governmental ambulance providers. The payments are made from an uncompensated care (UC) pool to defray the costs of charity care. Between FY 2012 and FY 2021, the number of ambulance providers receiving ASSPP payments increased from 7 to 80, and in FY 2021, four ambulance providers received 42 percent of all ASSPP federal funds paid to ambulance providers in Texas, totaling about $24 million.

Audit. The OIG conducted its audit to determine whether the state agency’s claim for federal reimbursement for ASSPP payments for certain providers complied with federal and state requirements. The OIG selected its sample of four ambulance providers from the top six providers who received the most ASSPP payments in FY 2021, reviewing each selected provider’s policies and procedures for preparing ASSPP cost reports and their charity care policy and reconciling sections of the FY 2021 cost report to supporting documentation. For each selected provider, the OIG reviewed a nonstatistical sample of charity care, payroll, depreciation, and other expenses in their FY 2021 cost report to determine whether these amounts were supported. The OIG also reviewed the state agency’s policies and procedures for reviewing ASSPP cost reports.

Cost report preparation. According to the report, two essential parts of the cost report submitted under the ASSPP are the calculation of an ambulance provider’s cost-to-charge ratio and uninsured charity care costs. To determine the cost-to-charge ratio, the provider reports costs incurred for providing services as certified public expenditures. The total allowable costs for the service period are divided by total billed charges for the service period. That ratio is then applied to billed charges associated with the uninsured charity care to calculate uninsured charity care costs used to determine the ambulance provider’s ASSPP allowable amount. The ASSPP payments made to ambulance providers are limited by the amount of funds allocated to the UC pool.

The state agency conducts desk reviews of provider cost reports to ensure that all financial and statistical information reported in the cost report conforms to applicable rules and instructions. After the desk review, the state agency performs a quality assurance process to ensure the accuracy of any adjustments made during the desk review, after which the state agency returns the cost report to the ambulance provider for certification.

Findings. The OIG found that the state agency’s claims for federal reimbursement for ASSPP payments for three of the four selected ambulance providers did not comply with federal and state requirements, with an adjustment error appearing in one provider’s ASSPP cost report and unallowable and potentially unallowable costs in three ambulance providers’ ASSPP cost reports. The errors occurred because the state agency: (1) failed to identify an adjustment error made during a desk review; and (2) did not require ambulance providers to include documentation to support certain costs claimed on ASSPP cost reports. While the noncompliance impacted the allocation of UC pool funds to all 80 ambulance providers participating in the ASSPP, there was no impact on the amount of federal reimbursement to the state agency for ASSPP. Thus, the OIG did not make a recommendation to the state agency to refund the unallowable costs to the federal government or set aside the potentially unallowable costs for further CMS review.

Recommendations. The OIG recommended that the state agency: (1) require training for all individuals who certify ASSPP cost reports on how to review cost reports for accuracy; and (2) revise its policies and procedures to require ambulance providers to submit sufficient documentation allowing the state agency to determine whether costs claimed on ASSPP cost reports are related to the provision of contracted patient care. The state agency agreed with both recommendations and detailed steps it plans to take to address them.

First, the state agency stated it plans to switch to a new reporting system for the ASSPP in early 2026, and all individuals who certify ASSPP cost reports and adjustments will be required to complete annual training. Second, the state agency stated it will strengthen its policies and procedures, including requiring ambulance providers to submit sufficient documentation for newly reported assets. It will also require providers to submit data on staff, including whether they performed direct patient care for ambulance services.

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