On October 14, 2022, CMS issued Transmittal 11642 (Change Request 12948), which announced the Medicare Ambulance Inflation Factor (AIF) for the calendar year 2023.

The AIF is calculated by measuring the increase in the consumer price index for all urban consumers (CPI-U) for the 12-month period ending with June of the previous year.  Starting in the calendar year 2011, the change in the CPI-U is now reduced by a so-called “productivity adjustment”, which is equal to the 10-year moving average of changes in the economy-wide private nonfarm business multi-factor productivity index (MFP).  The MFP reduction may result in a negative AIF for any calendar year.  The resulting AIF is then added to the conversion factor used to calculate Medicare payments under the Ambulance Fee Schedule.

For the 12-month period ending in June 2022, the Federal Bureau of Labor Statistics (BLS) has calculated that the CPI-U increased by 9.1%.  CMS further indicated that the CY 2023 MFP would be 0.4%.  Accordingly, CMS indicated that the Ambulance Inflation Factor for the calendar year 2023 will be 8.7%.  

This is the largest inflation update since the implementation of the current Medicare Ambulance Fee Schedule in April 2002.  The increase from last year’s 5.1% increase is also the single largest year-over-year increase on record.