The Ambulance-Transport-to-Dialysis Fraud

If you have kidney disease that requires dialysis, you need to get to a treatment center about three times per week. You know in advance when these treatments will be. Many people get to the treatment center on their own, perhaps by driving their own car or on public transit. But Medicare, whose End-Stage Renal Disease pays for patients needing dialysis, will also under pay for transportation to the dialysis center when it is “medically necessary” for especially ill patients. When Medicare covers transportation to dialysis, it pays for either a taxi or ride-share, or for especially sick patients it will pay for an ambulance. As you might expect, an ambulance costs a lot more. Thus, if you are a fraud-minded individual, there’s money to be made in transporting Medicare dialysis patients via ambulance, rather than taxi.

Paul Eliason, Riley League, Jetson Leder-Luis, Ryan C. McDevitt, and James W. Roberts, study this situation in “Ambulance Taxis: The Impact of Regulation and Litigation on Health-Care Fraud” (Journal of Political Economy, May 2025). Consider this graph. The vertical axis measures how many non-emergency ambulance rides that Medicare paid for over time. The total nearly triples from 2003 to 2014 or so. For comparison, the number of Medicare dialysis patients rose by about 50% during this time.

After 2014, Medicare instituted new rules. As the authors write:

Medicare began implementing prior authorization for ambulance claims in 2014, stipulating that providers will only receive payment for repetitive, nonemergency rides to dialysis facilities if they have already submitted documentation of a patient’s medical necessity, rather than allowing providers to submit claims for payment first and then responding to any subsequent requests to verify a patient’s eligibility. Medicare began rolling out the new requirement in 2014 in three states that had particularly high rates of nonemergency ambulance claims—New Jersey, South Carolina, and Pennsylvania—and then extended it in 2016 to nearby Delaware, District of Columbia, Maryland, North Carolina, Virginia, and West Virginia. Plans to expand prior authorization nationwide were postponed in 2020 due to COVID-19 but eventually completed in August 2022 …

The authors estimate: “From 2003 to 2017, Medicare spent $7.7 billion on 37.5 million nonemergency ambulance rides for dialysis patients.”

None of this is any surprise to economists, or indeed to anyone with a dollop of skepticism in their soul. Medicare and Medicaid combined cost about $2 trillion per year. That healthy sum will attract fraudsters, and once they fraudsters have found a loophole, they may be able to exploit it for years before being noticed. The ambulance-taxi for dialysis scam is, by itself, small potatoes. But it’s not by itself. As a broader measure, the authors write: “In 2019, improper payments that did not meet Medicare’s statutory, regulatory, administrative, or other legally applicable requirements totaled $31.2 billion, or 7.4% of overall spending (CMS 2023). ”

If the public is going to support government spending programs, the government needs to do a systematic and well-publicized job of auditing the spending program to demonstrate that the money is being spent for its legally designated use, and is accomplishing its designated purpose. Otherwise, no one should be surprised when proposals for spending seem almost automatically unpopular.

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