[Federal Register Volume 62, Number 116 (Tuesday, June 17, 1997)]
[Proposed Rules]
[Pages 32715-32733]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-15829]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 410 and 424

[BPD-813-P]
RIN 0938-AH13


Medicare Program; Ambulance Services

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This proposed rule would update and revise HCFA's policy on 
coverage of ambulance services. It would base Medicare coverage and 
payment for ambulance services on the level of medical services needed 
to treat the beneficiary's condition. It also clarifies Medicare policy 
on coverage of non-emergency ambulance services for Medicare 
beneficiaries.
DATES: Comments will be considered if we receive them at the 
appropriate address, as provided below, no later than 5 p.m. on August 
18, 1997.

ADDRESSES: Mail written comments (1 original and 3 copies) to the 
following address: Health Care Financing Administration, Department of 
Health and Human Services, Attention: BPD-813-P, P.O. Box 26676, 
Baltimore, MD 21207-0476.
    If you prefer, you may deliver your written comments (1 original 
and 3 copies) to one of the following addresses:

Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., 
Washington, DC 20201, or
Room C5-09-26, 7500 Security Boulevard, Baltimore, MD 21244-1850.

    Because of staffing and resource limitations, we cannot accept 
comments by facsimile (FAX) transmission. In commenting, please refer 
to file code BPD-813-P. Comments received timely will be available for 
public inspection as they are received, generally beginning 
approximately 3 weeks after publication of a document, in Room 309-G of 
the Department's offices at 200 Independence Avenue, SW., Washington, 
DC, on Monday through Friday of each week from 8:30 a.m. to 5 p.m. 
(phone: (202) 690-7890).
FOR FURTHER INFORMATION CONTACT: Margot Blige, (410) 786-4642.

SUPPLEMENTARY INFORMATION:

I. Background

A. Statutory Coverage of Ambulance Services

    Under section 1861(s)(7) of the Social Security Act (the Act), 
Medicare Part B (Supplementary Medical Insurance) covers and pays for 
ambulance services, to the extent prescribed in regulations, when the 
use of other methods of transportation would be contraindicated. The 
House Ways and Means Committee and Senate Finance Committee Reports 
that accompanied the 1965 Social Security Amendments suggest that the 
Congress intended that (1) the ambulance benefit cover transportation 
services only if other means of transportation are contraindicated by 
the beneficiary's medical condition, and (2) only ambulance service to 
local facilities be covered unless necessary services are not available 
locally, in which case, transportation to the nearest facility 
furnishing those services is covered (H.R. Rep. No. 213, 89th Cong., 
1st Sess. 37, and S. Rep. No. 404, 89th Cong., 1st Sess., Pt I, at 43 
(1965)). The reports indicate that transportation may also be made from 
one hospital to another, to the beneficiary's home, or to an extended 
care facility.

B. Current Medicare Regulations for Ambulance Services

    Our regulations relating to ambulance services are located at 42 
CFR part 410, subpart B. Section 410.10(i) lists ambulance services as 
one of the covered medical and health services under Medicare Part B. 
Ambulance services are subject to basic conditions and limitations set 
forth at Sec. 410.12 and to specific conditions and limitations 
included at Sec. 410.40.
    Section 410.40(a) defines an ``ambulance'' as a vehicle that is 
specially designed for transporting the sick or injured, containing a 
stretcher, linens, first aid supplies, oxygen equipment, and other 
lifesaving equipment required by State or local laws, and staffed with 
personnel trained to provide first aid treatment.
    Section 410.40(b) permits Part B coverage of ambulance services 
when the use of other means of transportation

[[Page 32716]]

would be contraindicated and Part A coverage is not available. For 
hospital or rural primary care hospital (RPCH) inpatients, it states 
that the transportation must be furnished by, or under arrangements 
made by, the hospital or RPCH, or that the transportation be furnished 
by an ambulance supplier with which the hospital does not have an 
arrangement and the hospital has a waiver under which Medicare Part B 
payment may be made to the ambulance supplier.
    Section 410.40(c) limits origins and destinations. Medicare payment 
is made for transportation to a hospital, RPCH, or skilled nursing 
facility (SNF), from any point of origin; to the home of a beneficiary 
from a hospital, RPCH, or SNF; or round trip from a hospital, RPCH, or 
SNF to a supplier outside of those facilities to obtain medically 
necessary diagnostic or therapeutic treatment not available where the 
beneficiary is an inpatient.
    Section 410.40(d) limits Part B coverage of ambulance services 
furnished outside of the United States. Medicare payment is made for 
transportation to a foreign hospital only in conjunction with a 
beneficiary's admission for medically necessary inpatient services.
    Section 410.40(e) limits Medicare payment for ambulance services. 
Medicare payment is made for the following services:
     Transportation to a facility that is in the same locality 
as the beneficiary's home or to the nearest facility if the one closest 
to the beneficiary's home is unable to provide the necessary service to 
the beneficiary.
     Transportation to the beneficiary's home from the facility 
where the beneficiary was treated.
     Round trip transportation to the nearest outside supplier 
capable of furnishing necessary diagnostic and therapeutic services not 
available at the facility where the beneficiary is an inpatient.

C. Current Medicare Policy and Manual Instructions for Ambulance 
Services

    We issue instructions to our contractors for processing Medicare 
claims in the Medicare Carriers Manual (MCM) and the Medicare 
Intermediary Manual (MIM). The current instructions for Medicare 
coverage and payment of ambulance services appear in sections 2120 and 
5116 of the MCM and sections 3660 and 3618 in the MIM. For the most 
part, the manual instructions repeat the provisions of the regulations 
in part 410 pertaining to ambulance services.
    The manual instructions expand on the regulations by--
     Requiring carriers to take appropriate action, including 
conducting on-site inspections, to verify that an existing ambulance 
supplier meets all applicable requirements when there are no State or 
local laws defining an ambulance, when suppliers fail to comply with 
the documentation requirements, or whenever there is a question about a 
supplier's compliance.
     Recognizing some technological advances in ambulance 
equipment and training of personnel that enable suppliers to make 
available medical treatment beyond the basic lifesaving techniques.
     Addressing the issue of determining the base rate 
allowance for the advanced life support (ALS) level of ambulance 
services, as contrasted with basic life support (BLS) level. The manual 
states that the ALS reasonable charge may be used as a basis for 
payment when an ALS level of ambulance services is used. However, there 
may be instances when the supplier exhibits a pattern of uneconomical 
care such as repeated use of ALS level ambulances in situations in 
which it should have known that the less expensive BLS ambulance was 
available and that its use would have been medically appropriate. While 
we allow higher payment for the ALS level of ambulance services, the 
carrier is responsible for evaluating the appropriate level of services 
for each claim.
     Covering transportation of ESRD beneficiaries to renal 
dialysis facilities under certain circumstances, assuming that 
transportation in vehicles other than ambulances would be 
contraindicated. Transportation to a hospital is covered. Also, under 
the following circumstances, a nonhospital-based or independent renal 
dialysis facility may meet the destination requirements for purposes of 
coverage of ambulance services for an ESRD beneficiary:
     The facility is located ``on or adjacent to'' the premises 
of the hospital.
     The facility furnishes services to patients of the 
hospital, for example on an outpatient or emergency basis, even though 
the facility is primarily in business to furnish dialysis services to 
its own patients.
     There is an ongoing professional relationship between the 
two facilities. For example, the hospital and the facility have an 
agreement that provides for physician staff of the facility to abide by 
the bylaws and regulations of the hospital's medical staff.
    Ambulance services from a beneficiary's home to any dialysis 
facility are not covered unless these conditions are met. However, the 
carriers have the authority to interpret the meaning of the phrase ``on 
or adjacent to'' the premises of a hospital for purposes of coverage of 
ambulance services for ESRD beneficiaries to facilities to receive 
renal dialysis therapy. Medicare carriers have not been consistent in 
their interpretation of manual instructions on ambulance services for 
ESRD beneficiaries to and from hospital-based and nonhospital-based 
dialysis facilities.

D. Studies and Reports on Ambulance Services

    In a 3-year period, four government reports were issued addressing 
Medicare payments for ambulance services.
    Under the Omnibus Budget Reconciliation Act of 1989 (OBRA '89) 
(Pub. L. 101-239), the Congress mandated a study of payment practices 
for ambulance services under Medicare. This study, ``A Study of 
Payments for Ambulance Services Under Medicare'', was conducted by 
Project Hope and was issued in 1994. The study focused on the rapid 
growth of Medicare Part B payments for ambulance services. In 1987 (the 
year selected for this report's analysis), Medicare's allowed charges 
for ambulance services amounted to almost $602 million. By 1991, 
allowed charges increased to $1.23 billion, double the amount of 1987. 
The report showed that Medicare's allowed charges for ambulance 
services have risen at an average annual rate of 20 percent since 1974.
    The rapid increase of Medicare Part B payments for ambulance 
services was also highlighted in an October 1992 audit report conducted 
by the Department's Office of Inspector General (OIG) entitled, 
``Review of Medical Necessity for Ambulance Services, (A-01-91-
00513)''. In its report, the OIG notes that, in the 3-year period 
between 1986 and 1989, there was a significant increase in the use of 
and payment for the ALS level of ambulance services when compared to 
the BLS level of ambulance services.
    The report further indicates that some carriers pay Medicare claims 
at the ALS level when that level of services is required by State or 
local laws. The study noted that the significant increase in the use of 
the ALS level of services and in Medicare payments could be attributed 
to our coverage and payment policies under which payment is based on 
the type of ambulance in which a beneficiary is transported and not on 
the medical necessity for the level of services furnished by the 
ambulance.

[[Page 32717]]

    The OIG recommended that we take the following actions: (1) Modify 
the MCM to require carriers to pay for non-emergency ambulance services 
at the BLS level of service if they are medically necessary, (2) 
establish controls for the carriers to ensure that Medicare payment for 
the ALS level of service is based solely on the medical need of the 
beneficiary, and (3) closely monitor carrier compliance.
    After we published the ambulance regulations, major legislative 
changes provided broad coverage for dialysis services to end-stage 
renal disease (ESRD) beneficiaries. Between 1978 and 1990, there was a 
significant increase in the number of ESRD beneficiaries. Ambulance 
services furnished to this population also increased significantly. The 
OIG issued two reports concerning ambulance services furnished to ESRD 
beneficiaries.
    The first ESRD report, ``Ambulance Services For Medicare End-Stage 
Renal Disease Beneficiaries: Payment Practices, (OEI-03-90-02131)'', 
issued in March 1994, found that about two percent of ESRD 
beneficiaries are associated with an extremely high frequency of using 
ambulance services; that is, these ESRD beneficiaries are using 
ambulance services three times a week for transportation to routine 
maintenance dialysis. The report notes that we do not differentiate 
between predictable routine, scheduled transportation, and emergency 
acute care transportation. It concludes that we do not take advantage 
of lower costs associated with high-volume scheduled transportation. 
The report also notes that some carriers do not use the HCFA Common 
Procedural Coding System (HCPCS) codes uniformly. The report recommends 
that we require uniform use of the HCPCS codes and establish a code for 
scheduled, non-emergency transportation.
    (We recently implemented coding changes through an update to the 
MCM that addresses the latter recommendation. These coding changes 
differentiate between transportation to a hospital-based dialysis 
facility (or hospital-related) and a nonhospital dialysis facility.)
    The second ESRD report, ``Ambulance Services for Medicare End-Stage 
Renal Disease Beneficiaries: Medical Necessity, (OEI-03-90-02130)'', 
issued in August 1994, retrospectively examines the medical necessity 
of ambulance claims for ESRD beneficiaries. This report concludes that 
70 percent of the dialysis-related ambulance services did not meet 
Medicare coverage guidelines. However, claims were not being denied as 
medically unnecessary. The report offers several alternative strategies 
for making improvements to the program. Some of the recommendations 
suggest significant policy changes that we believe represent potential 
improvements to administering the ambulance services benefits.

II. Reasons for Considering Changing Medicare Policy and 
Regulations

A. Public Concerns about Ambulance Services

    For many years, we have had discussions with representatives from 
the ambulance industry covering a variety of issues including: The 
definition of an ambulance, the appropriate billing for the ALS level 
of services, and clarification of our coverage and payment guidelines 
regarding ALS and BLS levels of services. A frequent question is 
whether the coverage of an ambulance service is affected by the 
individual beneficiary's need for specific services or by the type of 
vehicle and staff that are used to transport the beneficiary.
    In December 1994, the Subcommittee on Labor, HHS, Education, and 
Related Agencies under the Senate Appropriations Committee held a 
hearing, ``Ambulance Costs under Medicare'', to review Medicare 
coverage and payment of ambulance services. Many of the issues 
identified in the government reports described earlier were raised by 
this subcommittee. At the hearing, we assured the members of the 
subcommittee that we would act aggressively to revise our regulations 
to address the problems identified with the increasing expenditures for 
ambulance services and the suppliers furnishing the services.
    In January 1995, we held a 2-day conference on ambulance services 
with representatives from the ambulance industry. We met with several 
entities, including the American Ambulance Association, the National 
Association of State Emergency Medical Services Directors, the 
International Association of Firefighters, the American College of 
Emergency Physicians, and the American Hospital Association. The 
meeting allowed us to consult with experts in ambulance services and 
discuss issues of particular concern to us and ambulance suppliers 
before we developed regulations and instructions that change our 
ambulance services policy. The meeting provided us with an opportunity 
to establish positive working relationships and access to valuable 
information resources.
    The industry representatives provided us with a considerable amount 
of information about the industry and made recommendations on various 
Medicare policy issues related to ambulance services. Two frequent 
problems they brought to our attention follow:
     Some local ordinances mandate that all 911 emergency calls 
be answered by an ALS-level ambulance rather than a BLS-level 
ambulance. This causes a problem when a carrier determines that payment 
should be made at the BLS level.
     There is a need for national policy requiring physician 
certification for scheduled ambulance transportation.
    In addition to issues raised by the industry, the OIG identified as 
problematic the notable increases in the use of ALS-level ambulances to 
transport Medicare ESRD beneficiaries to scheduled, routine dialysis 
treatments. The OIG believes scheduled services can usually be 
furnished by a BLS-level ambulance.
    The industry representatives (and others) urged us to 
comprehensively revise the regulations covering ambulance services to 
address these problems.

B. Vehicles Used To Furnish Services

    Section 410.40(a) does not explicitly state that ambulance services 
must be furnished in a vehicle designed and equipped to respond to 
medical emergencies. In most States, an ambulance is defined by State 
or local laws as a vehicle that is intended for emergency 
transportation of patients. In some States or localities, there are no 
laws defining an ambulance; in others, the laws do not require that the 
vehicles used as ambulances be designed or equipped as emergency 
vehicles.
    In addition, there are suppliers operating in some States who 
believe their vehicles, despite not meeting State or local 
requirements, meet the Federal definition of an ambulance contained in 
Sec. 410.40(a). These suppliers bill Medicare for transportation in 
vehicles that are not equipped to respond to emergencies even though 
they are required by State or local law to be so equipped. As a result, 
we have made Medicare payments to some suppliers of transportation 
services for furnishing transportation in a vehicle that is not an 
ambulance or does not meet State or local requirements for emergency 
vehicles. Typically these suppliers furnish services to persons who 
have scheduled medical or other appointments and use vehicles such as 
ambulettes, ambu-vans, medi-transports, invalid coaches, and other 
similar vehicles. Transportation in these vehicles is furnished to 
persons who

[[Page 32718]]

may need assistance in being transported to caregivers, for example, 
because of difficulty ambulating, but who do not require emergency 
transportation for purposes of obtaining acute care. More specifically, 
the condition of the beneficiary is such that transportation by means 
other than in a vehicle designed and equipped to respond to a medical 
emergency would not be contraindicated. Transportation in these 
vehicles is not covered by Medicare Part B. In other instances, 
ambulance suppliers fail to submit adequate documentation to carriers 
showing that they comply with State or local laws.

C. Staff Furnishing Services

    Section 410.40(a) states that a vehicle used as an ambulance must 
be staffed with personnel trained to provide first aid treatment. In 
the absence of applicable State or local requirements, the staff must 
meet standards established by the Federal Department of Transportation.
    A vehicle used for emergency transportation generally contains 
highly sophisticated medical and communications equipment. Hence, the 
major differences between BLS and ALS levels of services usually is the 
training level of the staff on board the vehicle. The industry standard 
is that the BLS-level ambulance is staffed with two people, each of 
whom is trained to provide basic first aid and certified as an 
emergency medical technician-basic (EMT-B). The ALS-level ambulance is 
staffed with two people trained to provide basic first aid, one of whom 
is also trained and certified at the advanced first aid level and 
certified either as a paramedic or as an emergency medical technician-
advanced (EMT-A). The EMT-A has received additional training and 
certification to perform one or more ALS services. Paramedics and 
emergency medical technicians must be certified by the State or local 
authority in the area in which the services are furnished and be 
legally authorized to operate all life-saving and life-sustaining 
equipment that is on board. Section 410.40(a) does not describe the 
level of training necessary to provide either the basic or advanced 
level of care.

D. Origins and Destinations

    Section 410.40(c) sets forth our longstanding policy that coverage 
is not authorized for ambulance services to destinations other than 
those that were specified in the committee reports accompanying the 
1965 Social Security Amendments (H.R. Rep. No. 213, 89th Cong., 1st 
Sess. 37, and S. Rep. No. 404, 89th Cong., 1st Sess., Pt. I, at 43 
(1965)). Thus, under Sec. 410.40(c), Medicare Part B covers ambulance 
services for a beneficiary only if other methods of transportation 
would be contraindicated and the transportation is to one of the 
following destinations:
      To a hospital, which includes a RPCH, or SNF from any 
point of origin.
     To the beneficiary's home from a hospital, RPCH, or SNF.
     To an outside supplier to obtain medically necessary 
diagnostic or therapeutic services not available in the hospital, RPCH, 
or SNF where the beneficiary is an inpatient from a hospital, RPCH, or 
SNF (including the return trip).
    Transporting hospital or RPCH inpatients to and from an outside 
supplier to obtain medically necessary diagnostic or therapeutic 
services is a Medicare Part A service and the cost is paid in the 
appropriate ancillary cost center of the hospital or RPCH where the 
beneficiary is an inpatient.
    Section 410.40(e) limits Medicare payment to the destinations 
described in Sec. 410.40(c).
    Sections 410.40(c) and (e) do not permit routine coverage of, or 
payment for, transportation to nonhospital-based or independent 
diagnostic and treatment facilities. Currently, we pay for 
transportation to these types of facilities only if the beneficiary is 
an inpatient at a hospital, RPCH, or SNF and the treatment needed is 
not available at that inpatient facility. We do not cover round trip 
transportation to nonhospital-based facilities from the beneficiary's 
home.

E. Basic Life Support and Advanced Life Support Services

    When section 1861(s)(7) of the Act was passed, only one level of 
ambulance service was being furnished; that is, BLS. The vehicle was 
equipped with basic first aid equipment such as a stretcher, linens, 
and emergency lights and sirens. The staff was trained to provide basic 
first aid treatment, for example, to stop bleeding, splint fractures, 
or administer cardio-pulmonary resuscitation to restore breathing or 
heartbeat. Since ambulance services were first covered under Medicare, 
the advancement of first aid techniques assisted in the creation of the 
ALS level of ambulance services. These techniques included the ability 
to treat severe trauma and to administer drugs and biologicals, as well 
as to perform other more advanced lifesaving and/or lifesustaining 
treatments.
    Since 1982, we have recognized different payment levels for 
ambulance services depending on whether the services furnished are 
described as a BLS or ALS level of service. However, our regulations 
have not kept up with the changing use of technology, and so we have no 
way of ensuring that we are paying properly for the services that are 
furnished.

F. Location and Availability of Ambulance Suppliers

    Ambulance services are furnished by for-profit companies and non-
profit companies. The for-profit ambulance companies charge an amount 
sufficient to cover costs and a return on investment. The non-profit 
companies, once the predominant suppliers of these services, are 
largely volunteer organizations. Many of these volunteer organizations 
are located in areas that were considered rural. Although increases in 
population have changed some rural areas into urban areas, many of the 
suppliers continue to be volunteer organizations. Still other areas 
remain largely underpopulated; however, the services furnished have 
increased because of the level of training and technology available.
    Other non-profit ambulance suppliers are local governments, either 
cities or other incorporated entities. Until recently, within the last 
10 to 15 years, the non-profit volunteer companies and the municipal 
organizations did not charge Medicare for their services. Because the 
cost of furnishing services has become increasingly more expensive and 
the level of training and certification more sophisticated, many of 
these organizations have begun to charge for part or all of the 
services that they furnish.

III. Proposed Changes to Medicare Policy and Regulations

    There is a need to make policy changes so that the Medicare 
coverage criteria are consistent and clear and reflect the advances 
that have occurred in the health care and ambulance industries. Our 
current regulations inadequately address technological advances. We 
believe it is appropriate at this time to establish criteria under 
which Medicare carriers can determine when the ALS level of service is 
necessary and covered and when the condition of the beneficiary 
requires only the BLS level of service.
    We propose to amend our regulations to clarify that the basis for 
covering ambulance services is the medical condition of the beneficiary 
for transportation furnished by an ambulance. To accomplish this 
clarification of determining the level of medically necessary services 
for

[[Page 32719]]

coverage and payment purposes, we propose that the suppliers use 
diagnostic codes designated by HCFA that would describe the nature of 
the beneficiary's medical condition. We propose to designate the 
International Classification of Diseases, 9th revision, Clinical 
Modification (ICD-9-CM) diagnostic codes that would describe the nature 
of the beneficiary's medical condition. The use of these codes would 
also assist the ambulance suppliers in billing the medically necessary 
BLS or ALS level of ambulance service.

A. Medicare Coverage of Ambulance Services

    As a means of distinguishing ambulance services covered under Part 
B from other modes of patient-related transportation, we propose 
revising existing Sec. 410.40. In Sec. 410.40(a), we would provide for 
Part B coverage of ambulance services only if the supplier meets the 
applicable vehicle, staff, and billing and reporting requirements in 
Sec. 410.41, and the medical necessity and origin and destination 
requirements in Sec. 410.40. Also, even when all other coverage 
requirements are met, Medicare Part B would cover the services as 
ambulance services only if they are not services that can be paid for 
directly or indirectly under Part A. The cost of the transportation 
paid for under Part A is ordinarily considered part of the cost related 
to the hospital's care of the beneficiary as a patient. If the hospital 
is paid under the prospective payment system (PPS), payment is made 
under the appropriate diagnosis-related group (DRG). If the hospital is 
not paid under PPS, payment is made on a reasonable cost basis per 
hospital stay, subject to the Tax Equity and Fiscal Responsibility Act 
(TEFRA). If the beneficiary's stay is covered under Medicare Part A, 
payment for the stay will reflect the transportation and that 
transportation cannot be covered under the Part B ambulance services 
benefit.

B. Levels of Services

    We propose in Sec. 410.40(b) to cover ambulance services in the 
United States at either the BLS or ALS level of services. We would 
determine the level of payment based on the level of services medically 
necessary to treat a beneficiary's condition as described by the ICD-9-
CM diagnostic codes used to bill for ambulance services. We would make 
an exception to the BLS/ALS distinction for certain non-Metropolitan 
Statistical Areas (non-MSA) and cover ALS services if certain criteria 
in Sec. 410.40(e) are met.

C. Medical Necessity

    We propose in Sec. 410.40(c)(1) that ambulance services are covered 
by Medicare based on the beneficiary's medical condition. A listing of 
medical conditions and the proposed corresponding ICD-9-CM diagnostic 
codes is included in Addendum 1 of this proposed rule.
    The codes would indicate the need for medically necessary BLS or 
ALS level of ambulance services. More specifically, the ICD-9-CM 
diagnostic codes would be used as indicators of medical necessity by 
describing the nature of the symptoms or injury; that is, they describe 
the beneficiary's medical condition that makes the ambulance 
transportation necessary. If more specific information about the 
beneficiary's condition is available, that information would also be 
coded using ICD-9-CM diagnostic codes. More specific information might 
be available, for instance, when a beneficiary is transferred from one 
facility to another and the physician provides the ambulance personnel 
with pertinent information about the beneficiary's condition. While 
this list is not exhaustive, it does represent what we have identified, 
through discussions with the industry and carrier representatives, as a 
range of the types of medical conditions to which ambulance suppliers 
currently respond.
    The ICD-9-CM diagnostic list includes the code v49.8, Other 
Specified Problems Influencing Health Status. For example, this code 
would be applicable when a beneficiary with end-stage renal disease 
needs regular dialysis treatment and cannot use regular transportation 
because he or she is bed-confined. To assist in determining medical 
necessity as it relates to this code, we are proposing that for 
purposes of Medicare Part B, the term bed-confined is defined as 
follows: ``bed-confined'' denotes the inability to get up from bed 
without assistance, the inability to ambulate, and the inability to sit 
in a chair or wheelchair. This definition also applies to the terms 
``bedridden'' and ``stretcher-bound''. Bed-confined is not synonymous 
with non-ambulatory since a paraplegic or quadriplegic person is non-
ambulatory but spends a significant amount of time in a wheelchair. 
Bed-confined is also not synonymous with bed rest, a recommended state 
of affairs that does not exclude an occasional ambulation to the 
commode or time spent in a chair.
    We recognize that unusual circumstances exist that warrant the need 
for ambulance services. In these circumstances, the publication of the 
list does not preclude the Carrier from accepting other ICD-9-CM 
diagnostic codes to describe a medical condition that is not included 
on the list. However, we believe that these circumstances will be rare. 
The codes in Addendum 1 of this proposed rule would enable the supplier 
to know whether a claim may be paid at the BLS or ALS level of 
ambulance services. The use of ICD-9-CM diagnostic codes is intended to 
promote consistency in claims processing. Use of the ICD-9-CM 
diagnostic codes, however, does not make the claim payable if the 
beneficiary could have been transported by other means. Proposed 
Sec. 410.40(c)(3) provides that we will establish guidelines on the use 
of the designated codes that would ensure medical necessity of 
ambulance services, coverage at the appropriate level, and consistency 
in claims filing. We will, in the event that there are subsequent 
revisions to the listing of ICD-9-CM diagnostic codes to describe the 
medical condition of the beneficiary, publish the updated listing of 
codes used for ambulance services as a Notice in the Federal Register.
    Proposed Sec. 410.40(c)(2) provides for coverage of non-emergency 
services (including, but not limited to, transportation for an ESRD 
beneficiary) if the ambulance supplier, before furnishing services to 
the beneficiary, obtains a current written physician's order certifying 
that the beneficiary must be transported in an ambulance because other 
means of transportation would be contraindicated. The physician's order 
must be dated no earlier than 60 days before the date a service is 
furnished. The ambulance supplier would also be responsible for 
obtaining additional written certifications for each subsequent 60-day 
period.
    We believe the requirement for physician's certification for 
scheduled ambulance services would ensure that scheduled ambulance 
services are necessary as other means of transportation would be 
contraindicated. Adding the requirement is consistent with the 
Secretary's authority to ensure that all claims for services are 
reasonable and necessary in accordance with section 1862(a)(1) of the 
Act.
    The requirement that this certification be renewed every 60 days is 
consistent with the Secretary's authority under section 1835(a)(2)(B) 
of the Act. This section ensures, that, in the case of medical and 
other health services furnished by a provider, a physician certifies 
that such services, including

[[Page 32720]]

those furnished over a period of time, are medically necessary.

D. Origins and Destinations

    In Sec. 410.40(d), we propose to modify the limits on origins and 
destinations that currently appear in Sec. 410.40(c). We would also 
remove reference to round-trip ambulance transportation of inpatients 
of hospitals and RPCHs to outside facilities from this section since 
this is a Part A benefit and more properly belongs in another section. 
We will consider the appropriate placement of this text and place it in 
the proper section in the final rule. We would add a provision that, 
under Part B, ambulance transportation is permitted from an SNF to the 
nearest supplier of medically necessary services not available at the 
SNF where the beneficiary is an inpatient, including the return trip. 
We would also add a provision that would cover medically necessary 
ambulance services for an ESRD beneficiary living at home to the 
nearest dialysis facility capable of furnishing the necessary dialysis 
services without regard to whether that dialysis facility is hospital-
based. Thus, round-trip ambulance services furnished to a beneficiary 
from his or her residence would be covered. Our purpose in proposing 
this modification is to make Sec. 410.40(d) consistent with our policy 
of transporting beneficiaries to the nearest appropriate facility.

E. Consideration of a Coverage Exception for ALS services in Non-
Metropolitan Statistical Areas

    We are concerned that our policy determining the level of Medicare 
payment based on the level of medically necessary services may have 
some negative impact on an ambulance supplier's ability to furnish 
services in communities with small populations. In addition, several 
industry representatives have voiced their concerns that this proposed 
change could possibly decrease access to service or, in extreme 
circumstances, lead to the collapse of some emergency medical systems. 
Additional discussions have led us to look further at the need for any 
exception to these rules. To help us to better understand the extent to 
which a problem exists, or could potentially exist, we are soliciting 
information from interested parties on the need for an exception and 
the areas where it may apply. We are requesting information that would 
help identify the sole suppliers of ambulance services in non-MSAs and 
other suppliers that may qualify for an exception. The information 
could include a list of sole suppliers in rural counties of a State, a 
description of the level of services offered by these suppliers, the 
size of the community they serve, the population of the service area, 
the distance to the nearest carrier, the number of vehicles operated by 
the supplier(s), time and distance factors related to providing 
service, and any other information, including relevant economic 
information that would have a bearing on the need for an exception to 
our proposed coverage and payment policy.
    The solicitation of information is not to determine whether an 
individual supplier meets eligibility requirements for an exception. 
This is solely a request for information that will assist us in making 
the final determination as to whether an exception process is 
warranted. If we do not receive compelling information regarding the 
need for an exception, we may choose not to provide an exception to the 
rule that suppliers bill for the level of services furnished. If we 
implement an exception to our general ambulance coverage policy, we 
would review the need for the policy within 5 years after we implement 
it. We would want to ensure that there is a continued need for an 
exception and consider any changes that may be needed to reflect 
current trends in population and the ambulance industry.
    To further facilitate our understanding of this issue, we have 
especially involved the Department's Office of Rural Health Policy and 
consulted with various industry representatives in an effort to address 
this issue and consider alternatives that would mitigate negative 
impact on communities. With these special circumstances in mind, we 
have examined what special considerations may be warranted for 
communities.
    Absent the detailed information we are requesting through our 
solicitation, we have developed two alternatives that we could use if 
we decide that an exception is warranted.
    Under our first, and preferred alternative, we would propose in 
Sec. 410.40(e) to pay ambulance suppliers in non-MSAs for the ALS level 
of services in all cases if the State Emergency Medical Services (EMS) 
Director annually makes one of the following certifications:
     The ambulance supplier serves a non-MSA, is the sole 
supplier of ground ambulance services in the area, owns and operates 
ambulance vehicles, and furnishes only ALS ambulance vehicles and 
staff.
     If there is more than one ground ambulance supplier in the 
non-MSA area, the ambulance supplier seeking the exception is located 
more than 40 miles from the nearest available ground ambulance supplier 
in the area.
    In order to qualify for this exception, the supplier would submit 
to the carrier, on an annual basis, financial information demonstrating 
that without payment at the ALS level, the financial impact would 
jeopardize beneficiary access to ambulance services in the area. The 
supplier would also submit information showing Medicare utilization of 
ambulance services compared to total service; total volume of services 
furnished by the supplier; and any other specific, pertinent 
information documenting the impact on beneficiaries' access to 
ambulance services that might result from payments at the BLS level for 
suppliers that have ALS ambulances only. On an annual basis, the 
ambulance supplier would also be responsible for submitting to the 
State EMS Director information demonstrating that it meets the 
established geographic exception criteria. Based on the State EMS 
Director's certification of the geographic criteria and the carrier's 
review of the financial information, the carrier would determine if the 
ambulance supplier meets the requirements to qualify for an exception.
    We chose the 40-mile standard because, after consultation with the 
National Highway Traffic Safety Administration, we determined that 40 
miles is a reasonable indicator of access to services. It assumes that 
20 minutes is an acceptable maximum response time in most areas. The 
establishment of a distance criteria is consistent with other access 
standards used for rural areas, including Medicare's criteria for 
designating Sole Community Hospitals (42 CFR 412.92). In addition, the 
use of a distance criterion would be relatively easy to administer 
compared with other possible criteria. We believe ease of 
implementation is important because the proposed exception would 
require active participation by the State EMS Directors in certifying 
the ambulance suppliers that would qualify for the exception. The 
National Highway Traffic Safety Administration has suggested that in 
many cases, while distance may be an acceptable criteria, time factors 
also are important. We did not propose time factors in our first 
alternative because they would be difficult to administer. 
Nevertheless, we recognize that time factors may be more appropriate 
than distance in some areas and we would like to receive comments on 
this issue.
    The second alternative we have considered would be to create an 
exception with criteria similar to those

[[Page 32721]]

used for the sole community hospitals under Medicare's prospective 
payment system for hospitals. Under this alternative, we would require 
that the State EMS Director certify that the ambulance supplier is the 
sole supplier of ambulance services, or is located in an urban or rural 
area (as defined in Sec. 412.62(f)(1)(ii) and (f)(1)(iii)) and meets 
one of the following conditions:
     The ambulance supplier is located between 25 and 35 miles 
from other like ambulance suppliers.
      The ambulance supplier is located between 15 and 25 miles 
from other like ambulance suppliers, but because of distance, local 
topography, and weather conditions, the travel time between the 
supplier and the other nearest ambulance supplier is at least 45 
minutes.
    These criteria are much more complex than the first alternative and 
would be difficult to administer. The amount of data that would need to 
be collected and evaluated would be considerable. It is for this reason 
that we do not favor this alternative.

F. Limitation on Services Outside the United States

    We would redesignate Sec. 410.40(d) as Sec. 410.40(f), ``Specific 
limits on coverage of ambulance services outside the United States,'' 
without changing the policy.

G. Limitation on Liability

    In considering changes to Medicare coverage of ambulance services, 
we are mindful of the effect any changes may have on beneficiaries, 
particularly on beneficiary liability for payment of services. We 
intend that a beneficiary not pay for an ambulance service for which we 
deny payment because of a lack of medical necessity, when a beneficiary 
did not know that the service is not covered. Existing regulations 
concerning limitations on liability under Medicare in Secs. 411.400, 
411.402, and 411.406 (part 411, subpart K) would apply to ambulance 
services. Under the limitation on liability, Medicare payment may be 
made for certain claims for a service if we exclude the service from 
coverage in accordance with Sec. 411.15(k) and section 1862(a)(1) of 
the Act as not medically necessary. A beneficiary who did not know and 
could not reasonably have been expected to know that payment would be 
denied for a service under section 1862(a)(1) of the Act generally 
receives protection from financial liability in accordance with the 
limitation on liability provisions of section 1879 of the Act as 
implemented by part 411, subpart K of our regulations. Similarly, when 
the beneficiary is protected and the ambulance supplier also did not 
know and could not reasonably have been expected to know that payment 
would be denied, the supplier also receives protection from financial 
liability in accordance with the limitation on liability provision. In 
this case, Medicare payment may be made to the supplier.
    A Medicare payment reduction from the ALS to BLS level of services 
would constitute a partial denial of payment for the ALS level of 
services. If we reduce payment from the ALS to the BLS level of service 
on the basis of a lack of medical necessity in accordance with 
Sec. 411.15(k) and section 1862(a)(1) of the Act, the beneficiary and 
supplier protections under the limitation on liability provisions in 
part 411, subpart K and section 1879 of the Act would apply to the 
payment reduction.
    With respect to ambulance services, the limitation on liability 
applies only in a narrow range of cases in which the denial is made 
under section 1862(a)(1) of the Act; that is, because the service 
furnished was not reasonable or necessary. Most denials of Medicare 
payment for ambulance services are made on the basis of section 
1861(s)(7) of the Act and implementing regulations in existing 
Sec. 410.40 because the services do not meet the definition of 
ambulance services. When, for example, ambulance services do not meet 
the rule that other means of transportation would be inappropriate for 
the beneficiary's condition (proposed Sec. 410.40(c)), or when they 
violate the limits on origin and destination or the nearest appropriate 
facility rule (proposed Sec. 410.40(d)), the statutory basis for denial 
is section 1861(s)(7) of the Act, and the limitation on liability 
provisions do not apply.
    In proposed Sec. 410.40(g), we specify the narrow class of medical 
necessity denials to which the limitation on liability provisions of 
part 411, subpart K apply. We state, however, that Sec. 411.404 
concerning criteria for determining that a beneficiary knew that 
services are excluded from Medicare coverage does not apply to medical 
necessity payment denials for ambulance services.
    Under this proposed rule, the use by suppliers of written advance 
notices to the beneficiaries of the likelihood of noncoverage by 
Medicare of ambulance services would not be permitted. We believe it 
would be inappropriate to allow an ambulance supplier to give written 
advance notice of the likelihood of noncoverage or to attempt to obtain 
an agreement from a beneficiary to pay for ambulance services when the 
circumstances surrounding the need for ambulance services usually do 
not permit a beneficiary to make a rational, informed consumer 
decision. Nonetheless, if a supplier could not have been expected to 
know that a particular ambulance service was not medically necessary, 
the supplier would also not be held liable.
    If, upon review, the carrier determines that the services furnished 
were not reasonable and necessary, and denies coverage of the services, 
partially or in full, the ambulance supplier has the right to appeal 
the determination as stated in part 405 subpart H. Consistent with 
existing policy, the right to appeal applies only to those ambulance 
suppliers that accept assignment. (This would not be an appropriate 
application when the supplier does not accept assignment and payment is 
made directly to the beneficiary. If the supplier does not accept 
assignment, the beneficiary has the right to appeal.) It is our belief, 
however, that proposed use of the ICD-9-CM diagnostic codes to describe 
the condition of the beneficiary would provide suppliers and ambulance 
personnel with additional knowledge that they need to make the correct 
decision when submitting a claim for payment. Therefore, we expect that 
there would be few instances when there would be appeals.

H. Requirements for Ambulances Services

1. Vehicle
    We propose in Sec. 410.41(a) that a vehicle used as an ambulance 
must be designed and equipped to respond to medical emergencies and, in 
non-emergency situations, be capable of transporting beneficiaries with 
acute medical conditions. The vehicle must also comply with all 
relevant State and local laws governing licensing and certification of 
an emergency medical transportation vehicle.
    We would also require that, at a minimum, an ambulance contain a 
stretcher, linens, emergency medical supplies, oxygen equipment, and 
other lifesaving emergency medical equipment and be equipped with 
emergency warning lights, sirens, and two-way telecommunications.
2. Vehicle Staff
    We propose in Sec. 410.41(b)(1) the staffing requirements for the 
BLS level of services. We propose that the vehicle be staffed by at 
least two persons each trained to provide first aid and certified as an 
emergency medical technician-basic (EMT-B) by the State or local

[[Page 32722]]

authority where the services are furnished and legally authorized to 
operate all lifesaving equipment on board the vehicle.
    In Sec. 410.41(b)(2), we propose the staffing requirements for the 
ALS level of services. The ALS-level ambulance would include at least 
two staff members. One of the staff members must be trained to provide 
basic first aid at the EMT B level and another member who must be 
trained and certified as a paramedic or as an emergency medical 
technician-advanced (EMT-A) who must also be trained and certified to 
perform one or more ALS services. Paramedics and emergency medical 
technicians must be certified by the State in which the services are 
furnished and legally authorized to operate all lifesaving equipment on 
board.

3. Billing and Reporting Requirements

    We propose in Sec. 410.41(c) that a supplier must use diagnostic 
and procedure codes designated by HCFA. We propose to designate the 
HCFA Common Procedure Coding System (HCPCS) codes describing the origin 
and destination of the services and ICD-9-CM diagnostic codes 
describing the beneficiary's medical condition (see Addendum 1 of this 
rule) to bill for covered ambulance services. We also would require 
that a supplier must, at the carrier's request, complete and return an 
ambulance supplier form established by HCFA and provide Medicare 
carriers with documentation of its compliance with State and local 
emergency vehicle and staff licensure and certification requirements 
(see Addendum 2 of this rule). In this paragraph, we also would 
require, upon the carriers request, that the supplier provide any 
additional information as required, for example when a supplier does 
not submit the required form and documentation or whenever there is a 
question about the supplier's documentation or there is a question 
about the supplier's compliance with any of the requirements for 
vehicle and staff.
    To be covered ambulance services, the services must be medically 
necessary in accordance with section 1862(a)(1) of the Act. Medical 
necessity is usually established on the basis of the description of the 
beneficiary's condition at the time of the transportation. Currently, 
we require the use of International Classification of Diseases, Ninth 
Revision, Clinical Modification (ICD-9-CM) diagnostic codes on Part B 
claims submitted by physicians as well as by other providers. Forty-six 
of the 53 Medicare carriers require the ambulance suppliers to include 
ICD-9-CM diagnostic codes to confirm medical necessity.
    As stated above, we intend that all suppliers who bill Medicare for 
ambulance services use the HCPCS codes describing origin and 
destination, and the ICD-9-CM diagnostic codes to describe a 
beneficiary's condition, based on the information from the emergency 
medical technician or paramedic who furnishes treatment at the scene 
and during transportation.
    The documentation required from each supplier would ensure that the 
vehicles used to furnish ambulance services are equipped and staffed to 
respond to emergency situations and in scheduled situations to be able 
to properly respond to acute care needs. The ambulance supplier form 
requirement would ensure that the documentation requirements are met.

IV. Other Information

A. Paperwork Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
requires that we solicit comment on the following issues:
     Whether the information collection is necessary and useful 
to carry out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    Therefore, we are soliciting public comment on each of these issues 
for the following sections of this document that contain information 
collection requirements.
    The information collection requirements in Sec. 410.40(c)(2) 
require the ambulance supplier to obtain certification from the 
beneficiary's physician to document the beneficiary's need for non-
emergency, scheduled transportation by ambulance. We believe it is 
necessary to ensure that the ambulance services are medically 
necessary. The requirement for the physician's certification does not 
require a particular form or format and can be simply a letter written 
to describe the beneficiary's condition that supports the need for 
ambulance services. This could take as little as 10 minutes of the 
physician's time per patient and could be used by the supplier for a 
60-day period. The burden on the supplier is to send in the 
certification with the first claim to the Medicare carrier or 
intermediary to validate the need for the transportation. We do not 
know how many suppliers or beneficiaries would be affected by this 
requirement; however, we do not believe the number to be substantial, 
nor do we believe the burden to be significant. The following chart 
shows the potential paperwork burden that may be imposed on physicians 
by this proposed rule.

                                    Estimated Paperwork Burden on Physicians                                    
----------------------------------------------------------------------------------------------------------------
                                                                     Estimated                                  
                                                                   annual number     Estimated                  
                                                                   of ambulance    average time      Estimated  
                           CFR Section                                 trips       in minutes to   total annual 
                                                                     requiring     complete each   burden hours 
                                                                   certification     statement                  
                                                                    statements                                  
----------------------------------------------------------------------------------------------------------------
410.40(c)(2)....................................................           3,000              10             500
----------------------------------------------------------------------------------------------------------------

    The information collection requirements in Sec. 410.41(c)(1) 
concern treatment furnished to beneficiaries transported by ambulance. 
Suppliers would be required to use ICD-9-CM diagnostic codes describing 
the beneficiary's condition to complete the claims form to bill the 
Medicare program for payment for ambulance services. The diagnostic 
coding system we propose to use is a system of ICD-9-CM diagnostic 
codes and therefore

[[Page 32723]]

the transition from the coding system used by the great majority of 
suppliers to the new system would be seamless. In addition, the use of 
the new diagnostic codes would eliminate the narrative description of 
the beneficiary's condition currently required. Therefore, we believe 
this requirement would lessen the existing information collection 
burden on the supplier. The time estimated to place the correct codes 
on the form is approximately 1 minute. We do, however, acknowledge that 
using the ICD-9-CM diagnostic coding system may initially require more 
time than the estimated 1 minute. We would like to solicit comments 
from those contractors who do not require suppliers to submit claims 
with diagnostic codes. Specifically, we would like to receive 
information that will assist us in determining how problematic, if at 
all, required use of diagnostic codes will be to the contractor and its 
suppliers and the costs associated with the implementation of such a 
requirement.
    Section 410.41(c)(2) requires the supplier to complete an ambulance 
supplier form and to provide documentation of vehicle and staff 
licensure and certification to the Medicare carrier. This simply 
requires photocopying documentation already required by the State or 
local law and in the possession of the supplier and sending those 
copies, along with the form, to the carrier. We would require ambulance 
suppliers to complete the Ambulance Supplier form on an annual basis or 
in keeping with licensure or certification requirements established by 
State or local laws. It is our understanding that an overwhelming 
number of States require ambulance supplier licensure or certification 
renewal on an annual basis.
    Our decision not to state a specific time frame in which ambulance 
suppliers will be required to submit the form took into consideration 
the potential burden on those suppliers operating in areas with renewal 
requirements other than on an annual basis. The supplier is also 
required to notify the carrier when a new vehicle or staff member is 
added to the business. Suppliers will not be required to complete a new 
form. Carriers may accept the supplier's statement and accompanying 
documentary evidence that vehicle and personnel requirements are met. 
We believe receipt of this documentation is necessary to ensure that 
newly acquired vehicles that will be used to furnish ambulance services 
are properly equipped and that newly hired EMS personnel are trained 
and certified to provide the appropriate level of emergency medical 
service to respond to emergency situations and, in non-emergency 
situations, are able to respond to the acute care needs of the 
beneficiary. It is estimated that the time to complete this form is no 
more than 32 minutes.
    Section 410.41(c)(3) requires that the supplier provide any 
additional information necessary to ensure that the carriers records 
are complete and up-to-date. Although we are unable to estimate the 
time that may be necessary to meet this requirement, we do not believe 
it will take the supplier longer than a couple of minutes to copy and 
send the additional documentation.
    Section 410.40(e) provides for the criteria for our preferred 
alternative of an exception to the ALS and BLS payment criteria which 
will allow all payments to a supplier that met the criteria to be made 
at the ALS level. We may not include an exception in the final rule 
unless documentation is furnished convincing us that an exception 
process is necessary, but we have shown the potential paperwork burden 
associated with our preferred alternative and an alternative that is 
spelled out in the preamble to this rule.
    The following chart shows the potential paperwork burden that may 
be imposed on the ambulance suppliers by this proposed rule.

                                   Estimated Annual Supplier Reporting Burden                                   
----------------------------------------------------------------------------------------------------------------
                                                                                     Estimated       Estimated  
                 CFR Sections                     Estimated number of ambulance   average burden   annual burden
                                                            suppliers              per response        hours    
----------------------------------------------------------------------------------------------------------------
410.41(c)(1) ICD-9-CM diagnostic codes ALS/BLS  9,000...........................          1 min.             150
410.41(c)(2) ambulance supplier form and        9,000...........................         32 min.           4,530
 documentation.                                                                                                 
410.41(c)(3) any additional information.......  9,000...........................          2 min.             300
410.40(e) Annual submission of supporting       (Potential) 3,000...............         60 min.           3,000
 financial documentation for an ALS exception.                                                                  
 OPTION #1.                                                                                                     
OPTION #2 FOUND IN THE PREAMBLE...............  (Potential) 3,000...............         60 min.           3,000
----------------------------------------------------------------------------------------------------------------

    We have submitted a copy of this proposed rule to OMB for its 
review of the information collection requirements in Secs. 410.40 and 
410.41.
    For comments that relate to information collection requirements, 
mail comments to:
    Health Care Financing Administration, Office of Financial and Human 
Resources, Management Planning and Analysis Staff, 7500 Security 
Boulevard, Room #C2-26-17 Baltimore, Maryland, 21244-1850.
    Mail a copy of your comments to: Office of Information and 
Regulatory Affairs, Office of Management and Budget, Room 10235, New 
Executive Office Building, Washington, DC 20503, Attn: Allison Herron 
Eydt, HCFA Desk Officer.

B. Response to Comments

    Because of the large number of items of correspondence we normally 
receive on Federal Register documents published for comment, we are not 
able to acknowledge or respond to them individually. We will consider 
all comments we receive by the date and time specified in the ``DATES'' 
section of this preamble, and, if we proceed with a subsequent 
document, we will respond to the comments in the preamble to that 
document.

V. Regulatory Impact Statement

    Consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 
through 612), we prepare a regulatory flexibility analysis unless the 
Secretary certifies that a rule would not have a significant economic 
impact on a substantial number of small entities. For purposes of the 
RFA, all suppliers of ambulance services are considered to be small 
entities. Individuals, carriers, and States are not considered to be 
``small entities''.
    In addition, section 1102(b) of the Act requires the Secretary to 
prepare a regulatory impact analysis if a rule may have a significant 
impact on the

[[Page 32724]]

operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 603 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a Metropolitan 
Statistical Area and has fewer than 50 beds.
    As illustrated below the impact of this regulation does not meet 
the criteria under E.O. 12866 to require a regulatory impact analysis; 
however, the following information, together with information provided 
elsewhere in this preamble constitute a voluntarily analysis and moot 
the requirements of the RFA. First, this proposed rule was initiated 
partly because of the concern over the rapid increase in the cost to 
the Medicare program for furnishing ambulance services to 
beneficiaries. This rapid increase in expenditures can be attributed to 
a variety of causes that include the following:
     A greater number of ambulance suppliers provide only the 
more expensive ALS level of services even if only a BLS level of 
services is warranted.
     High costs for equipment, supplies, and trained personnel 
incurred by all ambulance suppliers are passed on to the public.
     Provision of scheduled ambulance services to ESRD 
beneficiaries for treatment or therapy to hospital-based facilities 
that may be farther away from the beneficiary's home than nonhospital-
based facilities offering the same service. These transports cost the 
Medicare program more because of the higher mileage charges.
     Erroneous Medicare payment of claims for ambulance 
services from suppliers of non-emergency vehicles that transport 
beneficiaries whose medical condition is such that transportation in an 
ambulance is unnecessary.
    Second, we believe the proposals contained in this rule would 
result in the consequences outlined below:
     The requirement that ambulance services be furnished in a 
vehicle equipped and staffed to respond to a medical emergency or an 
acute care situation would improve the overall quality of services 
furnished to beneficiaries and eliminate payment for transportation 
services that are furnished in a vehicle not equipped or staffed to 
provide ambulance services. This particular aspect of the proposed rule 
may cause some suppliers to have to upgrade their vehicles, equipment, 
or staff training and certification so that the vehicles meet the 
definition of an ambulance. There may be some, however, who may not be 
able to upgrade their vehicles or staff. We do not know how many 
suppliers this requirement would affect; however, because we believe 
the entities that may be affected by this proposal primarily provide 
transportation services, such as wheelchair van transportation, we do 
not believe the number to be substantial. In an effort to determine the 
impact of this proposed change, we are requesting information from 
those suppliers of ambulance services who will potentially be affected 
by this proposal.
     The requirement for suppliers to use ICD-9-CM diagnostic 
codes to bill ambulance services would promote consistency in Medicare 
carrier processing of claims for ambulance services. The use of these 
codes would also reduce the uncertainty currently experienced by 
suppliers concerned about whether they will receive payment for their 
claims for specific types of services, because using the codes would 
assist suppliers in filing claims properly. The use of the appropriate 
ICD-9-CM diagnostic code to describe a beneficiary's medical condition 
would justify the need for ambulance services and determine the 
appropriate level of coverage. However, use of the appropriate 
diagnostic code does not make the claim payable if the beneficiary 
could have been transported by other means.
     The application of the limitation on liability protections 
would provide a safeguard to beneficiaries who must use ambulance 
services by ensuring that they would not be required to pay for 
differences in the amounts paid for BLS and ALS services. These same 
limitation on liability protections provide safeguards for the 
suppliers as well. For example, if the supplier erred on the side of 
caution by furnishing an (ALS level of) ambulance service that was more 
costly than was necessary because the medical situation was less severe 
than was first thought to have existed, the supplier would not bear the 
adverse economic burden of that decision.
     The requirement for physicians to certify the need for 
scheduled ambulance services of beneficiaries who are inpatients to 
outside facilities to receive therapy or treatment would ensure that 
those beneficiaries receiving the services actually need them. Also, 
the provision permitting ESRD beneficiaries to be transported to 
nonhospital-based facilities nearest their home would be more 
convenient, since they would no longer have to be transported to 
hospital-based facilities that may be farther away. In addition, for 
those beneficiaries this is a more cost-effective policy since 
regularly transporting beneficiaries further from their homes would be 
more costly.
    Third, if we are convinced that an exception to the ALS/BLS rule is 
necessary, the non-Metropolitan Statistical Area exception that would 
permit coverage of the more costly ALS level of services in non-
Metropolitan Statistical Areas could assure access to ambulance 
services where there is only one ambulance supplier. However we will 
create an exception only if we believe that the rule would impose 
financial hardship on isolated suppliers that cannot maintain both BLS 
and ALS vehicles.
    Last, the overall savings that this rule would generate are listed 
below:

                                            Medicare Program Savings                                            
                                                  [In millions]                                                 
----------------------------------------------------------------------------------------------------------------
                                                  Fiscal Years                                                  
-----------------------------------------------------------------------------------------------------------------
                            1997                                  1998         1999         2000         2001   
----------------------------------------------------------------------------------------------------------------
$50.........................................................          $55          $60          $65          $75
----------------------------------------------------------------------------------------------------------------

    A primary concern in basing coverage and payment on medical 
necessity is the issue of ambulance services in sparsely populated 
areas. We realize that there are areas where multiple ambulances, a mix 
of BLS and ALS, are not economical and, as such, acknowledge that the 
distributive effect of this regulation may be perceived as uneven 
because billing for ALS only services occurs only in some areas. In 
terms of expenditure cutbacks the estimated $50 million in spending 
reductions in the first year out of a total of $1.83 billion has been 
determined to result in a national

[[Page 32725]]

reduction of about 2.7 percent of the total expenditures for ambulances 
services. Through further analysis of this circumstance we have 
determined that we can expect to see that a limited impact of one half 
of the anticipated cutback in payments (approximately $25 million) 
would take place in northern California, Florida, Mississippi, Texas, 
and Ohio, and one-fourth of the cutback (another $12.5 million) would 
take place in Alabama, Arkansas, Georgia, Louisiana, Oklahoma, and 
Oregon. We are able to identify these areas on the basis of regional 
patterns that reflect areas where there is use of predominately ALS 
services. There are, however, no national data identifying communities 
that mandate using ALS services exclusively. The program used to 
determine this impact is aggregated by locality and does not contain 
provider specific information. Therefore, while we are unable to 
determine exactly how many suppliers in the aforementioned areas will 
be affected, we have estimated the dollar impact by State if the areas 
furnished a mix of BLS/ALS services approximating the national average.
    In determining what special considerations may be warranted to 
mitigate the possible negative impact on non-Metropolitan Statistical 
Areas of the country, we considered two alternatives as a possible 
solution. Under the first and preferred alternative we would propose to 
continue to reimburse ambulance suppliers in a non-Metropolitan 
Statistical Area for the ALS level of service if the State EMS Director 
can certify that the ambulance supplier meets established criteria. The 
second alternative we considered would be to create an exception with 
criteria similar to those used for sole community hospitals under 
Medicare's prospective payment system for hospitals. The specifics of 
both alternatives are discussed at length in the preamble. We also had 
to take into consideration questions that were raised that have led us 
to doubt the need for any exception to the proposed rules. To foster 
better understanding of this problem or potential problem, we have 
issued a request for information from interested parties on the need 
for an exception and to help identify areas where it might apply. This 
aspect of our analysis is also discussed at length in the preamble.
    If an exception is implemented, this perceived ``uneven'' impact 
may not be as significant in the States listed above. Also, we may find 
that the overall national impact is less than anticipated. In any 
event, our clarification of the criteria for coverage of ambulance 
services should reduce allowances only to those suppliers now receiving 
payments incorrectly. The limitation on liability provisions will 
protect both beneficiaries and suppliers where they are ``without 
fault.'
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

List of Subjects

42 CFR Part 410

    Health facilities, Health professions, Kidney diseases, 
Laboratories, Medicare, Rural areas, X-rays.

42 CFR Part 424

    Emergency medical services, Health facilities, Health professions, 
Medicare.
    42 CFR chapter IV would be amended as set forth below:

PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS

    1. The authority citation for part 410 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

    2. Section 410.40 is revised to read as follows:


Sec. 410.40  Coverage of ambulance services.

    (a) Basic rules. (1) Medicare Part B covers ambulance services if 
the supplier meets the applicable vehicle, staff, and billing and 
reporting requirements of Sec. 410.41 and the medical necessity and 
origin and destination requirements of this section.
    (2) Medicare Part B covers ambulance services if Medicare Part A 
payment is not made directly or indirectly for the services.
    (b) Levels of services. Except as provided in paragraph (e) of this 
section (concerning ALS services furnished in non-MSA areas) and based 
on the level of services needed to treat a beneficiary's condition (as 
described by diagnostic codes that HCFA designates for ambulance 
services), Medicare covers ambulance services within the United States 
as one of the following levels of services:
    (1) Basic life support (BLS) services.
    (2) Advanced life support (ALS) services.
    (c) Medical necessity requirements. (1) Except as provided in 
paragraph (c)(2) of this section, Medicare covers ambulance services if 
they are furnished to a beneficiary whose medical condition is such 
that other means of transportation would be contraindicated.
    (2) Medicare covers non-emergency transportation services if the 
ambulance supplier, before furnishing services to the beneficiary, 
obtains a current written physician's order certifying that the 
beneficiary must be transported in an ambulance because other means of 
transportation would be contraindicated. The physician's order must be 
dated no earlier than 60 days before the date the service is furnished.
    (3) In accordance with section 1861(s)(7) of the Act, HCFA:
    (i) Establishes guidelines on the use of diagnostic codes that 
ensure the medical necessity of ambulance services, coverage at the 
appropriate level of service (BLS or ALS), and consistency in claims 
filing.
    (ii) Updates the guidelines and codes as necessary.
    (d) Origin and destination requirements. The following 
transportation is covered:
    (1) From any point of origin to the nearest hospital, RPCH, or SNF 
that is capable of furnishing the required level and type of care for 
the beneficiary's illness or injury. The hospital must have available 
the type of physician or physician specialist needed to treat the 
beneficiary's condition.
    (2) From a hospital, RPCH, or SNF to the beneficiary's home.
    (3) From a SNF to the nearest supplier of medically necessary 
services not available at the SNF where the beneficiary is an 
inpatient, including the return trip.
    (4) For a beneficiary who is receiving renal dialysis for treatment 
of ESRD if the requirements of paragraph (c)(2) of this section are 
met, from the beneficiary's home to the nearest facility that supplies 
renal dialysis, including the return trip.
    (e) Coverage exception for ALS services in non-MSA areas. Medicare 
covers ambulance services as ALS level of services if the following 
conditions are met:
    (1) The State Emergency Medical Services Director makes, on an 
annual basis, the following certification:
    (i) The ground ambulance supplier serves a county or comparable New 
England entity that is not designated as a Metropolitan Statistical 
Area by the Office of Management and Budget (that is, a non-MSA area).
    (ii) The supplier is either the sole supplier of ground ambulance 
services in the area, or is located more than 40 miles from any other 
available ground emergency services vehicle in the area.
    (iii) The supplier owns and operates ambulance vehicles.

[[Page 32726]]

    (iv) The supplier furnishes only ALS ambulance vehicles and staff.
    (2) The supplier submits annually to the carrier financial 
information demonstrating that without payment at the ALS level, 
beneficiary access to ambulance services in the area would be 
jeopardized.
    (f) Specific limits on coverage of ambulance services outside the 
United States. If services are furnished outside the United States, 
Medicare Part B covers ambulance transportation to a foreign hospital 
only in conjunction with the beneficiary's admission for medically 
necessary inpatient services as specified in subpart H of part 424 of 
this chapter.
    (g) Limitation on beneficiary liability. (1) If the supplier 
furnishes BLS level of ambulance services to an individual, but uses an 
ALS-level vehicle and submits a bill for Medicare payment of ALS level 
of services, HCFA partially denies coverage of the services under 
Sec. 411.15(k) of this chapter because the services are not reasonable 
or necessary and reduces payment from the ALS level of services to the 
BLS level of services.
    (2) For amounts denied under paragraph (g)(1) of this section, the 
provisions of Sec. 411.404 notwithstanding, HCFA considers 
beneficiaries to meet the conditions of Sec. 411.400(a)(2) of this 
chapter, that is, not to have known or been expected to know that the 
services are not covered under Medicare.
    3. Section 410.41 is added to read as follows:


Sec. 410.41  Requirements for ambulance suppliers.

    (a) Vehicle. A vehicle used as an ambulance must meet the following 
requirements:
    (1) Be specially designed to respond to medical emergencies or 
provide acute medical care to transport the sick and injured and comply 
with all State and local laws governing an emergency transportation 
vehicle.
    (2) Be equipped with emergency warning lights and sirens.
    (3) Be equipped with telecommunications equipment to send and 
receive voice and data transmissions.
    (4) Be equipped with a stretcher, linens, emergency medical 
supplies, oxygen equipment, and other lifesaving emergency medical 
equipment as required by State or local laws.
    (b) Vehicle staff--(1) BLS vehicles. A vehicle furnishing ambulance 
services must be staffed by at least two people who meet the following 
requirements:
    (i) Are certified as emergency medical technicians-basic (EMT-B) by 
the State or local authority where the services are furnished.
    (ii) Are legally authorized to operate all lifesaving and life-
sustaining equipment on board the vehicle.
    (2) ALS vehicles. In addition to meeting the requirements of 
paragraph (b)(1) of this section, one of the two staff members must be 
certified as a paramedic or an emergency medical technician-advanced 
(EMT-A) who is certified to perform one or more ALS services.
    (c) Billing and reporting requirements. An ambulance supplier must 
comply with the following requirements:
    (1) Bill for ambulance services using HCFA designated procedure 
codes to describe origin and destination and HCFA designated diagnostic 
codes to describe the beneficiary's medical condition.
    (2) Upon a carrier's request, complete and return the ambulance 
supplier form developed by HCFA and provide the Medicare carrier with 
documentation of emergency vehicle and staff licensure and 
certification requirements in keeping with State and local laws.
    (3) Upon a carrier's request, provide additional information and 
documentation as required.

PART 424--CONDITIONS FOR MEDICARE PAYMENT

    1. The authority citation for part 424 is revised to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).


Sec. 424.124  [Amended]

    2. In Sec. 424.124, paragraph (c)(2) is amended by removing the 
citation ``Sec. 410.140'' and adding in its place the citation 
``Sec. 410.41''.

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)

    Dated: January 8, 1997.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.

    Dated: January 29, 1997.
Donna E. Shalala,
Secretary.

Addendum 1

    We would assign International Classification of Diseases 9th 
revision, Clinical Modification (ICD-9-CM) diagnostic codes to each of 
the following conditions:
    (Listed in the first column are the medical conditions that are 
encountered most frequently by ambulance crews. The second column 
contains the corresponding ICD-9-CM code(s). In the third column we 
have placed an ``A'' denoting ``ALS'', ``B'' denoting ``BLS'', or ``B/
A'' denoting both ``BLS/ALS''. If only an ``A'' or ``B'' is in the 
column, it means that the trip will be paid as only as ALS or BLS. If 
both ``B/A'' appear, while it is expected that most trips will be BLS, 
the determination regarding which level of service is medically 
necessary will be made, based on documentation submitted by the 
supplier, at the discretion of the carrier. Please note that this list 
is not exhaustive. In unusual circumstances that warrant the need for 
ambulance services, the Carrier may accept the use of other ICD-9-CM 
codes to describe a medical condition that is not on this list).

------------------------------------------------------------------------
                                                                BLS/ALS 
                Condition                    ICD-9-CM Code       Level  
------------------------------------------------------------------------
Abdominal Pain...........................     789.00, 789.07  B/A       
                                                      789.09            
Abnormal Electrocardiogram (EKG).........             794.31  A         
Asphyxiation and Strangulation...........              994.7  A         
Backache, unspecified....................              724.5  B         
Burns....................................      949.0, 949.1,  B/A       
                                               949.2, 949.3,            
                                                949.4, 949.5            
Cardiac Arrest...........................              427.5  A         
Chest Pain, unspecified..................             786.50  A         
Coma.....................................             780.01  B         

[[Page 32727]]

                                                                        
Contracture of Multiple Joints...........             718.49  B         
Convulsions..............................              780.3  B         
Delirium, acute..........................              293.0  B         
Dead on Arrival (DOA) (Cause unknown;                  798.2  B         
 death occurring in less than 24 hours                                  
 from onset of symptoms).                                               
Drowning.................................              994.1  A         
Drug Overdose; Unspecified Drug or                     977.9  A         
 Medicinal Substance.                                                   
Effects of Lightning.....................              994.0  A         
Electrocution and nonfatal effects caused              994.8  A         
 by electric current.                                                   
Food Poisoning; unspecified..............              005.9  B/A       
Head Injury, closed......................              854.0  A         
Head Injury, open........................              854.1  A         
Hemorrhage of Gastrointestinal Tract,                  578.9  B/A       
 unspecified.                                                           
Hemorrhage, unspecified..................              459.0  B/A       
Hypothermia..............................              991.6  A         
Injuries, multiple.......................              959.8  A         
Injury to Elbow, Forearm and Wrist.......              959.3  B         
Injury to Face and Neck..................              959.0  B/A       
Injury to Hand...........................              959.4  A         
Injury to Hip and Thigh..................              959.6  B         
Injury to Knee, Ankle, Leg and Foot......              959.7  B         
Injury to Shoulder and Upper Arm.........              959.2  B         
Injury to Trunk..........................              959.1  A         
Instantaneous Death......................              798.1  B         
Joint Pain, multiple.....................             719.40  B         
Open Wound, Unspecified Eye Ball.........              871.9  B         
Other Artificial Opening (e.g., presence              v44.48  B         
 of chest tubes).                                                       
Other Specified Problems Influencing                   v49.8  B         
 Health Status (e.g., bed-confined).                                    
Pelvis Pain, female......................              625.9  B/A       
Pelvis Pain, male........................              789.0  B/A       
Pelvis Stiffness.........................             719.55  B/A       
Poisoning, unspecified noxious substance               989.9  B/A       
 eaten as food.                                                         
Respiratory Arrest.......................              799.1  A         
Respiratory Distress.....................             786.09  A         
Shock....................................             785.50  A         
Smoke Inhalation, Symptomatic............              987.9  A         
Stroke...................................                436  A         
Transient Alteration of Awareness........             780.02  B/A       
Unconscious..............................             780.09  B         
Unspecified Complication of Labor and                  669.9  A         
 Delivery.                                                              
Wound Disruption of (Dehiscence).........              998.3  B/A       
------------------------------------------------------------------------

Addendum 2

Note To: (Insert Name of Medicare Supplier)
From: (Insert Name of Medicare Carrier)
Subject: Completion of Attached Ambulance Supplier Form

    The attached form must be completed by you whenever your State and 
Local laws require that you update the licensure of your vehicles and/
or staff. We are also requiring that this form be completed at the 
Carriers discretion so that our agents will be assured that they have 
the latest documentation on file to make appropriate claims payment 
determinations.
    The form is self explanatory and therefore there are no program 
instructions for its completion. We do not expect that it will take 
longer than 30 minutes to answer the questions and will require only 
another minute or two to copy and attach the photocopies supporting the 
response to some of the questions.
    If you have any questions about completing this form please contact 
us at (fill in the telephone number and or address of the carrier).

BILLING CODE 4120-01-P 

[[Page 32728]]

[GRAPHIC] [TIFF OMITTED] TP17JN97.000

 

[[Page 32729]]

[GRAPHIC] [TIFF OMITTED] TP17JN97.001

 

[[Page 32730]]

[GRAPHIC] [TIFF OMITTED] TP17JN97.002

 

[[Page 32731]]

[GRAPHIC] [TIFF OMITTED] TP17JN97.003

 

[[Page 32732]]

[GRAPHIC] [TIFF OMITTED] TP17JN97.004



[[Page 32733]]

[FR Doc. 97-15829 Filed 6-16-97; 8:45 am]
BILLING CODE 4120-01-C