[Federal Register Volume 65, Number 51 (Wednesday, March 15, 2000)]
[Rules and Regulations]
[Pages 13911-13914]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-6420]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 405 and 410

[HCFA-1813-F]
RIN 0938-AJ87


Medicare Program; Coverage of, and Payment for, Paramedic 
Intercept Ambulance Services

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

ACTION: Final rule.

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SUMMARY: This final rule responds to public comments received on a 
final rule with comment period published on January 25, 1999 that 
implemented section 4531(c) of the Balanced Budget Act of 1997 
concerning Medicare coverage of, and payment for, paramedic intercept 
ambulance services in rural communities. It also implements section 412 
of the Medicare, Medicaid, and State Children's Health Insurance 
Programs Balanced Budget Refinement Act of 1999 by adding a new 
definition of a rural area.

EFFECTIVE DATE: These regulations are effective on April 14, 2000.

FOR FURTHER INFORMATION CONTACT: Robert Niemann, (410) 786-4569.

SUPPLEMENTARY INFORMATION:

I. Background

    In general, Medicare payment for ambulance services provided in 
accordance with section 1861(s)(7) of the Social Security Act (the Act) 
may be made only to the ambulance supplier furnishing the ambulance 
transport. Paramedic intercept services are advanced life support (ALS) 
services delivered by paramedics who furnish services separately from 
the agency that furnishes the ambulance transport. Except in the very 
limited circumstances described below, Medicare program payment for 
these services may be made only to the ambulance company furnishing the 
ambulance transport. Paramedic intercept services are most often 
furnished for an emergency ambulance transport in which a local 
volunteer ambulance that can furnish only basic life support (BLS) 
services is dispatched to transport a beneficiary. If the beneficiary 
needs ALS services (such as EKG monitoring, chest decompression, or IV 
therapy), another agency (typically a hospital or proprietary emergency 
medical service) dispatches a paramedic to meet the BLS ambulance at 
the scene or enroute to the hospital. The ALS paramedics then furnish 
the ALS services to the beneficiary. This tiered approach to life-
saving may be cost effective in some areas because most volunteer 
ambulances do not charge for their services, and one paramedic service 
can cover many communities.

A. Balanced Budget Act of 1997

    Section 4531(c) of the Balanced Budget Act of 1997 (BBA) provided 
that the Secretary could include limited coverage of these intercept 
services furnished in a rural area: that is, payment may be made 
directly to the agency furnishing the paramedic service in a rural 
area. The services, however, are covered only if they are furnished 
under contract with one or more volunteer ambulance services and they 
are medically necessary based on the condition of the beneficiary 
receiving the ambulance service. In addition, by law, the volunteer 
ambulance service involved must meet all of the following requirements:
     Furnish only BLS services at the time of the intercept.
     Be prohibited by State law from billing for any service.
    Finally, the entity furnishing the ALS paramedic intercept service 
must meet the following requirements:
     Be certified as qualified to furnish the ambulance 
services under the Medicare program (including compliance with State 
laws and regulations).
     Bill all recipients who receive ALS paramedic intercept 
services from the entity, regardless of whether or not those recipients 
are Medicare beneficiaries.

B. The Final Rule with Comment Period

    On January 25, 1999, we published a final rule with comment period 
in the Federal Register (64 FR 3637), which, in part, revised 42 CFR 
410.40 to implement section 4531(c) of the BBA. In implementing the 
law, we defined ``rural area'' in the same way it is defined for 
purposes of the Medicare hospital inpatient prospective payment system 
under section 1886(d)(2)(D) of the Act and in regulations at 
Sec. 412.62(f). That is, a rural area is any area outside of a 
Metropolitan Statistical Area (MSA) or New England County Metropolitan 
Area as defined by the Office of Management and Budget.
    Although it provided the Secretary with the authority to cover 
paramedic intercept services under certain conditions, section 4531(c) 
of the BBA did not specify what the payment should be for those 
services. After considering several options, we decided to pay for 
paramedic intercept services based on the difference between the ALS 
payment rate and the BLS payment rate for each carrier's geographic 
pricing locality. We believed that this option balanced considerations 
for access to care and consistency with current ambulance payment 
policy. We would be providing the intercept company with a reasonable 
payment while not providing the same amount of payment that we 
generally would provide to an ambulance company that furnishes both the 
transport and the paramedic service. We reasoned that if we paid the 
difference between the ALS and BLS rates to the intercept company, we 
would be acknowledging the BLS rate that would have been paid to the 
volunteer company had it been permitted by the State to bill the 
program for the transport.

C. Balanced Budget Refinement Act of 1999

    Section 412 of the Medicare, Medicaid, and State Children's Health 
Insurance Programs Balanced Budget Refinement Act of 1999 (BBRA) (Pub. 
L. 106-113), enacted on November 29, 1999, amends section 4531(c) of 
the BBA. Section 412 states ``* * * an area shall be treated as a rural 
area if it is designated as a rural area by any law or regulation of 
the State or if it is located in a rural census tract of a metropolitan 
statistical area (as determined under the most recent Goldsmith 
Modification, originally published in the Federal Register on February 
27, 1992, (57 FR 6725)).'' (The Goldsmith Modification is a methodology 
to identify small towns and rural areas within large metropolitan 
counties that are isolated from central areas by distance or other 
features. This Modification has been useful for expanding the 
eligibility for Federal programs that assist rural populations to 
include isolated rural populations of large metropolitan counties).

[[Page 13912]]

II. Discussion of Public Comments

    In response to the final rule with comment period published on 
January 25, 1999, we received approximately 175 comments from ambulance 
suppliers and their employees, Medicare beneficiaries, and two members 
of the Congress. The majority of the comments were identical or nearly 
identical. The comments and responses are set forth below:

A. Definition of Rural Area

    Comment: Commenters stated that using a rural definition based on 
MSAs and non-MSAs was not appropriate in the context of ambulance 
services. The commenters pointed out that, in large urban counties, 
many areas are very rural in nature. Because of the distance between 
these ``rural'' areas in an MSA and the nearest appropriate hospital, 
paramedic intercept services delivered in these rural areas are just as 
worthy of being recognized as those delivered in a rural county.
    The commenters suggested alternatives that included: (1) the area 
where services are furnished meets either the non-MSA criterion or is 
located in a rural area as defined by the Census Bureau; (2) setting 
some other population density criterion; or (3) considering driving 
distance.
    Some commenters stated that the paramedic intercept provision 
should not be limited to rural areas because this service is needed 
everywhere, not just in rural areas.
    Response: Section 4531(c) of the BBA, as amended by section 412 of 
the BBRA, specifically limits coverage of this service to rural areas; 
therefore, we cannot extend the paramedic intercept provision to all 
areas. In accordance with the provisions of section 412 of the BBRA, we 
are revising the definition of ``rural area'' in Sec. 410.40(c)(1). For 
this purpose, an area will be treated as a rural area if it is 
designated as a rural area by any law or regulation of the State or if 
it is located in a rural census tract of a metropolitan statistical 
area (as determined under the most recent Goldsmith Modification, 
originally published in the Federal Register on February 27, 1992 (57 
FR 6725)).
    Comment: Some commenters inquired whether the rural criteria would 
be applied to the location from which the beneficiary is transported 
(that is, pick-up point) or the location of the garage for the 
intercept services vehicle. One commenter suggested that coverage be 
limited to a service furnished in whole or in part in a rural area 
regardless of the location of the garage housing the vehicle used by 
the paramedic.
    Response: We are applying the rural area criteria to the location 
from which the beneficiary is transported, that is, the location of the 
beneficiary at the time the ambulance or the paramedic intercept 
encounters the beneficiary, whichever occurs first.
    Comment: Some commenters stated that the paramedic intercept 
provision in the BBA is not fair because it requires that the volunteer 
BLS ambulance be prohibited by State law from billing anyone for its 
services and that the only State with such a law is New York. 
Therefore, no suppliers in States other than New York can qualify for 
this benefit. The commenters stated that we should implement this 
provision everywhere in the country equitably or not implement it at 
all.
    Response: The statute clearly defines the conditions under which 
Medicare may cover paramedic intercept services. Section 4531(c) of the 
BBA states that the volunteer ambulance service involved in the 
intercept service must be prohibited by State law from billing for any 
services. Therefore, we have no discretion to broaden its application. 
The Congress gave the Secretary authority to implement the paramedic 
intercept provision only under the conditions set forth in the law. 
Thus, we believe our implementation of the provision is appropriate.

B. Payment for Paramedic Intercept Services

    Comment: We received numerous comments on the payment rate that we 
established for paramedic intercept services. Some commenters believed 
that we should pay the cost or reasonable charge of the service. Others 
suggested we pay the full ALS rate. In addition, commenters suggested 
we pay for paramedic intercept mileage. Finally, one commenter believed 
that we should pay on a State-wide basis rather than on an individual 
carrier locality basis.
    Response: Based on the comments, we are revising the payment 
methodology for paramedic intercept services (Sec. 405.502). Rather 
than basing the payment on the ALS rate minus the BLS rate, we will use 
the ALS rate minus 40 percent of the BLS rate. In the case of ALS 
intercept services, a full ALS service is being furnished except that 
the BLS ambulance cannot charge for the portion of the service it 
furnishes. In particular, the paramedic drives a ``flycar'' to the 
scene where the BLS crew is waiting with the beneficiary. (A ``flycar'' 
is the special vehicle that a paramedic drives to the BLS ambulance and 
that contains necessary medical supplies with which a BLS ambulance is 
not equipped.) The paramedic transfers supplies and equipment from the 
flycar to the BLS ambulance and treats the beneficiary while the BLS 
ambulance crew drives the ambulance to the hospital. Because the BLS 
ambulance service is volunteer and cannot charge, we need to estimate 
the percentage of the service that is nonreimbursable. We estimate that 
the amount of the service that is furnished by the BLS volunteer 
ambulance is the nonlabor portion of the BLS ambulance service, which 
is about 40 percent of the total BLS payment allowance. The difference 
between the ALS payment rate and the BLS payment rate that we are 
paying is our estimate of the reimbursable costs of the equipment and 
supplies furnished by the paramedic as well as the labor portion that 
we are attributing to the paramedic intercept services. In addition, 
for administrative simplicity and equity of payment, we are 
establishing the rate on a carrier-wide basis, by using the median 
allowance from all localities within the individual carrier's 
jurisdiction. We are not paying mileage for the paramedic intercept 
because the intercept vehicle is not used to transport the beneficiary 
and Medicare covers only the mileage incurred to transport the 
beneficiary.
    Comment: A commenter stated that the statute requires mandatory 
assignment of benefits for ambulance services effective January 1, 
2000. This mandatory assignment would not allow the ALS intercept 
provider to recoup its cost from the beneficiary if the payment 
allowance remained less than the cost of furnishing the service.
    Response: The mandatory assignment provision in the statute 
coincides with implementation of the ambulance fee schedule, which is 
currently being developed by a negotiated rulemaking committee. 
Mandatory assignment will not be implemented until payment under the 
fee schedule is implemented.
    We note that, while this final rule sets forth a payment rate for 
paramedic intercept services in accordance with the authority in 
section 4531(c) of the BBA, section 4531(b) of the BBA requires the 
establishment of a fee schedule for Medicare ambulance services by 
negotiated rulemaking. This negotiated rulemaking process is currently 
underway and may result in a different payment rate from that provided 
in this final rule. We will set forth any new payment rate in the 
proposed rule that includes other provisions for the ambulance fee 
schedule. The subsequent final rule would supercede the provisions of 
this paramedic intercept final rule.

[[Page 13913]]

    Finally, this rule affects only those paramedic intercept services 
that may be billed, and paid, by Medicare directly to the intercept 
provider. This rule will not affect any private arrangements between 
any BLS ambulance suppliers and providers of ALS services.

III. Provisions of the Final Rule for Paramedic Intercept Ambulance 
Services

    Currently, under Sec. 410.40(c), Medicare covers paramedic 
intercept services if they are furnished in a rural area as defined in 
Sec. 412.62(f). We are revising Sec. 410.40(c) to state that to qualify 
for Medicare coverage, paramedic intercept services must be furnished 
in an area that is designated as a rural area by any law or regulation 
of the State or that is located in a rural census tract of a 
metropolitan statistical area (as determined under the most recent 
Goldsmith Modification, originally published in the Federal Register on 
Friday, February 27, 1992 (57 FR 6725)).
    Additionally, we are revising the methodology for determining the 
payment rate. We are establishing the payment allowance on a carrier-
wide basis, by using the median allowance from all localities within 
the individual carrier's jurisdiction. We chose the median because it 
is the most accurate statistical measure of central tendency of an 
array of numbers. We are also changing the formula. Rather than using 
the ALS rate minus the BLS rate, we are using the ALS rate minus 40 
percent of the BLS rate. We will base Medicare payment for paramedic 
intercept services on the lower of the actual charge or the ALS rate 
minus 40 percent of the BLS rate. We are adding these payment rules as 
new paragraph (i) in Sec. 405.502.

IV. Collection of Information Requirements

    This document does not impose information collection and 
recordkeeping requirements. Consequently, it need not be reviewed by 
the Office of Management and Budget under the authority of the 
Paperwork Reduction Act of 1995.

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 will 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 operations of a substantial number of small rural 
hospitals. This analysis must conform to the provisions of section 604 
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 Executive Order 12866 to require a regulatory impact 
analysis; however, the following information, together with information 
provided elsewhere in this preamble, constitutes a voluntary analysis 
and meets the requirements of the RFA.
    Effective with services furnished on February 24, 1999, Medicare 
began paying for paramedic intercept services that meet the conditions 
for coverage. When these services have been furnished to a Medicare 
beneficiary, the ALS paramedic intercept company has had an incentive 
to bill the beneficiary for the difference between its full charge for 
the intercept service and 80 percent of the Medicare payment rate if it 
believed that the Medicare payment rate was inadequate to cover the 
cost of the service. Now that the payment rate will be increased, we 
anticipate that the paramedic intercept suppliers will accept 
Medicare's rate and bill the beneficiary for only the applicable 
deductible and coinsurance amounts. This will benefit both the company 
and the beneficiary.
    As we stated in the January 25, 1999 final rule with comment 
period, we believe that the only State in which the conditions 
described in section 4531(c) of the BBA exist is New York. After 
consultations with the ambulance industry in New York and examination 
of the Medicare program data, we estimate the volume of services that 
will be covered under this provision in a year will be between 2,000 
and 4,000. The current payment rates for these services range from 
about $88 to about $162 depending upon the location of the service. A 
payment allowance of approximately $262 per service (the difference 
between the carrier-wide payment allowance for ALS and 40 percent of 
the carrier-wide allowance for BLS) in western New York State, and 
approximately $223 for the rest of the State yields a negligible cost 
compared to the current rates paid for these services. For paramedic 
intercept services that meet the conditions for Medicare coverage, we 
estimate the total cost for the first year of implementation of this 
rule to be between $200,000 to $400,000. Because the Medicare Part B 
coinsurance and deductible provisions apply, the program portion of 
this cost is estimated to be between $160,000 and $320,000. The 
remainder of the cost will be the responsibility of beneficiaries.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any final rule that may result in an expenditure in any one 
year by State, local or tribal government, in the aggregate, or by the 
private sector of $100 million. This final rule will not have an effect 
on the governments mentioned, and private sector costs will be less 
than the $100 million threshold.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.
    We have reviewed this final rule under the threshold criteria of 
Executive Order 13132, Federalism. We have determined that it does not 
significantly affect the rights, roles, and responsibilities of States.

List of Subjects

42 CFR Part 405

    Administrative practice and procedure, Health facilities, Health 
professions, Kidney diseases, Medicare, Reporting and recordkeeping 
requirements, Rural areas, X-rays.

42 CFR Part 410

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

    For the reasons set forth in the preamble, 42 CFR chapter IV is 
amended as set forth below:

PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED

    A. Part 405, subpart E is amended as follows:
    1. The authority citation for part 405, subpart E continues to read 
as follows:


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

    2. In Sec. 405.502, we are adding a new paragraph (i) to read as 
follows:


Sec. 405.502  Criteria for determining reasonable charges.

* * * * *
    (i) Paramedic intercept ambulance services. (1) HCFA establishes 
its

[[Page 13914]]

payment allowance on a carrier-wide basis by using the median allowance 
from all localities within an individual carrier's jurisdiction.
    (2) HCFA's payment allowance is equal to the advanced life support 
rate minus 40 percent of the basic life support rate.
    (3) HCFA bases payment on the lower of the actual charge or the 
amount described in paragraph (i)(1) and (i)(2) of this section.

PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS

    B. Part 410 is amended to read as follows:
    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. In Sec. 410.40, the introductory text to paragraph (c) is 
republished, and paragraph (c)(1) is revised to read as follows:


Sec. 410.40  Coverage of ambulance services.

* * * * *
    (c) Paramedic ALS intercept services. Paramedic ALS intercept 
services must meet the following requirements:
    (1) Be furnished in an area that is designated as a rural area by 
any law or regulation of the State or that is located in a rural census 
tract of a metropolitan statistical area (as determined under the most 
recent Goldsmith Modification). (The Goldsmith Modification is a 
methodology to identify small towns and rural areas within large 
metropolitan counties that are isolated from central areas by distance 
or other features.)
* * * * *

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

    Dated: January 31, 2000.
Nancy Ann-Min DeParle,
Administrator, Health Care Financing Administration.
    Dated: March 9, 2000.
Donna E. Shalala
Secretary.
[FR Doc. 00-6420 Filed 3-14-00; 8:45 am]
BILLING CODE 4120-01-P