[Federal Register Volume 65, Number 225 (Tuesday, November 21, 2000)]
[Notices]
[Pages 69945-69946]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-29755]



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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

[HCFA-1151-N]


Medicare Program; Ambulance Services Demonstration

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

ACTION: Notice.

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SUMMARY: This notice announces the Ambulance Services demonstration, 
which will determine the quality and cost effectiveness of reimbursing 
ambulance services paid for by Medicare under Part B through a monthly 
capitated payment arrangement. The Secretary of Health and Human 
Services is required under the Balanced Budget Act of 1997 to establish 
up to three demonstration projects by entering into contracts with 
units of local governments that furnish or arrange for furnishing 
ambulance services in their jurisdictions. The demonstration will 
determine whether providing a capitated payment and flexibility to 
participating units of local governments will enable them to meet local 
needs more effectively while reducing Medicare expenditures for 
ambulance services.

DATES: Proposals will be considered if we receive them at the 
appropriate address, as provided below, no later than 5 p.m. on March 
21, 2001.

ADDRESSES: Mail written proposals (1 unbound original and 10 copies) to 
the following address: Department of Health and Human Services, Health 
Care Financing Administration, Attention: Kathy Headen, Room C4-17-27, 
7500 Security Boulevard, Baltimore, MD 21244-1850.
    Applications must be typed for clarity and should not exceed 40 
double-spaced pages, exclusive of the executive summary, resumes, 
forms, and documentation supporting the cost proposal. Please refer to 
file code HCFA-1151-N on the proposal.

FOR FURTHER INFORMATION CONTACT: Kathy Headen, (410) 786-6865 
([email protected].).

SUPPLEMENTARY INFORMATION:

I. Background and Legislative Authority

    The Secretary of Health and Human Services is required under 
section 4532 of the Balanced Budget Act of 1997 (BBA) to establish up 
to three demonstration projects by entering into contracts with units 
of local governments that furnish or arrange for furnishing ambulance 
services in their jurisdictions. The contract must cover at least 80 
percent of the persons residing within the unit of local governments 
who are enrolled in Medicare Part B (excluding persons enrolled in a 
Medicare+Choice plan). Payment under a contract to a local government 
will replace the amount that would otherwise be paid for ambulance 
services for individuals residing in the area. The Secretary and the 
unit of local government may include in the contract those other terms 
the parties consider appropriate, including: (1) Covering individuals 
residing in additional units of local government, (under arrangements 
entered into between these units and the unit of local government 
involved); (2) permitting the unit of local government to transport 
individuals to non-hospital providers if the providers are able to 
furnish quality services at a lower cost than hospital providers; or 
(3) implementing these other innovations as the unit of local 
government may propose to improve the quality of ambulance services and 
control the costs of the services.
    The BBA amended the Act to require that we pay the unit of local 
government a monthly capitation rate for the ambulance services, 
instead of the amount that (in the absence of the contract) would 
otherwise be payable under Part B of Title XVIII of the Social Security 
Act (Act) for the services covered under the contract. Section 4532(e) 
of the BBA also requires a formal evaluation of the projects, to 
include recommendations to modify the payment methodology and whether 
to extend or expand the demonstration projects.
    Section 225 of the Balanced Budget Refinement Act (BBRA) of 1999 
amended section 4532(b)(2) of the BBA, the demonstration payment 
formula, by authorizing the Secretary to establish a budget-neutral 
first-year capitated payment based on the most current available data, 
with payment in subsequent years adjusted for inflation.
    The BBA contemplates that successful applicants have a 
comprehensive administrative structure and will be able to demonstrate 
that they have the capability to contract with vendors, if necessary, 
to furnish the services. They will also be expected to have the 
capability to process and adjudicate claims, establish a monitoring and 
performance system to ensure quality of services, and possess data 
capabilities to exchange information with vendors and us.

II. Current and Proposed Regulations

    We published a final rule on January 25, 1999 (64 FR 3637) 
establishing new regulation requirements for Medicare Part B ambulance 
services that were effective February 24, 1999. These regulations 
revised the vehicle, staffing, level of service, and billing 
requirements for ambulance services. The regulations also revised the 
medical necessity requirements to include a national definition of the 
term bed-confined, established a new requirement that the beneficiary's 
attending physician furnish a written order certifying the medical 
necessity of non-emergency ambulance transports, and implemented 
section 4531(c) of the BBA concerning Medicare coverage for paramedic 
intercept services in rural communities.
    Section 4531 of the BBA requires the Secretary to set interim 
payment reductions for ambulance services for fiscal years 1998 and 
1999, as well as the portion of fiscal year 2000 that precedes January 
1, 2000. The BBA also requires the Secretary to establish a fee 
schedule for ambulance services through negotiated rulemaking. We 
published a proposed rule for the new fee schedule in the Federal 
Register on September 12, 2000 (65 FR 55100). Applicants should be 
familiar with the proposed changes as they formulate their proposal.

III. Purpose of Demonstration

    We want to determine whether providing a capitated payment and 
flexibility to participating units of local government will enable them 
to meet local needs more effectively while reducing Medicare 
expenditures for ambulance services. In particular, this demonstration 
will test whether freedom to select and monitor suppliers and establish 
prices will help control Medicare costs. Section 4532 of the BBA 
authorizes demonstrations to change the way in which the Medicare 
program purchases ambulance services in a geographic area. Instead of 
paying individual suppliers directly on a fee-for-service basis, the 
statute permits a local government entity to receive capitated payments 
from us and to establish an ambulance system designed for the local 
area. Under the demonstration, the applicant could operate the entire 
system itself, contract with suppliers to furnish services, or use a 
combination of the two means to deliver care. The local unit of 
government could establish its own fee schedule rather than using the 
Medicare fee schedule, request that potential suppliers bid on the 
service, or pay

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suppliers on a capitated basis. The local unit of government could 
select all willing suppliers or use a limited number of suppliers and 
use savings from efficiencies to provide added services.
    The demonstration offers the selected units of government a great 
deal of flexibility, as long as the government entity establishes a 
delivery system that ensures access to care and quality services under 
a budget neutral capitated payment rate.
    We will select up to three units of local government, using a 
competitive application process. A qualifying unit of local government 
is defined as a city, county, or incorporated town. A demonstration 
project can only exclude beneficiaries enrolled in Medicare Part B who 
reside within the unit if geographic features make coverage impractical 
for a specified area. In such case, up to 20 percent of the unit's Part 
B enrollees may be excluded.
    An independent panel will review proposals. Areas that will be 
examined include: Statement of the Problem; Organizational Capability; 
Service Delivery, Operations, and Quality Assurance; Payment 
Methodology and Implementation.

IV. Final Selection

    The final selection of up to three demonstration projects will be 
made by our Administrator from among the most highly qualified 
applicants. The Administrator will make the selection giving greater 
emphasis to proposals that have strong evidence of service delivery, 
operations, and quality assurance; the implementation plan; 
organizational capability; and payment methodology. The operational 
protocols for the payment system, coverage process, eligibility 
determination, and claims payment must be approved by us prior to 
implementation. We reserve the right to conduct site visits to the 
awardees' location prior to making awards. An independent contractor, 
selected and funded by us, will design and conduct an evaluation of the 
demonstration after its conclusion. The awardee will be required to 
cooperate with the contractor conducting the evaluation.

    Authority: Section 4532 of the Balanced Budget Act of 1997, 
(Pub. L. 105-33); and Section 225 of the Balanced Budget Refinement 
Act of 1999, (Pub. L. 106-113). (Catalog of Federal Domestic 
Assistance Program No. 93.779, Health Care Financing Research, 
Demonstrations and Evaluations)

    Dated: October 17, 2000.
Michael M. Hash,
Acting Administrator, Health Care Financing Administration.
[FR Doc. 00-29755 Filed 11-20-00; 8:45 am]
BILLING CODE 4120-01-U