[Federal Register Volume 68, Number 73 (Wednesday, April 16, 2003)]
[Notices]
[Pages 18654-18656]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-9503]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-1256-N]
RIN 0938-AM60


Medicare Program; Notice of Ambulance Fee Schedule in Accordance 
With Federal District Court Order

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Notice.

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SUMMARY: This notice announces the steps CMS is taking to comply with 
the Order in Lifestar Ambulance Service, Inc. v. United States, No. 
4:02-CV-127-1 (M.D. Ga. Jan. 16, 2003) Medicare Covered Ambulance 
Services.

EFFECTIVE DATE: This notice is effective on April 16, 2003.

FOR FURTHER INFORMATION CONTACT: Anne Tayloe, (410) 786-4546.

SUPPLEMENTARY INFORMATION: 

I. Background

    Section 4531 of the Balanced Budget Act of 1997 (BBA) required the 
Secretary of the Department of Health and Human Services to establish a 
national fee schedule (FS) for payment of ambulance services through a 
negotiated rulemaking process. The statute provided that the Secretary 
phase in the application of payment rates under the FS in an efficient 
and fair manner and that the aggregate amount of payment for such 
services under the new FS not exceed the amount that would have been 
paid under the old system (42 U.S.C. Sec.  1395m(l)(1), (2), (3)). The 
BBA provided that the FS would apply to services furnished on or after 
January 1, 2000.
    The September 12, 2000 proposed rule (65 FR 55078) and the February 
27, 2002 final rule (67 FR 9100) both provide for payment for ambulance 
services to be made in two parts: a base rate and a payment for 
mileage. Section 423 of the Medicare, Medicaid and SCHIP Benefits 
Improvement and Protection Act of 2000 (BIPA), which was passed after 
the publication of the proposed rule and prior to the promulgation of 
the final rule, provided that during the phase-in of the FS there would 
be full payment of any national mileage rate for ambulance services 
furnished by suppliers in States where the Medicare carrier did not 
previously pay separately for all mileage within the county from which 
the beneficiary is transported. Two States have been identified as 
qualifying under this provision: North Carolina and Tennessee. The BIPA 
states that this provision shall apply to services furnished on or 
after July 1, 2001. The FS was implemented on April 1, 2002 by the 
February 27, 2002 final rule. The final rule announced the 5-year 
phase-in that is based on a blend of a percentage of the payment based 
on the old payment system with a percentage of the payment based on the 
FS according to the following schedule:

------------------------------------------------------------------------
                                               Percentage
                                                 of old      Percentage
                Calendar year                    payment       of fee
                                                 system       schedule
------------------------------------------------------------------------
2002*.......................................            80            20
2003........................................            60            40
2004........................................            40            60
2005........................................            20            80
2006........................................             0          100
------------------------------------------------------------------------
\*\ April 1, 2002 through December 31, 2002 only.

    The full national FS mileage rate in those States that qualify for 
section 423 of the BIPA (North Carolina and Tennessee) has been paid as 
of April 1, 2002.
    In Lifestar Ambulance Service, Inc. v. United States, No. 4:02-CV-
127-1

[[Page 18655]]

(M.D. Ga. Jan 16, 2003), three ambulance suppliers seeking to represent 
a nationwide class of ambulance suppliers sued the Secretary, arguing 
that he has no discretion to give the FS an effective date other than 
January 1, 2000. The district court agreed with the plaintiff suppliers 
and issued an order certifying a nationwide class of ambulance 
suppliers and requiring the Secretary to adopt a FS for the January 1, 
2000 through March 31, 2002 period. The court's decision also requires 
the Secretary to pay full mileage in accordance with the BIPA provision 
for the July 1, 2001 through March 31, 2002 period. Id. at 20-21.

II. Provisions of the Notice

    The purpose of this notice is to comply with the court's order 
requiring a FS to be established for the January 1, 2000 through March 
31, 2002 period. By this notice, the Secretary is establishing a FS 
based on the FS as described in the February 27, 2002 final rule, with 
a modified phase-in as follows:

------------------------------------------------------------------------
                                               Percentage
                                                 of old      Percentage
                Calendar year                    payment       of fee
                                                 system       schedule
------------------------------------------------------------------------
2000*.......................................            95             5
2001........................................            90            10
2002........................................            80           20
------------------------------------------------------------------------
\*\ January 1, 2002 through March 31, 2002.

    Additionally, in accordance with the district court's order, the 
Medicare program will pay full BIPA mileage for services provided on or 
after July 1, 2001.
    The BBA provided that the Secretary shall phase in the application 
of payment rates under the FS in an efficient and fair manner. As 
previously detailed, based on the discretion afforded the Secretary by 
the BBA, the final rule published on February 27, 2002 provided for a 
linear progression from the prior payment system to FS payments, 
commencing with a 20 percent/80 percent blended payment for the last 
three quarters of FY 2002, and ending with a 100 percent FS payment for 
FY 2006.
    Five percent, 10 percent, and 20 percent is the most appropriate 
progression of blending percentages for the January 1, 2000 through 
March 31, 2002 period. For the first quarter of 2002, 20 percent is the 
same blending percentage as the percentage already used for the FS 
during the other 9 months in 2002. The 5 percent and 10 percent are the 
most appropriate percentages for 2000 and 2001, in that they comply 
with the statutory requirement for an efficient and fair phase-in, and 
are consistent with the linear progression in blending percentages 
promulgated in the February 27, 2002 final rule.
    The Lifestar court recognized the Secretary's statutory discretion 
to set the phase-in percentages for the January 1, 2000 through March 
31, 2002 period. The court also stated that these phase-in percentages 
must provide meaningful relief to the Lifestar plaintiffs. The FS 
described in this notice provides meaningful relief as evidenced in 
more detail under the impact section, below. We estimate that 2/3 of 
15,000 suppliers will be receiving a total of $81 million for this 
period.
    The statute at 42 U.S.C. 1395(m)(l)(3)(B) provides that FS payment 
amounts in subsequent years to the first year of the FS be set equal to 
the FS payment amounts from the previous year increased by a 
statutorily prescribed inflation factor. The FS final rule used data 
from 1998 and inflated it using the statutorily prescribed inflation 
factors to obtain the 2002 amounts. See 67 FR 9100, 9125. To determine 
the FS amounts for earlier years (that is, the period of January 1, 
2000 through December 31, 2001), we have deflated the FS amounts for 
2002 by the same statutorily prescribed ambulance inflation factors. 
These deflation factors are:

------------------------------------------------------------------------
                                                              Deflation
                       Calendar year                         percentage
------------------------------------------------------------------------
2000/2001.................................................           3.7
2001/2002.................................................           2.2
------------------------------------------------------------------------

III. Appeal of Lifestar Decision/Recoupment

    The Secretary has appealed the Lifestar decision. In the event the 
district court's decision is reversed on appeal, any FS or BIPA mileage 
payment made in accordance with this notice for the January 1, 2000 
through March 31, 2002 period will be subject to recoupment.

IV. Waiver of Proposed Rulemaking

    We ordinarily publish a notice of proposed rulemaking in the 
Federal Register and invite public comment on the proposed rule. The 
notice of proposed rulemaking includes a reference to the legal 
authority under which the rule is proposed, and the terms and 
substances of the proposed rule or a description of the subjects and 
issues involved. This procedure can be waived, however, if an agency 
finds good cause that a notice-and-comment procedure is impracticable, 
unnecessary, or contrary to the public interest and incorporates a 
statement of the finding and its reasons in the rule issued.
    The court's January 16, 2003 order in Lifestar requires 
establishment of a FS for the January 1, 2000 through March 31, 2002 
period within 90-days of the date of the order. It would be 
impracticable to provide a period for prior notice and comment and 
still meet the 90-day deadline. In fact, the Congress has recognized 
the impracticability of providing prior notice and comment where a 
statutory provision must be implemented within 150 days. See 42 U.S.C. 
1395hh(b)(2)(B) (providing that a notice of proposed rulemaking is not 
required if a statute establishes a specific deadline for 
implementation that is less than 150 days from enactment).
    Therefore, we find good cause to waive the notice of proposed 
rulemaking and comment period with respect to the issuance of this 
notice.

V. 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 (44 U.S.C. 35).

VI. Regulatory Impact Statement

    We have examined the impacts of this notice as required by 
Executive Order 12866 (September 1993, Regulatory Planning and Review), 
the Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96-
354), section 1102(b) of the Social Security Act, the Unfunded Mandates 
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
    There are approximately 15,000 suppliers nationwide that submit 
claims to Medicare for ambulance services. The Medicare program pays 
approximately $2.1 billion in Medicare benefits per year for these 
services. We estimate that approximately two-thirds of suppliers will 
benefit from this January 1, 2000 through March 31, 2002 FS and that 
the aggregate amount of program spending will be approximately $81 
million. The break out of this expenditure is as follows:

------------------------------------------------------------------------
                                                              Program
                      Calendar year                        expenditures
                                                           (in millions)
------------------------------------------------------------------------
2000....................................................             $16
2001....................................................             $43
2002....................................................             $22
    Total...............................................             $81
------------------------------------------------------------------------


[[Page 18656]]

    These amounts include approximately $16 million by which suppliers 
in North Carolina and Tennessee will benefit due to implementation of 
the BIPA ambulance mileage provision for the period of July 1, 2001 
through March 31, 2002.
    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). A regulatory impact 
analysis (RIA) must be prepared for major rules with economically 
significant effects ($100 million or more in any 1 year). The aggregate 
amount of program spending to comply with the court's order will be 
approximately $81 million. Therefore this notice is not a major notice 
as defined in Title 5, United States Code, section 804(2) and is not an 
economically significant notice under Executive Order 12866.
    The RFA requires agencies to analyze options for regulatory relief 
of small entities. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and government agencies. 
Most hospitals and most other providers and suppliers are small 
entities, either by nonprofit status or by having revenues of $6 
million to $29 million in any 1 year. Individuals and States are not 
considered to be small entities. We have determined that this notice 
will not have a significant economic impact on a substantial number of 
small entities. Therefore, we are not preparing an analysis for the 
RFA.
    In addition, section 1102(b) of the Act requires us 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 100 beds. We have determined that 
this notice will not have a significant effect on the operations of a 
substantial number of small rural hospitals. Therefore, we are not 
preparing an analysis for section 1102(b) of the Act.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule that may result in expenditures in any 1 year by 
State, local, or tribal governments, in the aggregate, or by the 
private sector, of $110 million. This notice has no consequential 
effect on State, local, or tribal governments or on the private sector.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a rule that imposes substantial 
direct requirement costs on State and local governments, preempts State 
law, or otherwise has Federalism implications. This notice will not 
have a substantial effect on State or local governments.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

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

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


    Dated: April 1, 2003.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: April 11, 2003.
Tommy G. Thompson,
Secretary.
[FR Doc. 03-9503 Filed 4-15-03; 8:45 am]
BILLING CODE 4120-01-P