[Federal Register Volume 68, Number 234 (Friday, December 5, 2003)]
[Rules and Regulations]
[Pages 67960-67963]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-30152]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 414

[CMS-1232-FC]
RIN 0938-AM44


Medicare Program; Coverage and Payment of Ambulance Services; 
Inflation Update for CY 2004

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

ACTION: Final rule with comment period.

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SUMMARY: This final rule provides the sunset date for the interim bonus 
payment for rural ambulance mileage of 18 through 50 miles as required 
by the Medicare, Medicaid and State Child Health Insurance Program 
Benefits Improvement and Protection Act of 2000 (BIPA) and provides 
notice of the annual Ambulance Inflation Factor (AIF) for ambulance 
services for calendar year (CY) 2004. The statute requires that this 
inflation factor be

[[Page 67961]]

applied in determining the fee schedule amounts and payment limits for 
ambulance services.

DATES: Effective date: These revisions are effective on January 1, 
2004. The ambulance inflation factor for 2004 applies to ambulance 
services furnished during the period January 1, 2004, through December 
31, 2004.
    Comment date: Comments will be considered if we receive them at the 
appropriate address, as provided below, no later than 5 p.m. on January 
29, 2004.

ADDRESSES: Mail written comments (one original and three copies) to the 
following address: Centers for Medicare & Medicaid Services, Department 
of Health and Human Services, Attention: CMS-1232-FC, P.O. Box 8013, 
Baltimore, MD 21244-8013.
    If you prefer, you may deliver your written comments (one original 
and three copies) to one of the following addresses: Hubert H. Humphrey 
Building, Room 443-G, 200 Independence Avenue, SW., Washington, DC 
20201, or Centers for Medicare & Medicaid Services, Room C5-14-03, 7500 
Security Boulevard, Baltimore, MD 21244-8013.
    Comments mailed to those addresses designated for courier delivery 
may be delayed and could be considered late. Because of staffing and 
resource limitations, we cannot accept comments by facsimile (FAX) 
transmission. Please refer to file code CMS-1232-FC on each comment. 
Comments received timely will be available for public inspection as 
they are received, generally beginning approximately 3 weeks after 
publication of this document, in Room C5-12-08 of the Centers for 
Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, 
Maryland, Monday through Friday of each week from 8:30 a.m. to 4 p.m. 
Please call (410) 786-7197 to make an appointment to view comments.

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

SUPPLEMENTARY INFORMATION:

I. Background

A. Legislative and Regulatory History

    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 legislation creating the Social Security Act 
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, 43 (1965)). The reports indicate that transportation may 
also be provided from one hospital to another, to the beneficiary's 
home, or to an extended care facility.
    Our regulations relating to ambulance services are located at 42 
CFR part 410, subpart B and 42 CFR part 414, subpart H. Section 
410.10(i) lists ambulance services as one of the covered medical and 
other 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. 
Part 414, subpart H describes how payment is made for ambulance 
services covered by Medicare.
    The Medicare program pays for ambulance services for Medicare 
beneficiaries when other means of transportation are contraindicated. 
Ambulance services are divided into different levels of services based 
on the medically necessary treatment provided during transport as well 
as into ground (including water) and air ambulance services. These 
services include the levels of service listed below.
For ground:
    [sbull] Basic Life Support (BLS)
    [sbull] Advanced Life Support, Level 1 (ALS1)
    [sbull] Advanced Life Support, Level 2 (ALS2)
    [sbull] Specialty Care Transport (SCT)
    [sbull] Paramedic ALS Intercept (PI)
For air:
    [sbull] Fixed Wing Air Ambulance (FW)
    [sbull] Rotary Wing Air Ambulance (RW)
    Historically, payment levels for ambulance services depended, in 
part, upon the entity that furnished the services. Prior to 
implementation of the ambulance fee schedule on April 1, 2002, 
providers (hospitals, including critical access hospitals, skilled 
nursing facilities, and home health agencies) were paid on a 
retrospective reasonable cost basis. Suppliers, which are entities that 
are independent of any provider, were paid on a reasonable charge 
basis.
    On February 27, 2002, a final rule was published in the Federal 
Register (67 FR 9100) that established a fee schedule for the payment 
of ambulance services under the Medicare program, effective for 
services furnished on or after April 1, 2002. This rule implemented 
section 1834(l) of the Act. The fee schedule described in the final 
rule replaced the retrospective reasonable cost payment system for 
providers and the reasonable charge system for suppliers of ambulance 
services. In addition, that final rule implemented that statutory 
requirement that ambulance suppliers accept Medicare assignment; 
codified the establishment of new Health Care Common Procedure Coding 
System (HCPCS) codes to be reported on claims for ambulance services; 
established increased payment under the fee schedule for ambulance 
services furnished in rural areas based on the location of the 
beneficiary at the time the beneficiary is placed on board the 
ambulance; and revised the certification requirements for coverage of 
nonemergency ambulance services. The final rule also provided for a 5-
year transition period during which program payment for Medicare 
covered ambulance services would be based upon a blended rate comprised 
of a fee schedule portion and a reasonable cost (providers) or 
reasonable charge (suppliers) portion. We are now in the second year of 
that transition over to full payment based solely on the fee schedule 
amount.

B. Transitional Assistance for Rural Mileage 18 through 50--Section 221 
of the Medicare, Medicaid and SCHIP Benefits Improvement and Protection 
Act of 2000 (BIPA)

    Section 221 of BIPA provided that, for services furnished during 
the period July 1, 2001 through, December 31, 2003, a bonus payment, 
not less than one-half of the bonus paid under the ambulance fee 
schedule for rural mileage 1 through 17 miles, would be paid for rural 
mileage 18 through 50. This provision was implemented by Sec.  
414.610(c) with the ambulance fee schedule.
    The statute provided for this bonus payment only for the interim 
period specified. We inadvertently omitted from the regulation the time 
period during which this benefit is payable. Therefore, we are revising 
Sec.  414.610(c) to reflect that this bonus payment applies only for 
services furnished during the statutory period. This revision to the 
regulation is a technical correction to conform the regulation to the 
statute. Therefore, we believe that notice and comment are unnecessary, 
and we are waiving proposed rulemaking.

[[Page 67962]]

C. Ambulance Inflation Factor (AIF) for CY 2004

    Section 1834(l)(3)(B) of the Act provides the basis for updating 
payment amounts for ambulance services. Our regulations at Sec.  
414.620(f) provide that the ambulance fee schedule must be updated by 
the AIF annually, based on the percentage increase in the consumer 
price index (CPI) for all urban consumers (U.S. city average) for the 
12-month period ending with June of the previous year (Sec.  
414.610(f)). The regulations also provide that notice of the AIF be 
published in the Federal Register without opportunity for prior notice 
and comment. We will follow applicable rulemaking procedures in 
publishing revisions to the fee schedule for ambulance services that 
result from any factors other than the inflation factor. In this 
preamble, we set forth the ambulance inflation factor applicable for 
services furnished in CY 2004.

II. Provisions of the Final Rule

A. Transitional Assistance for Rural Mileage 18 Through 50

    Section 414.610(c)(5) is amended to clarify that this benefit is no 
longer payable for services furnished after December 31, 2003.

B. Ambulance Inflation Factor for 2004

    Section 1834(l)(3)(B) of the Act, specified in Sec.  414.620(f), 
provides for an update in payments for CY 2004 that is equal to the 
percentage increase in the CPI for all urban consumers (CPI-U), for the 
12-month period ending with June of the previous year (that is, June 
2003). For CY 2004, that percentage is 2.1 percent.
    During the transition period (described in Sec.  414.615, 
Transition to the ambulance fee schedule), the AIF is applied to both 
the fee schedule portion of the blended payment amount and to the 
reasonable charge/cost portion of the blended payment amount separately 
for each ambulance provider/supplier. Then, these two amounts are added 
together to determine the total payment amount for each provider/
supplier.

III. Technical Corrections

    We are also making the following technical corrections to Sec.  
414.605, Definitions.
    [sbull] In the definition of ``Advanced life support (ALS) 
intervention,'' we are clarifying that an ALS intervention must be 
furnished by ALS personnel.
    [sbull] A comma was inadvertently omitted in the definition of 
``Advanced life support, Level 2 (ALS2).'' That comma is now inserted 
after the phrase ``or by continuous infusion'' and before the phrase 
``excluding crystalloid. * * *''
    [sbull] There was an inadvertent misuse of the term ``supplier'' in 
the definition of the term ``emergency response.'' The correct term is 
``entity.'' Providers, as well as suppliers, may furnish an emergency 
response. We did not intend to exclude providers from receiving payment 
for this service.
    [sbull] In the definition of ``Rural area'', we are clarifying that 
only New England County Metropolitan Areas (NECMAs) (and not MSAs) 
apply in New England. (NECMAs exist only in New England. All other 
areas have MSAs.) Also, the term ``NECMA'' was inadvertently omitted 
from the discussion of the Goldsmith modification. The phrase ``or 
NECMA'' is now inserted after the term ``MSA'' and before the phrase 
``that is identified as rural by the Goldsmith modification.'' This 
clarifies that a Goldsmith modification can apply to a NECMA as well as 
an MSA.
    [sbull] Section 414.610(c)(3) is revised to conform the first two 
sentences to reflect the fact that the process for determining payment 
for mileage is the same for ground and air miles.

IV. Waiver of Proposed Rulemaking

    We ordinarily publish a proposed rule in the Federal Register and 
provide a period for public comment before we publish a final rule. We 
can waive this procedure, however, if we find good cause that notice 
and comment procedure is impracticable, unnecessary, or contrary to the 
public interest and we incorporate a statement of this finding and its 
reasons in the rule issued. We find it unnecessary to undertake notice 
and comment rulemaking in this instance because the statute specifies 
the method of computation of annual updates, and we have no discretion 
in this matter. Further, this rule does not change substantive policy, 
but merely applies the statutorily-specified update method. Therefore, 
under 5 U.S.C. 553(b)(B), for good cause, we waive notice and comment 
procedures.
    We also find it unnecessary to undertake notice and comment 
rulemaking as to the technical changes because they merely provide 
technical corrections to the regulations and do not make any 
substantive changes to the regulations. Therefore, for good cause, we 
waive notice and comment procedures.

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.

VI. Regulatory Impact Statement

    We have examined the impacts of this rule 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.
    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). This final 
rule is not considered a major rule because it has an effect on the 
Medicare program of less than $100 million in any 1 year. Application 
of an AIF of 2.1 percent will result in an additional total program 
expenditure of approximately $65 million.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. 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. For purposes of the RFA, all 
ambulance providers/suppliers are considered to be small entities. 
Individuals and States are not included in the definition of a small 
entity.
    HHS considers that a substantial number of entities are affected if 
the rule impacts more than 5 percent of the total number of small 
entities as it does in this rule. Although this rule impacts every 
ambulance provider and supplier because all ambulance payment rates are 
increased by the 2.1 percent ambulance inflation factor, we do not 
believe that this has a significant impact. We estimate the combined 
impact of this rule would be an approximate 2 percent increase in 
Medicare revenues, which, therefore, would be a somewhat less than 2 
percent increase in total revenues (that is, Medicare plus non-Medicare 
revenues). This estimated impact does not meet the threshold 
established by

[[Page 67963]]

HHS to be considered a significant impact. Nonetheless, we have 
prepared the analysis below to describe the impact of this rule.
    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. This rule applies to 
small rural hospitals that furnish at least one Medicare covered 
ambulance service to at least one Medicare beneficiary.
    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 expenditure in any 1 year by State, 
local, or tribal governments, in the aggregate, or by the private 
sector, of $110 million. This final rule does not result in an 
expenditure in any 1 year by State, local, or tribal governments of 
$110 million.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it publishes a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. This rule will not have a substantial effect on State or 
local governments.
    This final rule sunsets the rural mileage bonus for rural mileage 
18 through 50 as required by statute, provides an update for inflation 
as mandated by statute, and changes the term ``supplier'' to the term 
``entity'' in the definition of an emergency service. Elimination of 
the bonus payment for rural mileage 18 through 50 will result in a 
savings to the program of $6 million in CY 2004. Therefore, this is not 
a major rule.
    We estimate that the total program expenditure for CY 2004 for 
ambulance services covered by the Medicare program is approximately $3 
billion. Application of an AIF of 2.1 percent will result in an 
additional total program expenditure of approximately $65 million.
    Our clarification that an ALS intervention must be furnished by ALS 
personnel will have negligible impact because generally ALS services 
are required to be furnished by ALS personnel.
    The insertion of the comma that had been inadvertently omitted in 
the definition of ``Advanced life support, Level 2 (ALS2)'' will have 
no impact since it conforms the regulation to the existing implementing 
instructions.
    Changing the term ``supplier'' to the term ``entity'' in the 
definition of ``emergency services'' is not a material change because 
it simply conforms the regulation to actual practice as the program is 
currently administered.
    Our clarification in the definition of ``Rural area'' that NECMAs 
apply in New England and our addition of NECMA to the discussion of the 
Goldsmith Modification have a negligible impact because of the very few 
ambulance suppliers affected. Also, the statute requires that this 
policy be followed in updating rates by using the most recent Goldsmith 
modifications.
    Our clarification for loaded mileage has no impact because it 
conforms the regulation to actual practice as the program is correctly 
administered.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

List of Subjects in 42 CFR Part 414

    Administrative practice and procedure, Health facilities, Health 
professions, Kidney diseases, Medicare, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services is amending 42 CFR chapter IV as follows:

PART 414--PAYMENT FOR PART B MEDICAL AND OTHER HEALTH SERVICES

0
1. The authority citation for part 414 continues to read as follows:

    Authority: Secs. 1102, 1871, and 1881(b)(1) of the Social 
Security Act (42 U.S.C. 1302, 1395hh, and 1395rr(b)(1)).

Subpart H--Fee Schedule for Ambulance Services


Sec.  414.605  [Amended]

0
2. In Sec.  414.605, the following changes are made:
0
A. The definition of ``Advanced life support (ALS) intervention'' is 
revised by removing the phrase ``beyond the scope of authority of an 
emergency medical technician-basic (EMT-Basic)'' and adding in its 
place the phrase ``required to be furnished by ALS personnel.''
0
B. A comma is inserted in the definition of ``Advanced Life Support, 
Level 2 (ALS2)'' after the phrase ``or by continuous infusion'' and 
before the phrase ``excluding crystalloid. * * *''
0
C. The term ``supplier'' in the definition of ``Emergency response'' is 
removed and the term ``entity'' is added in its place.
0
D. The definition of ``Rural area'' is revised to read as follows:


Sec.  414.605  Definitions.

* * * * *
    Rural area means an area located outside a Metropolitan Statistical 
Area (MSA), or, in New England, a New England County Metropolitan Area 
(NECMA), or an area within an MSA or NECMA that is identified as rural 
by the Goldsmith modification.
* * * * *
0
3. Section 414.610 is amended by revising paragraphs (c)(3) and (c)(5) 
to read as follows:


Sec.  414.610  Basis of payment.

* * * * *
    (c) * * *
* * * * *
    (3) Loaded mileage. Payment is based on loaded miles. Payment for 
air mileage is based on loaded miles flown as expressed in statute 
miles. There are three mileage payment rates: a rate for FW services, a 
rate for RW services, and a rate for all levels of ground 
transportation.
* * * * *
    (5) Rural adjustment factor (RAF). For ground ambulance services 
where the point of pickup is in a rural area, the mileage rate is 
increased by 50 percent for each of the first 17 miles and, for 
services furnished before January 1, 2004, by 25 percent for miles 18 
through 50. The standard mileage rate applies to every mile over 50 
miles and, for services furnished after December 31, 2003, to every 
mile over 17 miles. For air ambulance services where the point of 
pickup is in a rural area, the total payment is increased by 50 
percent; that is, the rural adjustment factor applies to the sum of the 
base rate and the mileage rate.
* * * * *

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

    Dated: September 2, 2003.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
    Approved: October 27, 2003.
Tommy G. Thompson,
Secretary.
[FR Doc. 03-30152 Filed 12-1-03; 12:43 pm]
BILLING CODE 4120-01-P