[Federal Register Volume 70, Number 169 (Thursday, September 1, 2005)]
[Notices]
[Pages 52105-52108]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-17278]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-1308-NC]
RIN 0938-AN94


Medicare Program; Withdrawal of Ambulance Fee Schedule Issued in 
Accordance With Federal District Court Order in Lifestar Ambulance, 
Inc. v. United States, No. 4:02-CV-127-1 (M.D. Ga., Jan. 16, 2003)--
Medicare Covered Ambulance Services

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

ACTION: Notice with comment period.

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SUMMARY: This notice with comment period withdraws the fee schedule 
that was put in place in 2003 to effect compliance with the Order in 
Lifestar Ambulance, Inc. v. United States. [211 F.R.D. 688 (M.D. Ga. 
2003)] That Order was vacated on January 10, 2005 by the U.S. Court of 
Appeals for the Eleventh Circuit and is no longer in force.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on October 31, 2005.

ADDRESSES: In commenting, please refer to file code CMS-1308-NC. 
Because of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (no duplicates, 
please):
    1. Electronically. You may submit electronic comments to http://www.cms.hhs.gov/regulations/ecomments or to http://www.regulations.gov 
(attachments should be in Microsoft Word, WordPerfect, or Excel; 
however, we prefer Microsoft Word).
    2. By mail. You may mail written comments (one original and two 
copies) to the following address ONLY: Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Attention: CMS-1308-
NC, P.O. Box 8011, Baltimore, MD 21244-1850.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments (one 
original and two copies) to the following address ONLY: Centers for 
Medicare & Medicaid Services, Department of Health and Human Services, 
Attention: CMS-1308-NC, Mail Stop C4-26-05, 7500 Security Boulevard, 
Baltimore, MD 21244-1850.

[[Page 52106]]

    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments (one original and two copies) before the 
close of the comment period to one of the following addresses. If you 
intend to deliver your comments to the Baltimore address, please call 
telephone number (410) 786-7197 in advance to schedule your arrival 
with one of our staff members.

Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., 
Washington, DC 20201; or
7500 Security Boulevard, Baltimore, MD 21244-1850.

    (Because access to the interior of the Humphrey Building is not 
readily available to persons without Federal Government identification, 
commenters are encouraged to leave their comments in the CMS drop slots 
located in the main lobby of the building. A stamp-in clock is 
available for persons wishing to retain a proof of filing by stamping 
in and retaining an extra copy of the comments being filed.)
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

EFFECTIVE DATE: This notice is effective on September 1, 2005.

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

SUPPLEMENTARY INFORMATION: Submitting Comments: We welcome comments 
from the public on all issues set forth in this rule to assist us in 
fully considering issues and developing policies. You can assist us by 
referencing the file code CMS-1308-NC and the specific ``issue 
identifier'' that precedes the section on which you choose to comment.
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. CMS posts all electronic 
comments received before the close of the comment period on its public 
Web site as soon as possible after they have been received. Hard copy 
comments received timely will be available for public inspection as 
they are received, generally beginning approximately 3 weeks after 
publication of a document, at the headquarters of the Centers for 
Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, 
Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 
p.m. To schedule an appointment to view public comments, phone 1-800-
743-3951.

I. Background

    [If you choose to comment on issues in this section, please include 
the caption ``BACKGROUND'' at the beginning of your comments.]
    Section 4531 of the Balanced Budget Act of 1997 (BBA) required the 
Secretary of the Department of Health and Human Services (HHS) (the 
Secretary) to establish a national fee schedule (FS) for payment of 
ambulance services through a negotiated rulemaking process. The statute 
provides that the Secretary phase in the application of payment rates 
under the FS in a fair and efficient manner and that the aggregate 
amount of payment for the services under the new FS not exceed the 
amount that would be paid under the old system as stated in section 
1834(l) of the Social Security Act (the Act). The BBA provided that the 
FS would apply to services furnished on or after January 1, 2000.
    The proposed and final FS rules both provided for payment for 
ambulance services to be made in two parts: (1) A base rate; and (2) 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 FS rule and prior to the 
publication 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 (``BIPA mileage 
provision''). Two States were identified as qualifying under this 
provision: North Carolina (NC) and Tennessee (TN). BIPA specifies that 
this provision applies to services furnished on or after July 1, 2001.
    This FS was implemented on April 1, 2002 by a final rule published 
in the Federal Register on February 27, 2002 (67 FR 9100). As stated in 
the final rule, the phase-in is accomplished over five years by 
blending a percentage of the payment that is based on the old payment 
system with a percentage of the payment based on the FS according to 
the following schedule:

------------------------------------------------------------------------
           Year                Old  (percent)          FS  (percent)
------------------------------------------------------------------------
4/1/2002-12/31/2002                      80                      20
               2003                      60                      40
               2004                      40                      60
               2005                      20                      80
               2006                       0                     100
------------------------------------------------------------------------

    The full national FS mileage rate in those States that qualify for 
BIPA provision section 423 (NC, TN) was paid as of April 1, 2002.
    In Lifestar Ambulance Service, Inc. v. United States, 211 F.R.D. 
688 (M.D. Ga. 2003), three ambulance suppliers seeking to represent a 
nationwide class of ambulance suppliers sued the Secretary, arguing 
that he had 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 required 
the Secretary to pay full mileage under the BIPA provision for the July 
1, 2001 through March 31, 2002 period.
    On April 16, 2003, the Secretary issued a notice in compliance with 
the district court's order. (68 FR 18654) The Secretary established a 
FS based on the FS as described in the Federal Register (67 FR 9100), 
with a modified phase-in as follows:

------------------------------------------------------------------------
           Year                Old  (percent)          FS  (percent)
------------------------------------------------------------------------
               2000                      95                       5
               2001                      90                      10
 1/1/2002-3/31/2002                      80                      20
------------------------------------------------------------------------

    Additionally, under the district court's order, the notice stated 
that the Medicare program would pay full BIPA mileage for services 
provided on or after July 1, 2001. The notice stated that the Secretary 
had appealed the decision in Lifestar and that any FS or BIPA mileage 
payment made under the notice for the January 1, 2000 through March 31, 
2002 period would be subject to recoupment if the district court's 
decision was reversed on appeal. The Secretary has not made any 
payments under this FS. In addition, we are not aware of any ambulance 
suppliers seeking payment under this FS prior to the Eleventh Circuit's 
reversal of the district court decision, although some were seeking 
full mileage under the BIPA mileage provision.
    On appeal, the Eleventh Circuit found that the district court had 
lacked jurisdiction over the case because the plaintiffs had not gone 
through the administrative process before filing suit. See Lifestar 
Ambulance Service, Inc. v.

[[Page 52107]]

United States, 365 F.3d 1293 (11th Cir. 2004), cert. denied, -US-, 125 
S.Ct. 866 (Jan 10, 2005). It reversed and vacated the district court 
decision and remanded the case with instructions to dismiss for lack of 
subject-matter jurisdiction. Plaintiffs unsuccessfully sought rehearing 
en banc and Supreme Court review. The district court dismissed the 
complaint in accordance with the Eleventh Circuit's mandate on February 
2, 2005.

II. Provisions of the Notice With Comment Period

    [If you choose to comment on issues in this section, please include 
the caption ``PROVISIONS'' at the beginning of your comments.]
    The purpose of this notice is to withdraw the FS covering the 
period of January 1, 2000 through March 31, 2002 that was published in 
the April 16, 2003 notice. As we stated explicitly in the April 16, 
2003 notice, we only issued this ambulance fee schedule to comply with 
the Lifestar district court order and that order was vacated and the 
Lifestar case dismissed. Although the April 16, 2003 notice clearly 
states that payment under the FS for the January 1, 2000 through March 
31, 2002 period is dependent on the district court opinion not being 
reversed by the Eleventh Circuit Court of Appeals, refraining from 
formally withdrawing the FS for this period could create unnecessary 
confusion.
    In light of our inability to issue a fee schedule by January 1, 
2000, we continue to believe that giving the fee schedule prospective 
application clearly meets the intent of the Congress. The Congress made 
no indication that it wanted us to apply the base rate or the mileage 
provisions of the FS retroactively in the event that we were unable to 
issue the final FS by January 1, 2000. Also, given ample opportunity, 
the Congress did not provide specific direction regarding this issue 
after the January 1, 2000 date passed. The Congress itself took no 
further action on the issue (such as directing the implementation of 
its own version of an ambulance fee schedule).
    Furthermore, the BBA directed the Secretary to phase in the 
application of the payment rates under the fee schedule in an efficient 
and fair manner and required that payments under the schedule in the 
year 2000 not exceed the inflation-adjusted expenditures that were made 
under the prior statute as stated in section 1834(l) of the Act. The FS 
was to reallocate expenditures among ambulance providers and suppliers 
in a manner that did not result in an increase in aggregate payments 
for ambulance services (for example, some providers and suppliers would 
have received higher payments, others would have received lower 
payments, and the changes would have offset each other.) Only 
additional payments made under the BIPA mileage provision were not 
required to meet this criteria. Applying the FS to the January 1, 2000 
through March 31, 2002 period would violate this principle unless the 
FS applied to all ambulance providers and suppliers, not just those 
seeking additional payment under it. Accordingly, we may have to recoup 
monies paid to those providers and suppliers whose payments were 
greater under the pre-existing ``reasonable charge'' and ``reasonable 
cost'' system when compared to what they would have received under the 
FS for the January 1, 2000 through March 31, 2002 period. Applying the 
FS retroactively to the providers and suppliers would arguably not 
constitute a fair phase-in of the FS provisions.

III. 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 substance 
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 FS being withdrawn by this notice was only put in place 
pursuant to the court's order in Lifestar, and explicitly provided that 
it would not be effective in the event the Lifestar decision was 
overturned on appeal. The Lifestar decision has been vacated, and the 
case in district court dismissed. To our knowledge no payments have 
been made under the FS to date and, had they been, such payments would 
be subject to recoupment pursuant to the provisions of the April 16, 
2003, notice. Accordingly, there is no reason to keep a FS in place 
that CMS is no longer required to promulgate, and under which it would 
make no payments in light of the appellate court decision. To leave the 
FS in place while awaiting comments would only generate confusion on 
the part of ambulance providers and suppliers.
    Therefore, we find good cause to waive the notice of proposed 
rulemaking with respect to the issuance of this notice.

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 (44 U.S.C. 35).

V. Regulatory Impact Statement or Analysis

    We have examined the impact of this notice as required by Executive 
Order 12866 (September 1993, Regulatory Planning and Review), the 
Regulatory Flexibility Act (RFA) (September 19, 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.
    Because the FS for the January 1, 2000 through March 31, 2002 is 
not one under which we are required to make payments in light of the 
Eleventh Circuit reversal of the district court decision, withdrawing 
the FS will have no financial impact on providers and suppliers, or on 
government spending.
    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). Because the 
FS being withdrawn is not one under which we are required to make 
payments, in light of the Eleventh Circuit decision, withdrawing it 
will have no financial impact on program spending. 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 small governmental 
jurisdictions. 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

[[Page 52108]]

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 Social Security Act (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 publishes 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. There are no 
other alternatives at this time.
    In accordance with the provisions of Executive Order 12866, this 
notice 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: May 17, 2005.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.

    Approved: August 25, 2005.
Michael O. Leavitt,
Secretary.
[FR Doc. 05-17278 Filed 8-26-05; 9:46 am]
BILLING CODE 4120-01-P