[Federal Register Volume 70, Number 226 (Friday, November 25, 2005)]
[Notices]
[Pages 71163-71165]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-23163]


-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-1294-N]
RIN 0938-AN99


Medicare Program; Coverage and Payment of Ambulance Services; 
Inflation Update for CY 2006

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

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: This notice announces an updated Ambulance Inflation Factor 
(AIF) for payment of ambulance services during calendar year (CY) 2006. 
The statute requires that this inflation factor be applied in 
determining the fee schedule amounts and payment limits for ambulance 
services. The updated AIF for 2006 applies to ambulance services 
furnished during the period January 1, 2006, through December 31, 2006.

DATES: Effective date: The AIF for 2006 is effective for ambulance 
services furnished during the period January 1, 2006, through December 
31, 2006.

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 at 42 CFR 
Part 410 and Part 414, 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 Act suggest that the Congress intended that: the ambulance 
benefit cover transportation services only if other means of 
transportation are contraindicated by the beneficiary's medical 
condition; and 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 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.
    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 following levels of service.
    For Ground:
 Basic Life Support (BLS)
 Advanced Life Support, Level 1 (ALS1)
 Advanced Life Support, Level 2 (ALS2)

[[Page 71164]]

 Specialty Care Transport (SCT)
 Paramedic ALS Intercept (PI)
    For Air:
 Fixed Wing Air Ambulance (FW)
 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, the Fee Schedule for Payment of Ambulance 
Services and Revisions to the Physician Certification Requirements for 
Coverage of Non-Emergency Ambulance Services final rule was published 
in the Federal Register (67 FR 9100). That final rule implemented 
section 1834(l) of the Act (which was added by the Balanced Budget Act 
of 1997) and established a fee schedule for the payment of ambulance 
services under the Medicare program effective for services furnished on 
or after April 1, 2002. 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 the requirement in section 
1834(l)(6) of the Act 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 non-emergency ambulance services. That 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 
fourth year of that transition over to full payment based solely on the 
fee schedule amount.

B. Ambulance Inflation Factor (AIF) for CY 2006

    Section 1834(l)(3)(B) of the Act provides the basis for updating 
payment amounts for ambulance services. Our implementing regulations at 
Sec.  414.610(f) provide that the ambulance fee schedule must be 
updated by the AIF annually, based on the consumer price index for all 
urban consumers (CPI-U) (U.S. city average) for the 12-month period 
ending with June of the previous year.
    Our regulations at Sec.  414.620 provide that changes in payment 
rates resulting from incorporation of the AIF will be announced by 
notice in the Federal Register without opportunity for prior comment. 
We find it unnecessary to undertake notice and comment rulemaking 
because the statute and regulations specify the methods of computation 
of annual updates. This notice does not change policy, but merely 
applies the update methods specified in the statute and regulations.

II. Provisions of the Notice

A. Ambulance Inflation Factor (AIF) for 2006

    Section 1834(l)(3)(B) of the Act, as specified in Sec.  414.610(f), 
provides for an update in payments for CY 2006 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 
2005). For CY 2006 that percentage is 2.5 percent.
    The national fee schedule for ambulance services has been phased in 
over a five-year transition period beginning April 1, 2002. (See Sec.  
414.615). According to section 414 of the Medicare Prescription Drug, 
Improvement and Modernization Act of 2003 (MMA) (Pub. L. 108-173), CMS 
established new Sec.  414.617 which specifies that for ambulance 
services furnished during the period July 1, 2004 through December 31, 
2009, the ground ambulance base rate is subject to a floor amount, 
which is determined by establishing nine fee schedules based on each of 
the nine census divisions, and using the same methodology as was used 
to establish the national fee schedule. If the regional fee schedule 
methodology for a given census division results in an amount that is 
lower than or equal to the national ground base rate, then it is not 
used, and the national fee schedule amount applies for all providers 
and suppliers in the census division. If the regional fee schedule 
methodology for a given census division results in an amount that is 
greater than the national ground base rate, then the fee schedule 
portion of the base rate for that census division is equal to a blend 
of the national rate and the regional rate. For CY 2006, this blend 
would be 40 percent regional ground base rate and 60 percent national 
ground base rate. Prior to January 1, 2006, during the transition 
period, the AIF was applied to both the fee schedule portion of the 
blended payment amount (both national and regional (if it applied)) and 
to the reasonable cost or charge portion of the blended payment amount 
separately, respectively, for each ambulance provider or supplier. 
Then, these two amounts were added together to determine the total 
payment amount for each provider or supplier. As of January 1, 2006, 
the total payment amount for air ambulance providers and suppliers will 
be based on 100 percent of the national ambulance fee schedule, while 
the total payment amount for ground ambulance providers and suppliers 
will be based on either 100 percent of the national ambulance fee 
schedule or 60 percent of the national ambulance fee schedule and 40 
percent of the regional ambulance fee schedule.

III. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 30-day notice in the Federal Register and when a collection of 
information requirement is submitted to the OMB for review and 
approval. In order to fairly evaluate whether OMB should approve an 
information collection, section 3506(c)(2)(A) of the Paperwork 
Reduction Act of 1995 requires that we examine the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    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).

IV. Waiver of Proposed Rulemaking

    We ordinarily publish a notice of proposed rulemaking in the 
Federal Register to provide a period of public comment before the 
provisions of a notice such as this take effect. We can waive this 
procedure, however, if we find good cause that a notice and comment 
procedure is impracticable, unnecessary, or contrary to the public 
interest and incorporate a statement of

[[Page 71165]]

finding and its reasons in the notice issued.
    We find it unnecessary to undertake notice and comment rulemaking 
because the statute and regulation specify the methods of computation 
of annual updates, and we have no discretion in this matter. Further, 
this notice does not change substantive policy, but merely applies the 
update methods specified in statute and regulation. Therefore, for good 
cause, we waive notice and comment procedures.
    Under the Congressional Review Act, major rules generally cannot 
take effect until 60 days after the rule is published in the Federal 
Register. However, section 808(2) of the Congressional Review Act 
states that agencies may waive this 60-day requirement for ``good 
cause'' and establish an earlier effective date. As explained above, we 
believe that there is ``good cause'' for waiver of the APA requirement 
for notice and comment rulemaking because it would be unnecessary for 
us to fulfill that requirement. For the same reason, we believe that 
the ``good cause'' exception applies to the 60-day effective date 
requirement for major rules in the Congressional Review Act.

V. 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.
    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). As stated 
above, the AIF (equal to the percentage increase in the CPI-U of June 
30, 2005 as compared to June 30, 2004) for 2006 is 2.5 percent. We 
estimate that the application of the AIF will result in this notice 
being considered a major rule because it will result in an additional 
total program expenditure of approximately $112 million in CY 2006.
    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 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. For purposes of the RFA, all 
ambulance providers or suppliers are considered to be small entities. 
Individuals and States are not included in the definition of a small 
entity.
    The Department of Health and Human Services (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 
notice. This notice will impact every ambulance provider and supplier 
in the same way because all ambulance payment rates for all ambulance 
services furnished by all types of ambulance providers and suppliers 
are increased by the same ambulance inflation factor. While all 
ambulance payment rates are increased by the 2.5 percent AIF, the 
impact of this increase does not meet the threshold established by HHS 
to be considered a significant impact.
    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. 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 no data to 
indicate that a substantial number of small rural hospitals will be 
impacted by this notice.
    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 notice does not result in expenditures 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 notice 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.
    We estimate that the total program expenditure for CY 2006 for 
ambulance services covered by the Medicare program is approximately 
$4.5 billion. Application of an AIF of 2.5 percent will result in an 
additional total program expenditure of approximately $112 million over 
CY 2005.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

    Authority: Section 1834(l) of the Social Security Act (42 U.S.C. 
1395m(l)).

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

    Dated: August 9, 2005.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
    Approved: October 7, 2005.
Michael O. Leavitt,
Secretary.
[FR Doc. 05-23163 Filed 11-23-05; 8:45 am]
BILLING CODE 4120-01-P