[Federal Register Volume 71, Number 102 (Friday, May 26, 2006)]
[Proposed Rules]
[Pages 30358-30364]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-7929]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 414

[CMS-1317-P]
RIN 0938-AO11


Medicare Program; Revisions to the Payment Policies of Ambulance 
Services Under the Fee Schedule for Ambulance Services

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

ACTION: Proposed rule.

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SUMMARY: We are proposing to set forth changes to the fee schedule for 
payment of ambulance services by adopting revised geographic 
designations for urban and rural areas as set forth in Office of 
Management and Budget's (OMB) Core-Based Statistical Areas (CBSAs) 
standard. We propose to remove the definition of Goldsmith modification 
and reference the most recent version of Goldsmith modification in the 
definition of rural area. In addition, we propose to add the definition 
of urban area as defined by OMB and revise our definitions of emergency 
response, rural area, and specialty care transport (SCT).
    We also propose to discontinue the annual review of the conversion 
factor (CF) and of air ambulance rates. We would continue to monitor 
payment and billing data on an ongoing basis and make adjustments to 
the CF and to air ambulance rates as appropriate to reflect any 
significant changes in these data.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on July 25, 2006.

ADDRESSES: In commenting, please refer to file code CMS-1317-P. 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 on specific 
issues in this proposed regulation to http://www.cms.hhs.gov/eRulemaking. Click on the link ``Submit electronic comments on CMS 
regulations with an open comment period.'' (Attachments should be in 
Microsoft Word, WordPerfect, or Excel; however, we prefer Microsoft 
Word.)
    2. By regular mail. You may mail written comments (one original and 
two copies) to the following address ONLY:

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Centers for Medicare & Medicaid Services, Department of Health and 
Human Services, Attention: CMS-1317-P, P.O. Box 8017, Baltimore, MD 
21244-8017.
    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-1317-P, Mail Stop C4-26-05, 7500 Security Boulevard, 
Baltimore, MD 21244-1850.
    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 HHH 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.

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

SUPPLEMENTARY INFORMATION:
    Submitting Public 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-1317-P 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 comments 
received before the close of the comment period on its public Web site 
as soon as possible after they have been received. 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

    Under the ambulance fee schedule, the Medicare program pays for 
transportation services for Medicare beneficiaries when other means of 
transportation are contraindicated. Ambulance services are classified 
into different levels of ground (including water) and air ambulance 
services based on the medically necessary treatment provided during 
transport. 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)
++ Specialty Care Transport (SCT)
++ Paramedic ALS Intercept (PI)

     For Air--

++ Fixed Wing Air Ambulance (FW)
++ Rotary Wing Air Ambulance (RW)

A. History of Medicare Ambulance Services

1. Statutory Coverage of Ambulance Services
    Under sections 1834(l) and 1861(s)(7) of the Social Security Act 
(the Act), Medicare Part B (Supplemental 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 by the beneficiary's medical condition.
    The House Ways and Means Committee and Senate Finance Committee 
Reports that accompanied the 1965 Social Security Amendments 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 Rep. No. 404, 
89th Cong., 1st Sess. Pt 1, 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.
2. Medicare Regulations for Ambulance Services
    Our regulations relating to ambulance services are set forth 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. Therefore, 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 national fee schedule for ambulance services is being phased in 
over a 5-year transition period beginning April 1, 2002. (See Sec.  
414.615). In accordance with section 414 of the Medicare Prescription 
Drug, Improvement and Modernization Act of 2003 (MMA) (Pub. L. 108-
173), we added 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. 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

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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.

II. Provisions of the Proposed Rule

    In this proposed rule, we would set forth changes to the fee 
schedule for payment of ambulance services by adopting revised 
geographic designations for urban and rural areas as set forth in OMB's 
Core-Based Statistical Areas (CBSAs) standard. We propose to remove the 
definition of Goldsmith modification and reference the most recent 
version of Goldsmith modification in the definition of rural area. In 
addition, we propose to add the definition of urban area already 
defined by OMB.
    We are also proposing to revise the definition of specialty care 
transport (SCT) to clarify that a hospital is the only appropriate 
origin and destination point for this level of care.
    In addition, we are proposing to discontinue our annual review of 
the CF and of air ambulance rates because we have not identified any 
significant differences from those assumptions in the 4 years since the 
implementation of the fee schedule. We would continue to monitor 
payment and billing data on an ongoing basis and make adjustments to 
the CF and to air ambulance rates as appropriate to reflect any 
significant changes in these data.
    Finally, we are proposing to revise our current definition of 
emergency response to specify the conditions that warrant payment for 
immediate response.

A. Adoption of New Geographic Standards for the Ambulance Fee Schedule

    Historically, the Medicare ambulance fee schedule has used the same 
geographic area designations as the acute care hospital inpatient 
prospective payment system (IPPS) and other Medicare payment systems to 
take into account appropriate urban and rural differences. While this 
promotes consistency across the Medicare program, it also provides a 
consistent and objective national definition for payment purposes and 
utilizes geographic area designations that more realistically reflect 
rural and urban populations, resulting in more accurate payments for 
ambulance services.
    As a result, we are proposing to adopt OMB's CBSA-based geographic 
area designations to more accurately identify urban and rural areas for 
ambulance fee schedule payment purposes. We also propose to update the 
Goldsmith standard, consistent with the provisions of section 1834(l), 
to more accurately determine rural census tracts within metropolitan 
areas.
    These changes would affect whether certain areas are recognized as 
rural or urban. The distinction between urban and rural is important 
for ambulance payment purposes because ambulance payments are based on 
the point of pick-up for the transport, and the point of pick-up for 
urban and rural transport is paid differently. Of particular 
significance to the ambulance fee schedule, the changes would affect 
whether or not certain areas are eligible for certain rural bonus 
payments under the ambulance fee schedule. For example, the changes 
would affect whether or not certain areas are recognized as what we 
refer to as ``Super Rural Bonus'' areas established by section 414(c) 
of the MMA and set forth in section 1834(l)(12) of the Act. That 
section specifies that, for services furnished during the period July 
1, 2004 through December 31, 2009, the payment amount for the ground 
ambulance base rate is increased by a ``percent increase'' (Super Rural 
Bonus) where the ambulance transport originates in a rural area (which 
includes Goldsmith areas) that we determine to be in the lowest 25th 
percentile of all rural populations arrayed by population density.
1. Core-Based Statistical Areas (CBSAs)--Revised Office of Management 
and Budget (OMB) Metropolitan Area Definitions
    [If you choose to comment on issues in this section, please include 
the caption ``CBSAs-REVISED OMB METROPOLITAN AREA DEFINITIONS'' at the 
beginning of your comments.]
    In the February 27, 2002 final rule (67 FR 9100), we stated that we 
could not easily adopt and implement, within the timeframe necessary to 
implement the fee schedule, a methodology for recognizing geographic 
population density disparities other than MSA/nonMSA. We also stated 
that we would consider alternative methodologies that may more 
appropriately address payment to isolated, low-volume rural ambulance 
providers and suppliers at a later date. The application of any rural 
adjustment is determined by the geographic location of the beneficiary 
at the time he or she is placed on board the ambulance. We are now 
proposing to adopt OMB's revised geographic area designations for urban 
and rural areas to address payment to those isolated, low-volume rural 
providers and suppliers.
    Prior to the 2000 decennial census, geographic areas were 
consistently defined by OMB as Metropolitan Statistical Areas (MSAs) 
with an MSA being defined as an urban area and anything outside an MSA 
being defined as a rural area. In addition, for purposes of ambulance 
policy, we recognized the 1990 update of Goldsmith areas (generally, 
rural census tracts within counties that covered large tracts of land 
with one predominant urban area only) as rural areas (65 FR 55077 
through 55100). In the fall of 1998, OMB chartered the Metropolitan 
Area Standards Review Committee to examine the Metropolitan Area (MA) 
standards and develop recommendations for possible changes to those 
standards. Three notices related to the review of the standards were 
published on the following dates in the Federal Register, providing an 
opportunity for public comment on the recommendations of the Committee: 
December 21, 1998 (63 FR 70525 through 70561); October 20, 1999 (64 FR 
56627 through 56644); and August 22, 2000 (65 FR 51059 through 51077).
    In the December 27, 2000, Federal Register (65 FR 82227 through 
82238), OMB announced its new standards. In that notice, OMB defines a 
CBSA, beginning in 2003, as ``a geographic entity associated with at 
least one core of 10,000 or more population, plus adjacent territory 
that has a high degree of social and economic integration with the core 
as measured by commuting ties.'' CBSAs are conceptually areas that 
contain a recognized population nucleus and adjacent communities that 
have a high degree of integration with that nucleus. The purpose of the 
new OMB standards is to provide nationally consistent definitions for 
collecting, tabulating, and publishing Federal statistics for a set of 
geographic areas.
    The OMB standards designate and define two categories of CBSAs--
Metropolitan Statistical Areas (MSAs) and Micropolitan Statistical 
Areas. (65 FR 82227 through 82238) According to OMB, MSAs are based on 
urbanized areas of 50,000 or more population and Micropolitan 
Statistical Areas (referred to in this discussion as Micropolitan 
Areas) are based on urban clusters of at least 10,000 population but 
less than 50,000 population. Counties that do not fall within CBSAs are 
deemed ``Outside CBSAs.''
    Under the ambulance fee schedule, MSAs would continue to be 
recognized as urban areas and all other areas outside MSAs (including 
Micropolitan areas, areas ``outside CBSAs'', and areas that meet the 
updated definition of the Goldsmith Modification) would be

[[Page 30361]]

recognized as rural areas. As noted previously, these designations are 
important because under the ambulance fee schedule, Medicare transports 
are designated either urban or rural based on the pick-up point of the 
transport.
    The new OMB definitions recognize 49 new MSAs and 565 new 
Micropolitan Areas, and extensively revise the composition of many of 
the existing MSAs. There are 1,090 counties in MSAs under the new 
definitions (previously, there were 848 counties in MSAs). Of these 
1,090 counties, 737 are in the same MSA as they were prior to the 
changes, 65 are in a different MSA, and 288 were not previously 
designated to any MSA.
    There are 674 counties in Micropolitan Areas. Of these, 41 were 
previously in an MSA, while 633 were not previously designated to an 
MSA. There are five counties that previously were designated to an MSA, 
but are no longer designated to either an MSA or a new Micropolitan 
Area (Carter County, Kentucky; St. James Parish, Louisiana; Kane 
County, Utah; Culpepper County, Virginia; and King George County, 
Virginia).
    The adoption of CBSA-based geographic area designations would mean 
that ambulance providers and suppliers that pick up Medicare 
beneficiaries in areas that would be outside of MSAs (but are currently 
within MSA areas) may experience increases in payment, while those 
ambulance providers and suppliers that pick up Medicare beneficiaries 
in areas that would be within MSA areas (but are currently outside of 
MSAs) may experience decreases in payment.
    The use of updated geographical areas would mean the recognition of 
new urban and rural boundaries based on the population migration that 
occurred over a 10-year period, between 1990 and 2000. In general, it 
is expected that ambulance providers and suppliers in 22 States may 
experience payment increases and ambulance providers and suppliers in 
40 States may experience payment decreases as a result of population 
shifts recognized by OMB's CBSA-based geographic area designations.
    We believe that updating the MSA definition to conform with OMB's 
CBSA-based geographic area designations, coupled with updating the 
Goldsmith Modification (that is, using the current Rural Urban 
Commuting Areas version, as discussed in Section 2 of this proposed 
rule), would more accurately reflect the contemporary urban and rural 
nature of areas across the country for ambulance payment purposes and 
cause ambulance fee schedule payments to become more accurate.
    As of October 1, 2004, the IPPS adopted OMB's revised metropolitan 
area definitions to identify ``urban areas'' for payment purposes. 
Under the IPPS, MSAs are considered urban areas and Micropolitan Areas 
and areas ``Outside CBSAs'' are considered rural areas (Sec.  
412.64(b). We are proposing to adopt similar CBSA-based designations of 
``urban area'' and ``rural area'' under the ambulance fee schedule for 
the reasons discussed. Therefore, we propose to revise Sec.  414.605 to 
include a definition of urban area and to reflect OMB's revised CBSA-
based geographic area designations in our definition of rural area.
2. Updated Goldsmith Modification--Rural Urban Commuting Areas (RUCAs)
    [If you choose to comment on issues in this section, please include 
the caption ``RUCAs'' at the beginning of your comments.]
    The Goldsmith Modification evolved from an outreach grant program 
sponsored by the Office of Rural Health Policy of the Health Resources 
and Services Administration (HRSA). This program was created to 
establish an operational definition of rural populations lacking easy 
access to health services in Large Area Metropolitan Counties (LAMCs). 
Dr. Harold F. Goldsmith and his associates created a methodology for 
identifying rural census tracts located within a large metropolitan 
county of at least 1,225 square miles. Using a combination of data on 
population density and commuting patterns, census tracts were 
identified as being so isolated by distance or physical features that 
they were more rural than urban in character. The original Goldsmith 
Modification was developed using data from the 1980 census. In order to 
more accurately reflect current demographic and geographic 
characteristics of the nation, HRSA's Office of Rural Health Policy, in 
partnership with the Department of Agriculture's Economic Research 
Service and the University of Washington, developed an update to the 
Goldsmith modification designated as Rural-Urban Commuting Area Codes 
(RUCAs) (69 FR 47518 through 47519).
    Rather than being limited to LAMCs, RUCAs use urbanization, 
population density, and daily commuting data to categorize every census 
tract in the country. RUCAs are used to identify rural census tracts in 
all metropolitan counties. Section 1834(l) of the Act requires that we 
include the most recent modification of the Goldsmith Modification to 
determine rural census tracts within MSAs. Therefore, we propose to 
remove the definition of ``Goldsmith modification'' at Sec.  414.605 
and incorporate a reference to the most current version of the 
Goldsmith modification in the definition of ``rural area.''

B. Specialty Care Transport (SCT)

    [If you choose to comment on issues in this section, please include 
the caption ``SPECIALTY CARE TRANSPORT'' at the beginning of your 
comments.]
    On February 27, 2002, we published a final rule with comment period 
in the Federal Register (67 FR 9100) entitled ``Fee Schedule for 
Payment of Ambulance Services and Revisions to the Physician 
Certification Requirements for Coverage of Nonemergency Ambulance 
Services'' that implemented the ambulance fee schedule. In that final 
rule, we defined SCT in Sec.  414.605 as the ``interfacility 
transportation of a critically injured or ill beneficiary by a ground 
ambulance vehicle, including medically necessary supplies and services, 
at a level of service beyond the scope of the EMT [(Emergency Medical 
Technician)]--Paramedic. SCT is necessary when a beneficiary's 
condition requires ongoing care that must be furnished by one or more 
health professionals in an appropriate specialty area, for example, 
nursing, emergency medicine, respiratory care, cardiovascular care, or 
a paramedic with additional training.''
    Additionally, ambulance vehicle staff are to be certified as 
emergency medical technicians and legally authorized to operate all 
lifesaving and life-sustaining equipment that are on board the vehicle. 
(Sec.  410.41(b)(1)) Typically, a SCT level of care occurs when the 
patient, who is already receiving a high level of care in the 
transferring acute care hospital, requires a level of care that the 
transferring hospital is not able to provide.
    We implemented the SCT level of payment for hospital-to-hospital 
ground ambulance transports upon implementation of the ambulance fee 
schedule on April 1, 2002 and we defined SCT at Sec.  414.605. The 
definition of SCT in Sec.  414.605 refers to ``interfacility 
transportation.'' We based our payment for SCT-level ground ambulance 
transports on hospital-to-hospital ambulance transportation data. As we 
stated in the preamble to the February 27, 2002 final rule (67 FR 
9100), the SCT level of care includes the situation where a beneficiary 
is taken by ground ambulance from the hospital to an air ambulance and 
then from the air ambulance to the final destination

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hospital. Also, we stated in the preamble for both the September 12, 
2000 (65 FR 55077) proposed rule and the February 27, 2002 (67 FR 9108) 
final rule, that SCT is a level of interhospital service. However, 
transfer to or from a type of facility other than a hospital (for 
example, skilled nursing facility or nursing home) is not SCT.
    Subsequent to the implementation of the ambulance fee schedule, we 
clarified our definition of SCT as hospital-to-hospital transport in a 
Program Memorandum to Medicare contractors, which was issued on 
September 27, 2002. (Program Memorandum Intermediaries/Carriers, 
Transmittal AB-02-130--Change Request 2295, September 27, 2002) That 
document and subsequent questions and answers related to the definition 
of SCT were made available to the public on the CMS Medicare ambulance 
policy Web site.
    In addition, we clarified our definition of SCT in the Medicare 
Benefit Policy Manual, Chapter 10-Ambulance Services, in which we 
stated that SCT is regarded as a highly-skilled level of care of a 
critically injured or ill patient during transfer from one hospital to 
another. We have also clarified our policy in Ambulance Open Door 
Forums, conference calls, and oral and paper communication written in 
response to questions posed by individuals and groups representing the 
ambulance industry.
    Despite our previous attempts to clarify the scope of SCT transport 
we nonetheless continue to receive questions. For this reason, we are 
proposing to revise the definition of ``specialty care transport'' at 
Sec.  414.605 to read ``hospital-to-hospital'' transport as opposed to 
``interfacility'' transportation. We believe this change would make it 
absolutely clear that a hospital is the only appropriate origin and 
destination point for the SCT level of care. Since this clarification 
would only conform the regulation text to our current policy on this 
issue, there would be no change in policy; there would be no additional 
cost to the Medicare program, its contractors or ambulance providers 
and suppliers.

C. Recalibration of the Ambulance Fee Schedule Conversion Factor

    [If you choose to comment on issues in this section, please include 
the caption ``RECALIBRATION OF THE AMBULANCE FEE SCHEDULE'' at the 
beginning of your comments.]
    In the February 27, 2002 final rule with comment period, (67 FR 
9102 and 9103), we indicated that we would adjust the conversion factor 
(CF) if actual experience under the fee schedule was significantly 
different from the assumptions used to determine the initial CF and air 
ambulance rates. We said specifically that we would monitor payment 
data and evaluate whether the assumptions used were accurate.
    We have continued to review our assumptions annually to determine 
whether or not a conversion factor adjustment is warranted. We examined 
the effects of the relative volumes of the different levels of 
ambulance services (service mix) and the extent of low billing charges 
to determine whether we should adjust the CF to reflect actual 
practices. In the 4 years since the implementation of the ambulance fee 
schedule, no significant differences from our original assumptions have 
emerged. We have observed only insignificant differences, and, to date, 
no adjustments in any one year have been warranted. It is for this 
reason, we believe it is appropriate to discontinue our annual review 
of the original conversion factor assumptions. We also believe that the 
formal annual review of air ambulance rates should be discontinued as 
we propose to monitor all ambulance rates and make adjustments on an 
``as-needed'' basis. We would continue to monitor payment and billing 
data on an ongoing basis and, if actual practices under the fee 
schedule differ significantly from any of our assumptions, we would 
adjust the CF and air ambulance rate appropriately. The ambulance 
industry has available multiple venues for notifying CMS of potential 
issues. These are the ambulance fee schedule open door forums, and 
telephone calls to CMS-designated personnel. As an additional 
safeguard, CMS generally conducts a review of ambulance data each year 
in preparation for issuing the Ambulance Inflation Factor (AIF). 
Therefore, we propose to revise the annual review requirement at Sec.  
414.610(g) to indicate that we will adjust the CF and air ambulance 
rates when appropriate to take into account actual practices under the 
fee schedule when these differ significantly from assumptions we use to 
calculate the CF and air ambulance rates.

D. Hospital-to-Hospital Ambulance Service--Emergency Response

    [If you choose to comment on issues in this section, please include 
the caption ``EMERGENCY RESPONSE'' at the beginning of your comments.]
    In Sec.  414.605, we define ``emergency response'' of an ambulance 
service to mean ``responding immediately at the BLS [(Basic Life 
Support)] or ALS1 [(Advanced Life Support Level 1)] level of service to 
a 911 call or the equivalent in areas without a 911 call system. An 
immediate response is one in which the ambulance entity begins as 
quickly as possible to take the steps necessary to respond to the 
call.'' In our February 27, 2002 final rule (67 FR 9100) defining 
``emergency response'', we stated that the additional payment for 
emergency response is for the additional overhead cost of maintaining 
the resources required to respond immediately to a call and not for the 
cost of furnishing a certain level of service to the beneficiary.
    The current ``emergency response'' definition has created confusion 
for those transports that originate at a hospital emergency department 
and the ambulance is transporting the beneficiary to an emergency 
department at another hospital for either admittance or treatment. For 
example, in most of these cases, the beneficiary must be stabilized 
prior to the transport. Therefore, the need to maintain a state of 
readiness to respond immediately to an urgent call, warranting a higher 
emergency response payment, does not appear to be applicable to these 
situations.
    Another example occurs when the ambulance is owned by the 
originating hospital. We stated in a Program Memorandum to the Medicare 
contractors (Transmittal AB-02-130, Change Request 2295, September 27, 
2002) that upon receipt of a call for ambulance services, the 
dispatcher makes the determination of whether the call constitutes an 
``emergency response''. When the ambulance service is already readily 
available at the originating hospital, an emergency call may not be 
necessary, much less through a dispatcher for a 911 service.
    While we recognize that there may be instances when an emergency 
response payment is warranted for a transport between two hospital 
emergency departments, we believe that payment based on readiness to 
respond immediately is not justified 100 percent of the time. For this 
reason, we believe our current definition of ``emergency response'' 
needs to be revised to reflect only circumstances where payment for 
immediate response is truly warranted. Therefore, we are proposing to 
revise the definition of ``emergency response'' as follows:
    ``Emergency response'' means that an ambulance entity--
     Maintains readiness to respond to urgent calls at the BLS 
or ALS1 level of service; and
     Responds immediately at the BLS or ALS1 level of service 
to 911 calls, the

[[Page 30363]]

equivalent in areas without a 911 call system or radio calls within a 
hospital system when the ambulance entity is owned and operated by the 
hospital.

III. 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.

IV. Response to Comments

    Because of the large number of public comments we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all comments we receive 
by the date and time specified in the DATES section of this preamble, 
and, when we proceed with a subsequent document, we will respond to the 
comments in the preamble to that document.

V. Regulatory Impact

    [If you choose to comment on issues in this section, please include 
the caption ``REGULATORY IMPACT'' at the beginning of your comments.]

A. Overall Impact

    We have examined the impacts of this proposed rule 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.
    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). Using CY 2004 
data, we estimate that any urban to rural population shifts reflected 
in the new proposed geographic designations could potentially result in 
an initial decrease in Medicare payments for all ambulance providers 
and suppliers of approximately $4.6 million. However, this estimate 
assumes that the same number of ambulance trips would originate from 
the same pick-up points as were reported in CY 2004, an unlikely 
scenario where urban and rural populations are shifting. We expect the 
initial change in geographic designations to have little, if any, 
overall effect on ambulance payments (See Section B, Anticipated 
Effects). This proposed rule does not reach the economic threshold and 
thus is not considered a major rule.
    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 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 
included in the definition of a small entity. We are not preparing an 
analysis for the RFA because we have determined that this rule will not 
have a significant economic impact on a substantial number of small 
entities.
    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 603 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 and is located outside of 
a Metropolitan Statistical Area or in a rural census tract within a 
Metropolitan Statistical Area as determined under the most recent 
version of the Goldsmith modification. We are not preparing an analysis 
for section 1102(b) of the Act because we have determined that this 
rule will not have a significant impact on the operations of a 
substantial number of small rural hospitals since small rural hospitals 
generally do not own and operate ambulance services.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. That threshold 
level is currently approximately $120 million. This rule will have 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 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. Since this regulation does not impose any costs on State 
or local governments, the requirements of E.O. 13132 are not 
applicable.

B. Anticipated Effects

    As noted in Section A, Overall Impact, we estimate, using CY 2004 
data, that adopting CBSA-based urban and rural designations could 
potentially result in an initial decrease in Medicare payments for 
ambulance providers and suppliers of approximately $4.6 million. 
However, we believe this is not likely to be the case. Rather, we 
believe that the overall effect of adopting the CBSA-based geographic 
definitions would result in a redistribution of payments from urban to 
rural areas in some States and from rural to urban areas in other 
States. As noted in Section A, in using CY 2004 data, we held the 
number and length of ambulance trips and the pick-up points constant in 
order to isolate the effect of the adoption of CBSA-based geographic 
areas. We believe this constant, for all practical purposes, is not 
likely to occur. We contend that with the use of updated geographical 
areas where rural areas are redesignated as urban areas, it will be 
more likely than not, that some level of population growth has occurred 
resulting in more ambulance trips overall than had occurred in CY 2004, 
even though these trips are paid at a lower rate per trip (areas 
designated as rural generally receive a higher payment per trip than 
areas designated as urban).
    In contrast, where urban areas are redesignated as rural, there 
will be fewer trips than was reported in CY 2004, but at higher rates. 
Thus, although ambulance suppliers and providers may bill fewer rural 
trips at the higher rate or more urban trips at the lower rate, we 
anticipate that the overall payments will remain the same. For these 
reasons, we estimate that this proposed rule will have no fiscal impact 
on the Medicare program because payments will, in effect, be 
redistributed.

C. Conclusion

    For these reasons, we are not preparing analyses for either the RFA 
or section 1102(b) of the Act because we have determined that this rule 
will not have a significant economic impact on a substantial number of 
small entities or a significant impact on the operations of a 
substantial number of small rural hospitals.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

[[Page 30364]]

List of Subjects 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 proposes to amend 42 CFR chapter IV as follows:

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

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

    Authority: Secs. 1102, 1871, and 1834(l) of the Social Security 
Act (42 U.S.C. 1302, 1395hh, and 1395m(l)).

Subpart H--Fee Schedule for Ambulance Services

    2. Section 414.605 is amended by--
    A. Removing the definition of ``Goldsmith modification.''
    B. Revising the definitions of ``emergency response,'' ``rural 
area,'' and ``specialty care transport (SCT).''
    C. Adding the definition of ``urban area'' in alphabetical order.
    The revisions and addition read as follows:


Sec.  414.605  Definitions.

* * * * *
    Emergency response means that an ambulance entity--
    (1) Maintains readiness to respond to urgent calls at the BLS or 
ALS1 level of service; and
    (2) Responds immediately at the BLS or ALS1 level of service to 911 
calls, the equivalent in areas without a 911 call system or radio calls 
within a hospital system when the ambulance entity is owned and 
operated by the hospital.
* * * * *
    Rural area means an area located outside an urban area, or a rural 
census tract within a Metropolitan Statistical Area as determined under 
the most recent version of the Goldsmith modification as determined by 
the Office of Rural Health Policy of the Health Resources and Services 
Administration.
    Specialty care transport (SCT) means the hospital-to-hospital 
transportation of a critically injured or ill beneficiary by a ground 
ambulance vehicle, including medically necessary supplies and services, 
at a level of service beyond the scope of the EMT-Paramedic. SCT is 
necessary when a beneficiary's condition requires ongoing care that 
must be furnished by one or more health professionals in an appropriate 
specialty area, for example, nursing, emergency medicine, respiratory 
care, cardiovascular care, or a paramedic with additional training.
    Urban area means a Metropolitan Statistical Area, as defined by the 
Executive Office of Management and Budget.
* * * * *
    3. Section 414.610, paragraph (g) is revised to read as follows:


Sec.  414.610  Basis of payment.

* * * * *
    (g) Adjustments. The Secretary monitors payment and billing data on 
an ongoing basis and adjusts the CF and air ambulance rates as 
appropriate to reflect actual practices under the fee schedule which 
are significantly different from assumptions used to calculate the CF 
and air ambulance rates. These rates are not adjusted solely because of 
changes in the total number of ambulance transports.

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical 
Assistance Program)

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)

    Editorial Note: This was received in the Office of the Federal 
Register on May 19, 2006.


    Dated: December 7, 2005.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
    Approved: February 28, 2006.
Michael O. Leavitt,
Secretary.
[FR Doc. E6-7929 Filed 5-25-06; 8:45 am]
BILLING CODE 4120-01-P