[Federal Register: November 15, 2004 (Volume 69, Number 219)]
[Notices]
[Page 66917-66920]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15no04-132]
[[Page 66917]]
-----------------------------------------------------------------------
Part IV
Department of Health and Human Services
-----------------------------------------------------------------------
Centers for Medicare & Medicaid Services
-----------------------------------------------------------------------
Medicare Program; Coverage and Payment of Ambulance Services;
Recalibration of Conversion Factor; Inflation Update for CY 2005;
Notice
[[Page 66918]]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
[CMS-1267-N]
RIN 0938-AN20
Medicare Program; Coverage and Payment of Ambulance Services;
Recalibration of Conversion Factor; Inflation Update for CY 2005
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: This notice sets forth: (1) A discussion of the annual review
of the conversion factor (CF) used to calculate the Medicare program
ambulance fee schedule; and (2) the annual ambulance inflation factor
for ambulance services for calendar year 2005.
EFFECTIVE DATE: The revised CF is effective for services furnished on
or after January 1, 2005.
FOR FURTHER INFORMATION CONTACT: Anne E. Tayloe, (410) 786-4546.
SUPPLEMENTARY INFORMATION:
I. Background
A. Legislative and Regulatory History
The Secretary will annually review the conversion factor (CF) and
will adjust the CF if actual experience under the fee schedule is
significantly different from the assumptions used to determine the
initial CF, as stated in Sec. 414.610(g). Additionally, the ambulance
inflation factor (AIF) must be adjusted annually, as stated in section
1834(l)(3)(B) of the Social Security Act (the Act) and in Sec.
414.610(f).
Under section 1861(s)(7) of the Act, Medicare Part B (Supplementary
Medical Insurance) covers and pays for ambulance services, to the
extent prescribed in regulations at 42 CFR parts 410 and 414, when the
use of other methods of transportation would be contraindicated for the
beneficiary. 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: (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.
Ambulance services (air and ground) are divided into different
levels of services based on the medically necessary treatment provided
during transport. These services include the levels of service as
follows:
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)
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.
The Balanced Budget Act of 1997 (BBA) (establishing section 1834(l)
of the Act) mandated the development of an ambulance fee schedule (AFS)
through negotiated rulemaking. On February 27, 2002, we published a
final rule in the Federal Register (Fee Schedule for Payment of
Ambulance Services and Revisions to the Physician Certification
Requirements for Coverage of Nonemergency Ambulance Services, 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. The fee schedule replaced the retrospective
reasonable cost payment system for providers and the reasonable charge
system for suppliers of ambulance services. Additionally, the final
rule: (1) Implemented a statutory requirement that ambulance suppliers
accept Medicare assignment; (2) codified the establishment of new
HealthCare Common Procedure Coding System (HCPCS) codes to be reported
on claims for ambulance services; (3) 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; (4) revised the certification
requirements for coverage of non-emergency ambulance services; and (5)
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
third year of that transition over to full payment based solely on the
fee schedule amount.
B. Ambulance CF Review
The February 27, 2002 final rule also provided that we would
annually review rates and adjust the CF and air ambulance rates if
actual experience under the fee schedule is significantly different
from the assumptions used to determine the initial CF and air ambulance
rates. The CF and air ambulance rates would not be adjusted solely
because of changes in the total number of ambulance transports (Sec.
414.610(g)). This notice describes the claims data for the first 9
months of the AFS (April 1, 2002 through December 31, 2002) and
explains the calculations used to determine whether the existing CF has
resulted in a significant discrepancy between assumptions and actual
experience under the AFS. These 2002 claims data were used because they
were the most recent complete period of claims data under the AFS that
were available for this analysis.
C. Ambulance Inflation Factor for CY 2005
Section 1834(l)(3)(B) of the Act (implemented by regulation at
Sec. 414.610(f)) provides the basis for updating payment amounts for
ambulance services. This provision requires that the AFS 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)).
[[Page 66919]]
II. Data and Methodology for Recalibration
As stated in section I.B. of this notice, we used claims data from
the period April 1, 2002 through December 31, 2002 because this was the
latest complete period for which we had claims data during which the
AFS was in effect. We used a similar methodology to set the original CF
as described in the February 27, 2002 final rule. We counted the number
of trips at each level and determined the percentage of utilization of
each to the total number of trips, then we compared these percentages
to the same percentages from the original data used to set the CF. This
method provided a means to evaluate the accuracy of the assumptions
that were used to set the original CF. We also examined the degree to
which ambulance billers' charges were less than the AFS amounts. This
gave the actual amount of ``low billing.'' We then determined the
conversion factor for ground services based on the actual claims data
and compared that amount to the CF that has been in use based on the
assumptions. The resulting CF was only eight-tenths of 1 percent (0.8
percent) lower than the CF that was in use. We then performed a similar
analysis using the 9-month 2002 claims data to evaluate the payment
rates for air ambulance services. This resulted in payment rates that
were 2.8 percent lower than the rates currently in use. We have
determined that this is not a significant difference. Therefore, in
accordance with Sec. 414.610(g), we have determined that no adjustment
to the existing payment rate structure is warranted.
The February 27, 2002 final rule also stated that we would review
the basis for the bonus amounts paid for ambulance transports that
originate in a rural area. Given that the Congress, through enactment
of section 414 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003, has provided for significant additional
spending for these services, we have determined that no further
adjustment in the payment amounts for these rural ambulance services is
warranted.
III. Provisions of the Notice
A. AFS CF Update
In accordance with Sec. 414.610(g), we have reviewed actual claims
data and determined that actual experience under the AFS is not
significantly different than the assumptions used to set the CF.
Therefore, we are not revising the existing CF as a consequence of
actual experience.
B. AIF for 2005
Section 1834(l)(3)(B) of the Act, as specified in Sec. 414.610(f),
provides for an update in payments for CY 2005 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
2004). We will use the actual percentage increase and not an estimate
or projection. The AIF for 2005 is 3.3 percent.
During the transition period (see Sec. 414.615), the AIF is
applied to both the fee schedule portion of the blended payment amount
and to the reasonable charge or cost portion of the blended payment
amount separately for each ambulance provider or supplier. Then, these
two amounts are added together to determine the total payment amount
for each provider or supplier.
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 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.
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 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 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, 2004 as compared to June 30, 2003) for 2005 is 3.3 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 $100 million in CY 2005.
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 or suppliers are considered to be small entities.
Individuals and States are not included in the definition of a small
entity.
We consider 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 suppliers and providers are increased by the same ambulance
inflation factor. We estimate the impact of this notice will be an
approximate 3 percent increase in Medicare revenues for all ambulance
suppliers and providers that furnish services to Medicare
beneficiaries. This will 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 HHS to be
considered a significant impact. Nonetheless, we have prepared the
analysis below to describe the impact of this notice.
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
[[Page 66920]]
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 notice 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 notice 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 notice will not have a substantial effect on State
or local governments.
We estimate that the total program expenditure for CY 2005 for
ambulance services covered by the Medicare program is approximately
$3.7 billion. This estimate of program spending includes application of
an AIF assumed to be approximately 3 percent. This assumption results
in an additional total program expenditure of approximately $100
million distributed over 16,000 suppliers and providers that furnish
ambulance services to Medicare beneficiaries.
For recalibrating the AFS, there are two alternatives: (1) To make
an adjustment to the AFS, if actual experience is significantly
different from our initial assumptions; or (2) to make no adjustment to
the AFS because actual experience is not significantly different from
our initial assumptions. As discussed in section II.A. of this notice,
we have decided not to make an adjustment to the AFS because actual
experience is not significantly different from our initial assumptions;
however, we note that making the adjustment would have lowered payments
to suppliers and providers of ambulance services. Therefore, payments
to suppliers and providers of ambulance services are slightly higher
than would otherwise be made if we were to make these adjustments to
the AFS. We estimate the impact of this action will be an approximate
0.8 percent increase in Medicare revenues for all ambulance suppliers
and providers that furnish ground ambulance services to Medicare
beneficiaries and an approximate 2.8 percent increase in Medicare
revenues for all ambulance suppliers and providers that furnish air
ambulance services to Medicare beneficiaries. This will be a 0.5
percent and 1.5 percent increase in total revenues for ground and air
ambulance services respectively (that is, Medicare plus non-Medicare
revenues). The estimated impact of this action is, therefore, not
significant.
In accordance with the provisions of Executive Order 12866, this
notice 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: July 29, 2004.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
Approved: September 21, 2004.
Tommy G. Thompson,
Secretary.
[FR Doc. 04-24757 Filed 11-2-04; 4:45 pm]
BILLING CODE 4120-01-P