# Medicare Program; Fee Schedule for Payment of Ambulance Services and Revisions to the Physician Certification Requirements for Coverage of Nonemergency Ambulance Services > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A02-4548 ## Record - **Collection:** Federal Register - **Document type:** Rule - **Published:** February 27, 2002 - **Citation:** 67 FR 9100 ## Text DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Parts 410 and 414 [HCFA-1002-FC] RIN 0938-AK30 Medicare Program; Fee Schedule for Payment of Ambulance Services and Revisions to the Physician Certification Requirements for Coverage of Nonemergency Ambulance Services AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Final rule with comment period. SUMMARY: This final rule establishes a fee schedule for the payment of ambulance services under the Medicare program, implementing section 1834(l) of the Social Security Act. As required by that section, the proposed rule on which this final fee schedule for ambulance services is based was the product of a negotiated rulemaking process that was carried out consistent with the Federal Advisory Committee Act and the Negotiated Rulemaking Act of 1990. The fee schedule described in this final rule will replace the current retrospective reasonable cost payment system for providers and the reasonable charge system for suppliers of ambulance services. In addition, this final rule requires that ambulance suppliers accept Medicare assignment; codifies the establishment of new Health Care Common Procedure Coding System (HCPCS) codes to be reported on claims for ambulance services; establishes 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 revises the certification requirements for coverage of nonemergency ambulance services. DATES: Effective date: April 1, 2002. Comment date: We will consider comments on portions of the regulation with respect to the following sections of the Medicare, Medicaid, and State Child Health Insurance Program Benefits Improvement and Protection Act (BIPA), Pub. L. 106-554: the provisions implementing the portion of section 205 relating to cost reimbursement for ambulance services furnished by certain critical access hospitals (CAHs) (§ 414.601 and § 414.610(a)); the provisions implementing section 221, establishing the rate for rural ambulance mileage greater than 17 miles and up to 50 miles (§ 414.610(c)(5)); the provisions implementing section 423 with regard to immediate payment of the full ambulance services fee schedule amount for in-county ground mileage under certain circumstances (§ 414.615(g)), if we receive them at the appropriate address, as provided below, no later than 5 p.m. on April 29, 2002. ADDRESSES: Mail written comments (an original and 3 copies) to the following address only: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1002-FC, PO Box 8013, Baltimore, MD 21244-8013. To ensure that mailed comments are received in time for us to consider them, please allow for possible delays in delivering them. If you prefer, you may deliver your written comments (1 original and 3 copies) to one of the following addresses: Room 443-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201, or, Room C5-14-03, 7500 Security Boulevard, Baltimore, MD 21244-8013. Comments mailed to the above addresses may be delayed and received too late for us to consider them. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission. In commenting, please refer to file code CMS-1002-FC. Comments received timely will be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, in Room C5-12-08 at 7500 Security Blvd, Baltimore, MD, on Monday through Friday of each week from 8:30 a.m. to 5 p.m. Please call (410) 786-7197 to view these comments. For information on ordering copies of the Federal Register containing this document and electronic access, see the beginning of the SUPPLEMENTARY INFORMATION section. FOR FURTHER INFORMATION CONTACT: Glenn McGuirk, (410) 786-5723. SUPPLEMENTARY INFORMATION: Copies: To order copies of the Federal Register containing this document, send your request to: New Orders, Superintendent of Documents, PO Box 371954, Pittsburgh, PA 15250-7954. Specify the date of the issue requested and enclose a check or money order payable to the Superintendent of Documents, or enclose your Visa or Master Card number and expiration date. Credit card orders can also be placed by calling the order desk at (202) 512-1800 or by faxing to (202) 512-2250. The cost for each copy is $9. As an alternative, you can view and photocopy the Federal Register document at most libraries designated as Federal Depository Libraries and at many other public and academic libraries throughout the country that receive the Federal Register . This Federal Register document is also available from the Federal Register online database through GPO Access, a service of the U.S. Government Printing Office. The Web site address is: http://www.access.gpo.gov/nara/index.html. I. Background The Medicare program pays for transportation services for Medicare beneficiaries when other means of transportation are contraindicated. Ambulance services are divided into different levels of ground (including water) and air ambulance services based on the medically necessary treatment provided during transport. These services include the levels of service listed below, which we define later in this rule. 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) Currently payment levels for ambulance services depend, in part, upon the entity that furnishes the services. Providers (hospitals, including critical access hospitals, skilled nursing facilities, and home health agencies) are paid on a retrospective reasonable cost basis. Suppliers, which are entities that are independent of any provider, are paid on a reasonable charge basis. This final rule establishes a fee schedule payment system for all such services. A. History of Medicare Ambulance Services 1. Original Statutory Coverage of Ambulance Services Under section 1861(s)(7) of the Social Security Act (the Act), Medicare part B (Supplementary Medical Insurance) covers and pays for ambulance services, to the extent prescribed in regulations, when the use of other methods of transportation would be contraindicated. The House Ways and Means Committee and Senate Finance Committee Reports that accompanied the 1965 Social Security Amendments 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. 2. Medicare Regulations for Ambulance Services Our regulations relating to ambulance services are located at 42 CFR part 410, subpart B. 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 § 410.12 and to specific conditions and limitations included at § 410.40. On January 25, 1999, we published a final rule with comment period (64 FR 3637) to revise and update Medicare policy concerning ambulance services. It identified destinations to which ambulance services are covered, established requirements for the vehicles and staff used to furnish ambulance services, and clarified coverage of nonemergency ambulance services for Medicare beneficiaries. This rule also implemented section 4531(c) of the Balanced Budget Act of 1997 (BBA), Pub. L. 105-33, concerning Medicare coverage for paramedic intercept services in rural communities. We published a final rule on March 15, 2000 (65 FR 13911) responding to public comments received on the January 25, 1999 final rule with comment period regarding Medicare coverage of, and payment for, paramedic intercept ambulance services in rural communities. It also implemented section 412 of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (BBRA), Pub. L. 106-113, by adding a new definition of a rural area. 3. Negotiated Rulemaking Process Section 1834(l)(1) of the Act provides that the ambulance fee schedule be established through the negotiated rulemaking process described in the Negotiated Rulemaking Act of 1990 (Pub. L. 101-648, 5 U.S.C. 581-590). Negotiations were conducted by a committee chartered under the Federal Advisory Committee Act (FACA) (5 U.S.C. App. 2). The Negotiated Rulemaking Committee on the Medicare Ambulance Services Fee Schedule (the Committee) consisted of individuals associated with national organizations that represent interests that are likely to be significantly affected by the fee schedule. There was a public solicitation through the Federal Register on January 22, 1999 (64 FR 3474) for participation in the negotiated rulemaking process. (Additional information about the negotiations can be found in the January 22, 1999 Federal Register notice or may be accessed at our Internet Web site at http://www.hcfa.gov/medicare/ambmain.htm. ) The Committee discussed various issues related to the ambulance fee schedule and a consensus Committee Statement was signed on February 14, 2000. 4. Proposed Rule In our proposed rule, we discussed the negotiated rulemaking procedure used to formulate our policy for the ambulance fee schedule and proposed additions to part 414 based on recommendations of the Committee. We discussed operational and regional variations, cost of living differences, services furnished in rural areas, and mileage. The structure of the fee schedule, the ambulance inflation factor, and phase-in methodology were also discussed. In addition, we proposed changes unrelated to the Committee's consensus statement on matters including coverage of ambulance services, physician certification requirements, payment during the first year, and billing method. We discussed local or State law related to ambulance services, mandatory assignment, and miscellaneous payment policies, including multiple patients, pronouncement of death, multiple arrivals, and BLS services furnished in an ALS vehicle. We presented our methodology for determining the conversion factor (CF) and for implementing the fee schedule. We discussed expenditure control for ambulance services and adjustments to account for inflation. Finally, to seek input on the desirability and flexibility of developing a code set to describe patients' conditions, we included an addendum containing a list of medical conditions. In accordance with the negotiated rulemaking procedures, we proposed the following additions to part 414 based on the recommendations of the Committee. 1. Definitions and levels of services. In part 414, we proposed to add subpart H, § 414.605 to define several levels of ground ambulance services ranging from BLS to specialty care transport. (Note that the term “ground” refers to both land and water transportation. The definitions and RVUs for each of the levels of service were described in § 414.605, “Definitions.”) Also, we proposed that the rate per ground mile for all ground ambulance services would be the same for each level of service. We stated in the proposed rule that there would be two levels of air ambulance services to distinguish fixed wing from rotary wing (helicopter) aircraft. In addition, to recognize the operational cost differences of the two types of aircraft, there would be two distinct payment amounts for air ambulance mileage. The air ambulance services mileage rate would be calculated per actual loaded (patient onboard) miles flown, expressed in statute miles (that is, ground, not nautical, miles.) The Committee used an industry consensus document, described below, as the basis for defining the levels of ambulance service. During 1990, the development of a training blueprint and the evaluation of current levels of training and certification for prehospital providers were identified as priority needs for national emergency medical services (EMS). As a result, the National EMS Training Blueprint Project was formed. In May 1993, representatives of EMS organizations adopted the National EMS Education and Practice Blueprint consensus document (Blueprint). As stated in the National EMS Education and Practice Blueprint, Executive Summary, printed September 1993, “The Blueprint divides the major areas of prehospital instruction and/or core performance into 16 ‘core elements.’ ” For each core element, the Blueprint recommends that there be four levels of prehospital EMS providers “corresponding to various knowledge and skills in each of the core elements.” At the “First Responder” level, personnel use a limited amount of equipment to perform initial assessments and interventions. The “EMT-Basic” has the knowledge and skill of the First Responder, but is also qualified to function as the minimum staff for an ambulance. “EMT-Intermediate” personnel has the knowledge and skills identified at the First Responder and EMT-Basic levels, but is also qualified to perform essential advanced techniques and to administer a limited number of medications. The “EMT-Paramedic,” in addition to having the competencies of an EMT- Intermediate, has enhanced skills and can administer additional interventions and medications. Since the release of the Blueprint, a consensus panel of EMS educators has recommended that the Department of Transportation, National Highway Traffic and Safety Administration (DOT/NHTSA) revise the document. DOT/NHTSA has accepted the recommendation of the panel and expects to release a revised Blueprint or an equivalent document in the near future. To request a copy of the National Emergency Medical Services Education and Practice Blueprint, please fax your request to: NHTSA/EMS Division, (202) 366-7721. Please include your name and address. Because of staffing and resource limitations NHTSA will forward the requested document via regular mail. We proposed the following seven levels of ambulance services. a. Basic Life Support (BLS) —When medically necessary, the provision of basic life support (BLS) services as defined in the National Emergency Medical Services EMS Education and Practice Blueprint for the Emergency Medical Technician-Basic (EMT-Basic) including the establishment of a peripheral intravenous (IV) line. b. Advanced Life Support, Level 1 (ALS1) —When medically necessary, this is the provision of an assessment by an advanced life support (ALS) ambulance provider or supplier or the furnishing of one or more ALS interventions. An ALS assessment is performed by an ALS crew and results in the determination that the beneficiary's condition requires an ALS level of care, even if no other ALS intervention is performed. An ALS provider or supplier is defined as a provider or supplier whose staff includes an individual trained to the level of the EMT-Intermediate or Paramedic as defined in the National EMS Education and Practice Blueprint. An ALS intervention is defined as a procedure beyond the scope of an EMT-Basic as defined in the National EMS Education and Practice Blueprint. These definitions are discussed later in the “Discussion of Public Comments on the Proposed Rule” section. c. Advanced Life Support, Level 2 (ALS2) —When medically necessary, the administration of at least three different medications or the provision of one or more of the following ALS procedures: • Manual defibrillation/cardioversion. • Endotracheal intubation. • Central venous line. • Cardiac pacing. • Chest decompression. • Surgical airway. • Intraosseous line. d. Specialty Care Transport (SCT) —When medically necessary, for a critically injured or ill beneficiary, a level of interhospital service furnished beyond the scope of the paramedic as defined in the National EMS Education and Practice Blueprint. This 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). e. Paramedic ALS Intercept (PI) —These services are defined in § 410.40(c) “Paramedic ALS Intercept Services”. These are ALS services furnished by an entity that does not provide the ambulance transport. Under limited circumstances, Medicare payment may be made for these services. (To obtain additional information about paramedic ALS intercept services, please refer to the March 15, 2000 final rule (65 FR 13911).) f. Fixed Wing Air Ambulance (FW) —We proposed that fixed wing air ambulance services would be covered when the point from which the beneficiary is transported to the nearest hospital with appropriate facilities is inaccessible by land vehicle, or great distances or other obstacles (for example, heavy traffic) and the beneficiary's medical condition is not appropriate for transport by either BLS or ALS ground ambulance. g. Rotary Wing Air Ambulance (RW) —We proposed that rotary wing (helicopter) air ambulance services are covered when the point from which the beneficiary is transported to the nearest hospital with appropriate facilities is inaccessible by ground vehicle, or great distances or other obstacles (for example, heavy traffic) and the beneficiary's medical condition is not appropriate for transport by either BLS or ALS ground ambulance. B. Current Payment System The Medicare program pays for ambulance services on a reasonable cost basis when furnished by a provider and on a reasonable charge basis when furnished by a supplier. (For purposes of this discussion, the term “provider” means all Medicare-participating institutional providers that submit claims for Medicare ambulance services (hospitals, including critical access hospitals (CAHs); skilled nursing facilities (SNFs); and home health agencies (HHAs).) The term “supplier” means an entity that is other than a provider. See § 400.202.) The reasonable charge methodology bases payment for ambulance services furnished by ambulance suppliers on the lowest of the customary, prevailing, actual, or inflation indexed charge (IIC). The following describes the current reasonable charge billing methods for ambulance services: • Method 1: A single, all-inclusive charge reflecting all services, supplies, and mileage. • Method 2: One charge reflecting all services and supplies (base rate) with a separate charge for mileage. • Method 3: One charge for all services and mileage, with a separate charge for supplies. • Method 4: Separate charges for services, mileage, and supplies. C. Organization of the Preamble The headings for the discussion of various policy issues in this final rule correspond to the headings used in the September 2000 proposed rule. For the convenience of the reader, the analysis of comments and their responses are integrated with the discussion of each issue. D. Recent Legislation We do not intend for the aggregate amount of payments under the ambulance fee schedule to be lower than the aggregate amount of payments under the current system. Consequently, as described below, we will adjust the conversion factor (CF) and air ambulance rates if actual experience under the fee schedule is different from the assumptions used to determine the initial CF and air ambulance rates. We estimate that total spending (the sum of Medicare program payments and beneficiary copayments) for ambulance services over the next five years will be: Calendar year Payments ($ billion) 2002 2.7 2003 2.8 2004 2.9 2005 3.0 2006 3.1 These estimates are based on the assumption that the ambulance inflation factor will be 2.2 percent for 2002 and 2.5 percent for years 2003 through 2006, that the ratio of services furnished at the various levels of intensity (for example, BLS versus ALS1 versus ALS2, etc.) will not change and that there will be an increase in Medicare beneficiary enrollment of 0.9, 0.8, 0.9, 1.3 and 1.0 percent in the years 2002 through 2006, respectively. To the extent that any of these assumptions are different from actual experience, actual payments will be higher or lower than these estimates. As we indicated in the proposed rule, we will monitor payment data and evaluate whether the assumptions used to establish the original CF (for example, the ratio of the volume of BLS services to ALS services) are accurate. If the actual proportions among the different levels of service are different from the projected amounts, we will adjust the CF accordingly and apply this adjusted CF prospectively. Similarly, if the level of low charge billing is significantly different from the assumed level, we will also adjust the CF and apply such an adjusted CF prospectively. Over the past 20 years, the Congress has been moving towards fee schedules and prospective payment systems for Medicare payment. In the case of ambulance services, the reasonable charge methodology has resulted in a wide variation of payment rates for the same service. In addition, this payment methodology is administratively burdensome, requiring substantial recordkeeping for historical charge data. The Congress, under the BBA, mandated the establishment of a national fee schedule for payment of ambulance services. 1. Balanced Budget Act of 1997 (BBA) Section 4531(b)(2) of the BBA added a new section 1834(l) to the Social Security Act (the Act). Section 1834(l) of the Act requires the establishment of a national fee schedule for payment of ambulance services under Medicare part B through negotiated rulemaking. This section also requires that in establishing the ambulance fee schedule, we will— • Establish mechanisms to control increases in expenditures for ambulance services as a benefit under part B of the Medicare program; • Establish definitions for ambulance services that link payments to the types of services furnished; • Consider appropriate regional and operational differences; • Consider adjustments to payment rates to account for inflation and other relevant factors; • Phase in the fee schedule in an efficient and fair manner; and, • Require that payment for ambulance services be made only on an assignment-related basis. In addition, the BBA requires that ambulance services covered under Medicare be paid based on the lower of the actual billed charge or the ambulance fee schedule amount. The law also provides, in a paragraph entitled “Savings,” that total payments during the first year of the ambulance fee schedule may be no more than what would have been paid if the ambulance fee schedule were not in effect. In addition, we are implementing the provisions of a regulation proposed in June 1997 that we would have made final prior to the fee schedule, but decided instead to implement coincident with the fee schedule, as discussed below. Section 4531(c) of BBA 1997 provided for payment of paramedic advanced life support (ALS) intercept services directly to the entity furnishing those services under limited circumstances. Paramedic ALS intercept services are ALS services delivered by paramedics that operate separately from the agency that provides the ambulance transport. This type of service is most often provided for an emergency ambulance transport in which a local volunteer ambulance that can provide only basic life support (BLS) level service is dispatched to transport a beneficiary. If the beneficiary needs ALS services such as EKG monitoring, chest decompression, or IV therapy, another entity dispatches a paramedic to meet the BLS ambulance at the scene or once the ambulance is on the way to the hospital. The ALS paramedics then provide their services to the beneficiary. One statutory criteria for payment is that the service must be furnished in a rural area. Other criteria (for example, the transporting entity must be volunteer) limited the application of this provision. The program defined a rural area as one that was outside any area defined by the Office of Management and Budget as a Metropolitan Statistical Area, (MSA) or New England County Metropolitan Area (NECMA). 2. Balanced Budget Refinement Act of 1999 Section 412 of the BBRA provided a new definition for the term “rural” in the context of the Medicare coverage provision for paramedic ALS intercept services. The BBRA states that, effective for services furnished on or after January 1, 2000: “An area shall be treated as a rural area if it is designated as a rural area by any law or regulation of the State or if it is located in a rural census tract of a metropolitan statistical area (as determined under the most recent Goldsmith modification, originally published in the Federal Register on February 27, 1992 (57 FR 6725).” This definition applies only to the Medicare paramedic ALS intercept benefit implemented at § 410.40(c). This is a very limited benefit and to date we know of only one State (New York) with areas that meet the statutory requirements. (See the March 15, 2000 final rule on “Coverage of, and Payment for, Paramedic Intercept Ambulance Services” (65 FR 13911).) For all other ambulance services, the definition of “rural” specified in this final rule will apply. 3. The Medicare, Medicaid, and State Child Health Insurance Program Benefits Improvement and Protection Act of 2000 (BIPA) BIPA provided the following changes to the ambulance fee schedule that have been incorporated into this rule. a. Critical Access Hospital (CAH) The proposed rule would have applied the ambulance fee schedule to all entities furnishing ambulance services to Medicare beneficiaries. Section 205 of BIPA provided that CAHs, or entities owned and operated by them, are paid for ambulance services based on reasonable cost if there is no other ambulance provider or supplier within a 35-mile drive. As a result, these entities are exempt from the ambulance fee schedule described in this final rule. These entities are also exempt from the current cost-per-trip inflation cap applicable to providers. This cap, established by section 4531(a)(1) of the BBA, limits increases in the cost per trip of ambulance services from one year to the next by the consumer price index for all urban consumers, reduced by 1 percentage point. Implementation of section 205 of BIPA requires us to establish a process for a CAH to qualify for this exemption. Such a process was addressed in a separate final rule, “Medicare Program; Changes to the Hospital Inpatient Prospective Payment Systems and Rates and Costs of Graduate Medical Education; Fiscal Year 2002 Rates, Etc.; Final Rules,” published August 1, 2001 (66 FR 39828). The payment policy component is addressed in this rule. Comment: Some commenters believe that we should pay all CAHs based on cost payment for ambulance services because, in their view, section 1834(g) of the Act requires that CAHs be paid on a reasonable cost basis for all services, not just their services to inpatients and outpatients. Response: The Congress, in section 205 of BIPA, specifically provides that ambulance services furnished on or after December 21, 2000 by a CAH or an entity owned and operated by a CAH be paid on a reasonable cost basis if the CAH or entity is the only provider or supplier located within a 35-mile drive of the CAH or entity. BIPA did not grant CMS broad authority to pay other CAHs on a cost basis. Therefore, CAHs that do not fall within the ambit of section 205 of BIPA will be paid under the ambulance fee schedule. b. Rural Ambulance Mileage The proposed rule would have established payment for rural mileage greater than 17 miles at the same rate as mileage within urban areas. Section 221 of BIPA provided that the payment rate for rural ambulance mileage greater than 17 miles and up to 50 miles be increased by not less than one-half of the additional payment per mile established for the first 17 miles of a rural ambulance trip. We are establishing this rate at one-half of the additional payment per mile established for the first 17 miles of a rural ambulance trip. This amount is the minimum that is required by the plain language of the law and is not discretionary. We believe that proposed rulemaking, which would be necessary to set the amount at a level higher than the minimum, is impracticable in this instance for timely implementation the law. This is consistent with the amount established by the Congress for the period prior to April 1, 2002. We are waiving proposed rulemaking for this provision and will implement it as a final rule with comment period. Therefore, we will accept public comments on this policy. c. Inflation Factor The proposed rule would have increased the per trip payments for services furnished in 2001 over the per trip payments for these services furnished in 2000 by an amount equal to the change in the CPI-U reduced by one percent. Section 423 of BIPA provided that the ambulance inflation factor for services furnished during the period July 1, 2001 through December 31, 2001 be equal to 4.7 percent, an increase of two percentage points over the rate in the proposed rule. We have implemented this provision without proposed rulemaking because it was self-implementing, not discretionary for CMS, and did not require us to interpret the law. For that reason, we find notice and comment rulemaking unnecessary. d. Ground Ambulance Mileage The proposed rule would have paid for all ground ambulance mileage during a four-year transition period based on a blend of the current payment rate and the fee schedule rate. Section 423 provided that there will be no phased-in blended payment for mileage for ambulance suppliers paid by carriers in those States in which, prior to the fee schedule, the carrier's payment to all suppliers did not include separate payment for all in-county ambulance mileage. Mileage paid by these carriers in these States will be paid based on the full fee schedule amount. This provision does not apply to providers. Because the law does not permit CMS to exercise any discretion in implementing the policy, we find notice and comment rulemaking unnecessary. Therefore, we are waiving proposed rulemaking for this provision and will implement it as a final rule with comment. Therefore, we will accept public comments on this policy. E. Components of Ambulance Fee Schedule Payment Amounts Ambulances may be ground, water or air. We proposed that the payment amount for each ambulance service paid under the ambulance fee schedule would be the sum of a base payment amount and a mileage rate. The base payment amount for each air ambulance service paid under the ambulance fee schedule would be the product of two primary factors: (1) A nationally uniform unadjusted base rate; and (2) a geographic adjustment factor for an ambulance fee schedule area. We proposed that the base payment amount for each ground or water ambulance service paid under the ambulance fee schedule would be the product of three factors— (1) A nationally uniform relative value for the service; (2) A geographic adjustment factor for an ambulance fee schedule area; and (3) A nationally uniform conversion factor (CF) for the service. We are proceeding with these proposals in this final rule. A detailed description of these factors is discussed in this final rule. Relative value units (RVUs) measure the value of ambulance services relative to the value of a base level ambulance service. Thus, if the value of the resources necessary to furnish service B is twice the value of the resources needed to furnish service A, service B will have twice as many RVUs as service A. RVUs are multiplied by a CF expressed as a dollar value to produce a payment amount. The RVUs represent, on average, the relative resources associated with the various levels of ambulance services. RVUs for each level of service were established by the Committee. Because the fee schedule is based on the relative values of different levels of ground ambulance services relative to a basic life support ground ambulance service, a factor is needed to convert the relative value to a dollar amount which is the national base payment rate. In order to determine the CF, the general approach is first to determine the total amount of money available and divide that total by the total number of relative value units that we estimate will be in the fee schedule for the base year. As we describe in more detail below, we used 1998 Medicare ambulance claims data to determine the total RVUs in this calculation. Section 1834(1)(3) of the Act states that, in establishing the ambulance fee schedule, the Secretary must ensure that the aggregate amount of payment made for ambulance services in calendar year (CY) 2000 (originally expected to be the first year of the fee schedule) does not exceed the aggregate amount of payment that would have been made absent the fee schedule. In the January 22, 1999 notice concerning the meetings of the Committee, we stated that we were postponing final agency action, pending establishment of the ambulance fee schedule, on a proposal to base payment on the level of service (ALS or BLS) actually needed by the beneficiary. We stated our position that the savings that would have been realized through implementation of that policy in 1998 should not be lost to the Medicare program. We estimated that $65 million in program savings would have been realized in 1998 if this policy had been in effect at that time. Section 4531(b)(3) of the BBA, which added section 1834(l)(3) to the Act, provided that the fee schedule was to be effective for ambulance services furnished on or after January 1, 2000. However, because of other statutory obligations, the scope of systems changes required to implement the ambulance fee schedule, and the need to ensure that our computerized systems were compliant with the Year 2000 (Y2K) requirements, we could not meet this statutory deadline. In the September 12, 2000 proposed rule, we indicated our intention to implement the fee schedule beginning January 1, 2001. However, although the proposed rule was largely based on an agreement reached as part of a negotiated rulemaking process with representatives of the ambulance industry and other interests, we received over 340 public comments. We did not have sufficient time to carefully consider all comments and publish a final rule in time to implement the fee schedule by January 1, 2001. This final rule establishes an implementation date of April 1, 2002. Our objective is to have the ambulance fee schedule become effective as soon as we can, in this case, April 1, 2002. F. Negotiated Rulemaking Process Section 1834(l)(1) of the Act provided that the ambulance fee schedule be established through the negotiated rulemaking process described in the Negotiated Rulemaking Act of 1990 (Pub. L. 101-648, 5 U.S.C. 581-590). Prior to using negotiated rulemaking under the Negotiated Rulemaking Act, the head of an agency must generally consider whether the following conditions exist: • There is a need for a rule. • There are a number of identifiable interests that will be significantly affected by the rule. • There is a reasonable likelihood that a committee can be convened with a balanced representation of persons who— + Can adequately represent the interests identified; and, + Are willing to negotiate in good faith to reach a consensus on the proposed rule. • There is a reasonable likelihood that a committee will reach a consensus on the proposed rule within a fixed timeframe. • The negotiated rulemaking procedure will not unreasonably delay the notice of proposed rulemaking and the issuance of a final rule. • The agency has adequate resources and is willing to commit its resources, including technical assistance, to the committee. • The agency, to the maximum extent possible consistent with the legal obligations of the agency, will use the consensus of the committee as the basis for the rule proposed by the agency for notice and comment. Negotiations were conducted by a committee chartered under the Federal Advisory Committee Act (FACA) (5 U.S.C. App. 2). We used the services of an impartial convener to help identify interests that would be significantly affected by the proposed rule (including residents of rural areas) and the names of organizations who were willing and qualified to represent those interests. The Negotiated Rulemaking Committee on the Medicare Ambulance Services Fee Schedule (the Committee) consisted of individuals associated with national organizations that represent interests that were likely to be significantly affected by the fee schedule. (Additional information about the negotiations can be found in the January 22, 1999 Federal Register notice or may be accessed at our Internet Web site at http://www.hcfa.gov/medicare/ambmain.htm. ) To the extent that the proposed rule accurately reflects the Committee Statement, signed on February 14, 2000, each member of the Committee has agreed not to comment on those issues on which consensus was reached. G. Interaction With the Proposed Rule Published on June 17, 1997 On June 17, 1997, we published a proposed rule (62 FR 32715) in the Federal Register to revise and update the Medicare ambulance services regulations at § 410.40. Specifically, we proposed: To base Medicare payment on the level of ambulance service required to treat the beneficiary's condition; to clarify and revise the policy on coverage of nonemergency ambulance services; and to set national vehicle, staff, billing, and reporting requirements. As noted above, section 1834(1)(2) of the Act provides, in part, that in establishing the ambulance fee schedule, the Secretary establish definitions for ambulance services that link payments to the types of services furnished. One of the provisions of the June 17, 1997 proposed rule would have defined ambulance services as either BLS or ALS and linked Medicare payment to the type of service required by the beneficiary's condition. We received a large number of comments on this provision, and, in general, commenters were very concerned about our proposal. II. Discussion of Public Comments on the Proposed Rule In response to the publication of the September 2000 proposed rule, we received approximately 340 comments. We received comments from, among others, national ambulance organizations, emergency physician groups and State emergency programs. The majority of the comments addressed issues related to medical condition descriptions lists, physician certification, and definitions of services. As stated previously, the headings for the policy issues in this final rule correspond to the headings used in the September 2000 proposed rule. For the convenience of the reader, the analysis of comments and their responses are integrated with the discussion of each issue. A. Proposals Based on Negotiated Rulemaking In our proposed rule, published September 12, 2000, we discussed the negotiated rulemaking procedures used to formulate our policy for the ambulance fee schedule. Comment: One commenter stated that we should reconvene the Committee to consider the comments received in response to the proposed rule and also reconvene the Committee annually to consider all future adjustments. Response: We have decided not to reconvene the Committee. We have adhered to the Committee's recommendations in all cases in which the Committee addressed an issue. Furthermore, some issues were excluded from the negotiation process, and therefore, were not within the purview of the Committee. Also, we believe that reconvening the Committee would significantly postpone the implementation of the regulation. Comment: Commenters from various regions stated that their organizations were not represented on the Committee. Some commenters believe that the North American Association of Public Utility Models (NAPUM) should have been included as a participant in the negotiated rulemaking process. NAPUM could have shared its Public Utility Model EMS system in the development of the ambulance fee schedule. Another commenter stated that the fixed wing air ambulance organizations were not properly represented at the negotiated rulemaking meetings and, therefore, the payment rates for fixed wing air mileage are inadequate. Response: There was a public solicitation through the Federal Register (January 22, 1999) for participation in the negotiated rulemaking process. All interested parties who responded to this public notice were given due consideration by the neutral convener whom we retained for this purpose. Also, the Association of Air Medical Services (AAMS), which has approximately 130 members that are fixed wing providers, represented the air ambulance industry. In the proposed rule, we proposed the following additions to part 414 based on the recommendations of the Committee. 1. Definitions and Levels of Services In part 414, we proposed to add subpart H, § 414.605 that would define several levels of ground ambulance services ranging from BLS to specialty care transport (SCT). (Note that the term “ground” refers to both land and water transportation. The definitions and RVUs for each of the levels of service are described in § 414.605, “Definitions.”) Also, this section proposed that the mileage rate paid under the fee schedule per ground mile would be the same for each level of ground ambulance service. In the course of establishing national standards for ALS and BLS during 1990, the development of a training blueprint and the evaluation of current levels of prehospital provider training and certification were identified by the national emergency medical services (EMS) industry as a priority need for EMS. As a result, the National EMS Training Blueprint Project was formed. In May 1993, representatives of EMS organizations adopted the Blueprint consensus document. This consensus document was used as the basis for defining the levels of service. As stated in the Blueprint, Executive Summary, printed September 1993, “The Blueprint divides the major areas of prehospital instruction and/or core performance into 16 ‘core elements.’ ” For each core element, the Blueprint recommended that there be four levels of prehospital EMS providers “corresponding to various knowledge and skills in each of the core elements.” At the First Responder level, personnel use a limited amount of equipment to perform initial assessments and interventions. The EMT-Basic has the knowledge and skill of the First Responder, but is also qualified to function as the minimum staff for an ambulance. EMT-Intermediate personnel has the knowledge and skills identified at the First Responder and EMT-Basic levels, but is also qualified to perform essential advanced techniques and to administer a limited number of medications. The EMT-Paramedic, in addition to having the competencies of an EMT-Intermediate, has enhanced skills and can administer additional interventions and medications. After the release of the Blueprint, a consensus panel of EMS educators had recommended that DOT/NHTSA revise the document. The Department of Transportation, National Highway Traffic and Safety Administration (DOT/NHTSA) has accepted the recommendation of the panel and is expected to release a revised Blueprint or an equivalent document in the near future. To request a copy of the National Emergency Medical Services Education and Practice Blueprint, please fax your request to: NHTSA/EMS Division, (202) 366-7721. Please include your name and address. Because of staffing and resource limitations, NHTSA will forward the requested document via regular mail. Levels of Ambulance Services Payment for all ambulance services under the fee schedule will be based on a base rate payment. In addition, there will be a separate payment for mileage. In the proposed rule, we stated that there would be two levels of air ambulance services to distinguish fixed wing from rotary wing (helicopter) aircraft. In addition, to recognize the operational cost differences of the two types of aircraft, there would be two distinct payment amounts for air ambulance mileage. The air ambulance services mileage rate would be calculated per actual loaded (patient on board) miles flown, expressed in statute miles (that is, ground, not nautical, miles). In the proposed rule, we proposed the seven levels of ambulance services shown below. We expressed the qualifications for staff at the various levels in terms of the Blueprint. As just noted, we are revising the proposed qualifications to indicate that the vehicle staffing will comply with existing State and local laws for each level of service. a. Basic Life Support (BLS) —In the proposed rule, we stated that, when medically necessary, the provision of basic life support (BLS) services is defined in the National Emergency Medicine Services (EMS) Education and Practice Blueprint for the Emergency Medical Technician-Basic (EMT-Basic) including the establishment of a peripheral intravenous (IV) line. b. Advanced Life Support, Level 1 (ALS1) —In the proposed rule, we stated that, when medically necessary, this level of service requires the provision of an assessment by an advanced life support (ALS) ambulance provider or supplier and the furnishing of one or more ALS interventions. An ALS assessment is performed by an ALS crew and results in the determination that the beneficiary's condition requires an ALS level of care, even if no other ALS intervention is performed. The proposed rule also stated that an ALS provider or supplier is defined as a provider trained to the level of the EMT-Intermediate or Paramedic as defined in the National EMS Education and Practice Blueprint. We proposed to define an ALS intervention as a procedure beyond the scope of an EMT-Basic as defined in the National EMS Education and Practice Blueprint. c. Advanced Life Support, Level 2 (ALS2) —In the proposed rule, we stated that this level of service is defined by, when medically necessary, the administration of at least three different medications or the provision of one or more of the following ALS procedures: • Manual defibrillation/cardioversion. • Endotracheal intubation. • Central venous line. • Cardiac pacing. • Chest decompression. • Surgical airway. • Intraosseous line. d. Specialty Care Transport (SCT) —In the proposed rule, we stated that this level of service is defined by, when medically necessary, for a critically injured or ill beneficiary, a level of interhospital service furnished beyond the scope of the paramedic as defined in the National EMS Education and Practice Blueprint. We stated that this service would be 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). e. Paramedic ALS Intercept (PI) —In the proposed rule, we stated that these services would be defined in § 410.40(c) “Paramedic ALS Intercept Services.” These are ALS services furnished by an entity that does not provide the ambulance transport. Under limited circumstances, Medicare payment may be made directly to the entity furnishing paramedic services. (To obtain additional information about paramedic ALS intercept services, please refer to the March 15, 2000 final rule (65 FR 13911).) f. Fixed Wing Air Ambulance (FW) —In the proposed rule, we stated that fixed wing air ambulance services would be covered when the point from which the beneficiary is transported to the nearest hospital with appropriate facilities is inaccessible by land vehicle, or great distances or other obstacles (for example, heavy traffic) and the beneficiary's medical condition is not appropriate for transport by either BLS or ALS ground ambulance. g. Rotary Wing Air Ambulance (RW) —In the proposed rule, we stated that rotary wing (helicopter) air ambulance services would be covered when the point from which the beneficiary is transported to the nearest hospital with appropriate facilities is inaccessible by ground vehicle, or great distances or other obstacles (for example, heavy traffic) and the beneficiary's medical condition is not appropriate for transport by either BLS or ALS ground ambulance. Comment: In the context of determining when payment would be made at the ALS rate versus the BLS rate, some commenters disagreed with the definitions provided in the National Emergency Medical Services Education and Practice Blueprint (the Blueprint), stating that State definitions and standards differed from this document. Some States license as paramedics individuals who have not completed all of the hours or modules required by the Department of Transportation's National Standard Paramedic Curriculum. Technically, these individuals would not be “trained to the level” of a paramedic as defined in the Blueprint and the resulting National Standard Paramedic Curriculum. Commenters suggested that the definition of a paramedic should be a person who is licensed by the State at an ALS level, regardless of whether the level of the training of the person meets the definition of “paramedic” as described in the Blueprint or National Standard Paramedic Curriculum. Several commenters also noted that the definition of BLS is confusing regarding establishment of a peripheral intravenous (IV) line. They further commented that, in many States, BLS personnel are not permitted by State law to establish IV lines. To clarify the definition, the commenters recommended that we make it clear that, when an IV line is established by an ALS crew, this is an ALS intervention that qualifies the trip as an ALS transport. Response: As a basis for defining the levels of service in the proposed rule, we incorporated the knowledge and skills outlined in the Blueprint. After considering the observations made by commenters and recognizing that the Department of Transportation, National Highway Traffic and Safety Administration has agreed to revise the Blueprint in the near future, we concluded that the knowledge and skill levels outlined in the Blueprint may be contrary to some existing State training standards and requirements. We have chosen instead, to rely on vehicle staffing requirements contained in existing State and local laws. Therefore, we are revising § 414.605 to indicate that payment will be made at the ALS1 level if the service furnished is beyond the skill level of an EMT-Basic in accordance with State and local laws. Comment: Several commenters noted that the definition of ALS1 differed from that in the Committee Statement. Specifically, the conjunction used in the Committee Statement between “assessment by an advanced life support (ALS) ambulance provider or supplier” and “the furnishing of one or more ALS interventions” was “and/or” rather than “and.” In addition, commenters pointed out that the ALS2 definition differed slightly between the preamble of the proposed rule and the proposed regulation text. For ALS2, commenters addressed the Committee Statement definition which was based on the supplier's provision of “three different medications or the provision of one or more of the following ALS procedures: • Manual defibrillation/cardioversion. • Endotracheal intubation. • Central venous line. • Cardiac pacing. • Chest decompression. • Surgical airway. • Intraosseous line.” The proposed definition at § 414.605 stated “three different medications and the provision of one or more of the following ALS procedures: • Manual defibrillation/cardioversion. • Endotracheal intubation. • Central venous line. • Cardiac pacing. • Chest decompression. • Surgical airway. • Intraosseous line.” Response: We agree with the commenters that the conjunction was inconsistent with the Committee Statement and, therefore, we are revising the regulation text to be consistent with the Committee Statement. We note, however, that we are using the conjunction “or” because this term carries the same meaning as “and/or.” Comment: Many commenters stated that the proposed definition of ALS assessment is confusing. The definition states that the ALS assessment is one “performed by an ALS crew that results in the determination that the beneficiary's condition requires an ALS level of care.” The commenters stated that, in order to be consistent with the Committee Statement, the definition should state that an ALS assessment is one performed by an ALS crew to determine whether the beneficiary's condition requires an ALS level of care. Some commenters suggested that the definition should be revised as follows: “ ‘Advanced Life Support (ALS) assessment’ is an assessment of a beneficiary with a medical condition requiring assessment by an ALS crew to determine whether ALS interventions are needed or may be needed during transport.” Response: We agree, and we have clarified the definition of ALS assessment accordingly. We are also clarifying that the ALS assessment is relevant only in an emergency case. While the Committee Statement is silent on this point, we believe that the ALS assessment would not be required in non-emergency or scheduled situations. Comment: Many commenters stated that we should provide payment for all drugs, both low and high cost. Commenters stated that we had refused to negotiate on the issue of a separate payment for drugs in addition to and apart from the fee schedule payment for the ambulance transport, on the grounds that all drug costs should be included in the base rate. The commenters believe that this position fails to take into account the fact that many ambulance systems are now being forced to pay for drugs that were previously paid for outside of the Medicare payment. These costs, they argue, were not captured in the aggregate ambulance payment amount which we calculated and upon which we would calculate the CF. Therefore, they argue, these costs would not be reflected in the base rates. One way drugs were paid for in the past outside the Medicare ambulance benefit was that a hospital would restock the ambulance without charge for any drugs that had been used. Commenters argue that, if hospitals do not continue restocking, ambulance suppliers will have to bear the cost of these drugs from a base rate that the commenters believe is already too low. The commenters believe that we should allow separate payments for drugs in addition to the ambulance fee schedule payment. Response: Medicare's drug benefit does not permit a discrete payment for drugs furnished on board an ambulance. Drugs in ambulances have been included in ambulance payment only because they have been considered to be ambulance supplies. The law permits payment for a drug furnished on board an ambulance only if the drug is considered an element of the ambulance service. At the same time, the law does not permit payment under the ambulance benefit other than through the ambulance fee schedule. As noted above, the BBA required that total payments during the first year of the fee schedule be no more than what would have been paid if the ambulance fee schedule were not in effect. The law provides no means to increase program payments for ambulance services that use new high-cost drugs. It provides only the inflation factor to increase rates under the ambulance fee schedule. With this constraint in mind, the Committee considered, within the structure of the fee schedule, establishing a separate RVU for drugs provided as ambulance supplies above a certain threshold cost. However, the Committee rejected this option. Therefore, payment for these items is included in the base rates for all levels of service. Comment: Commenters questioned whether oxygen, saline and aspirin are considered medications for purposes of meeting the alternate criterion for the ALS2 level of service that the ambulance supplier provide three different medications. Response: The proposed definition for an ALS2 level of service provides that this level of service is defined by, when medically necessary, the administration of at least three different medications or the provision of one or more of the following ALS procedures: • Manual defibrillation/cardioversion. • Endotracheal intubation. • Central venous line. • Cardiac pacing. • Chest decompression. • Surgical airway. • Intraosseous line. Only medications requiring a higher level of skill to administer are considered medications for purposes of this definition. We are clarifying in the final rule that payment at the ALS2 level requires the administration of at least three medications by intravenous push/bolus or by continuous infusion, excluding crystalloid, hypotonic, isotonic, and hypertonic solutions (for example, Dextrose, Normal Saline, Ringer's Lactate). Therefore, oxygen, saline and aspirin are not considered as medications for the purpose of determining whether an ALS2 level of care has been furnished. Comment: Many commenters wanted to know whether three doses of the same medication on one transport warrant classifying the service as an ALS2 service. Response: Three separate administrations of the same medically necessary medication (of the kind specified in the criteria for ALS2) during a single transport qualifies for payment at the ALS2 level. Comment: Many commenters requested clarification regarding SCT. In particular, the commenters asked that we further define the phrase “paramedics with additional training.” A commenter suggested that we include a reference to any State or local standards or protocols that define SCT training above and beyond the paramedic curriculum and a reference to a curriculum approved by the medical director of an EMS or ambulance system and shared with the carrier. Response: As indicated in the response concerning the Blueprint, above, we are revising § 414.605 to indicate that vehicle staffing must be in compliance with existing State and local laws. We now define “paramedics with additional training” in terms of State or local authority that governs the licensing and certification of EMS personnel in the State in which a paramedic is licensed. It seems possible, even likely that there is no comparable definition in every State. Comment: Some commenters asked whether the code for the SCT level service may be used as a code for a trip from a facility to an air ambulance and from the air ambulance to the final facility destination. Response: Yes, the SCT level of service may be used in transporting a beneficiary from the hospital to an air ambulance and then from the air ambulance to the second hospital, if the SCT criteria are met. Comment: Some commenters believe that paramedic intercept services will suffer because of the failure in the fee schedule to recognize paramedic intercept in States other than New York as a cost-effective means of the delivery of prehospital care. Commenters stated that it is important to provide adequate payment for paramedic intercept in all areas of the country. Response: As described in the regulations in § 410.40(c) (and also in Program Memorandum B-00-01 issued in January, 2000), under the Medicare statute, payment may be made directly to the intercept supplier for intercept services only if— (a) The intercept service is provided in a rural area under a contract with one or more volunteer ambulance services; (b) The volunteer ambulance supplier is certified to provide ambulance services; (c) The volunteer ambulance supplier provides services only at the BLS level at the time of the intercept; and (d) The volunteer ambulance supplier is prohibited by State law from billing anyone for the service furnished. The entity providing the intercept services must also be qualified to provide services under Medicare and must bill all patients receiving its intercept services. At this time, to the best of our knowledge, only the State of New York has areas that meet these four criteria. In all other areas, the BLS level ambulance supplier must bill the program for an appropriate level of service. If the paramedic intercept supplier wants to receive payment, it would have to make an agreement with the volunteer supplier regarding payment. Comment: One commenter asked whether the new levels of ALS2 and SCT under the fee schedule would be blended with the current ALS emergency code payment rates during the transition period. Response: For both ALS2 and SCT, the “old” portion of the blended amount is the allowance for ALS emergency services. 2. Emergency Response Adjustment Factor We proposed to add § 414.610(c)(1) to state that, for the BLS and ALS1 levels of service, an ambulance service that qualifies as an emergency response service would be assigned higher RVUs to recognize the additional costs incurred in responding immediately to an emergency medical condition. An immediate response is one in which the ambulance supplier begins as quickly as possible to take the steps necessary to respond to the call. No emergency response adjustment factor applies to PI, ALS2, SCT, FW, or RW. Comment: Some commenters stated that the definition of “emergency response” for purposes of the fee schedule in the implementing instructions (Program Memorandum AB-00-88) is inconsistent with the definition in the proposed rule and with the definition in the Committee Statement. The definition in AB-00-88 is: An emergency response is one that, at the time the ambulance supplier is called, is provided after the sudden onset of a medical condition manifesting itself by acute symptoms of sufficient severity such that the absence of immediate medical attention could reasonably be expected to result in placing the beneficiary's health in serious jeopardy; in impairment to bodily functions; or in serious dysfunction to any bodily organ or part. The definition in the Committee Statement is: For the BLS and ALS1 levels of service, an ambulance service that qualifies as an emergency response will be assigned a higher relative value to recognize the additional costs incurred in responding immediately to an emergency medical condition. An immediate response is one in which the ambulance provider begins as quickly as possible to take the steps necessary to respond to the call. There is no emergency modifier for PI, ALS2, or SCT. Response: We agree with the commenter, and we will be changing the definition of “emergency response” in the final regulation to conform to the definition in the Committee Statement with one exception. We have decided to delete from the Committee Statement's definition the phrase “emergency medical condition” because the purpose of the higher payment for the emergency medical condition is to recognize the additional cost required in order to be prepared to respond immediately to a call (for example, from a “911” service) when it is received without regard to the condition of the beneficiary. The nature of the beneficiary's condition is considered in determining whether an ambulance transport was medically necessary and in determining the level of service (for example, BLS-Emergency, ALS1-Emergency or ALS2). However, the emergency rate is paid based on the immediate response to the 911-type call and not based on the services furnished to the beneficiary. Therefore, we are revising the definition as follows: Emergency response means responding immediately at the BLS or ALS1 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 supplier begins as quickly as possible to take the steps necessary to respond to the call. We note that the definition of “emergency response” here is intended only to describe the circumstances under which higher payment would be made for services and its use is limited to this context. It would have no effect on other program definitions of “emergency.” 3. Operational Variations We proposed to add § 414.610(a), which would state that the ambulance fee schedule applies to all entities that furnish ambulance services, regardless of type. All public or private, for profit or not-for-profit, volunteer, government-affiliated, institutionally-affiliated or owned, or wholly independent supplier ambulance companies, however organized, would be paid according to this ambulance fee schedule, with the exception of CAHs as discussed above. 4. Regional Variations a. Cost of living differences In our proposed rule, we proposed that the payment for ambulance services would be adjusted to reflect the varying costs of conducting business in different regions of the country. We stated that we would adjust the payment by a geographic adjustment factor (GAF) equal to the practice expense (PE) portion of the geographic practice cost index (GPCI) for the Medicare physician fee schedule. (For purposes of this document, we use the abbreviation “GPCI” to mean the PE portion of the GPCI.) The GPCI is an index that reflects the relative costs of certain components of a physician's cost of doing business (for example, employee salaries, rent, and miscellaneous expenses) in one area of the country as compared to another. The geographic areas would be the same as those used for the physician fee schedule. (A detailed discussion of the physician fee schedule areas can be found in the July 2, 1996 proposed rule (61 FR 34615) and the November 22, 1996 final rule (61 FR 59494).) We proposed that the GPCI would be applied to 70 percent of the base payment rate for ground ambulance services; this percentage approximates the portion of ground ambulance service costs that are represented by salaries. Similarly, we proposed that the GPCI would be applied to 50 percent of the base payment rate for air ambulance services. The GPCI would not be applied to the mileage payment rate. In addition, the applicable GPCI would be based on the geographic location at which the beneficiary is placed on board the ambulance. We proposed to use the most recent GPCI; the physician fee schedule law requires that the GPCI be updated every 3 years. The latest revision became effective January 1, 2001. The updated data were published in the November 1, 2000 final rule on the physician fee schedule (65 FR 65585). Comment: A few commenters stated that the practice expense portion of the physician fee schedule GPCI does not properly reflect the cost of living when calculating payment for ambulance services. Response: We proposed using the practice expense portion of the GPCI, as described in the physician fee schedule final rule published in the Federal Register on November 1, 2000 (65 FR 65585). We based our proposal on the Committee Statement that using the PE of the GPCI is the most appropriate means available to measure the geographic differences in the costs of providing ambulance services. The components of the PE portion of the GPCI (for example, personnel and supplies) are similar to the components of ambulance services and the geographical variations in these costs for ambulances would therefore be similar to the cost variations for physician practices. Also, based on data available to the Committee, it recommended, and we agree, that the labor share of the costs of ambulance services is approximately 70 percent of the ground and 50 percent of the air ambulance cost. Therefore, the GPCI will apply to only 70 percent of the ground and 50 percent of the air ambulance base rates. We are not adjusting the mileage rates. Comment: Some commenters believe that both legs of a round trip should be paid on the basis of the initial point of pick-up of the beneficiary, and that both legs of a scheduled round trip crossing GPCI or State lines should be billed to the carrier with jurisdiction for the initial point of pick-up. The commenters state that, given the proposed rule, suppliers may have to bill different carriers for each of two legs on the same round trip. Also, beneficiaries are likely to be confused by bills which indicate different charges for each leg of a round trip, if it does not begin in a rural area. Finally, rural suppliers could lose the rural adjustment for the second leg of a round trip. Some commenters also believe the point of pick-up is not the best criterion for establishing level of payment. There were some commenters who felt that the GPCI should be matched to the location of the ambulance company. Also, some commenters wanted clarification on trips originating in another carrier jurisdiction. Response: The Committee determined that the most equitable way to apply the GPCI, as well as the rural adjustment payment, was by the point of pick-up and not by the destination, location of the ambulance company, or where the ambulance is garaged. One concern identified by the Committee with using the location of the company or the place where the ambulance is garaged was the relative ease of moving the location of the company or garage to achieve higher payment. A second issue was that any individual trip in a rural area would likely be longer and prevent an ambulance from furnishing an additional trip, thereby reducing utilization, whether the ambulance was garaged in an urban or rural area. Considering each leg of a round trip separately gives effect to the Committee's determinations. Moreover, considering each leg separately achieves administrative simplicity and greater administrative accuracy in making payments. Comment: One commenter suggested that the Medicare hospital area wage index be used in place of the GPCI, since many of the ambulance providers are hospital-based. Response: The Committee decided to use the GPCI, not the hospital area wage index. As stated above, the components of the ambulance service are more similar to the components of the PE portion of the GPCI than they are to the components of the hospital wage index. Also, fewer than 15 percent of ambulance services furnished to Medicare beneficiaries are hospital-based, so we do not see the hospital wage index as more appropriate than the GPCI. Thus, we will continue to use the practice expense GPCIs from the physician fee schedule. b. Services furnished in rural areas We proposed to add § 414.610(c)(1)(v), which stated that, for ground ambulance services in rural areas, a 50 percent increase is applied to the mileage rate for each of the first 17 miles; the regular (urban) mileage allowance applies to every mile over 17 miles. For air ambulance services, we stated, in rural areas, that a 50 percent increase is applied to the total payment for air services, both mileage and base rate. We proposed the 50 percent rural increase for the first 17 miles in consideration of the circumstances of isolated, essential ambulance suppliers (that is, when there is only one ambulance service in a given geographic area) which may not furnish many trips over the course of a typical month because of a small rural population. While we recognize that this methodology is not sufficiently precise to limit the rural bonus payment to only those rural ambulances that are isolated, essential, low-volume (the definition of rural we are proposing is not as precise as other alternatives), we proposed an adjustment to increase the rate of payment for mileage if the location at which the beneficiary is placed on board the ambulance is located in a rural area. We proposed to define a rural area to be an area outside a Metropolitan Statistical Area (MSA) or a New England County Metropolitan Area, or an area within an MSA identified as rural, using the Goldsmith modification. 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) of the Department of Health and Human Services. This program was created to establish an operational definition of rural populations lacking easy geographic access to health services in large counties with metropolitan cities. Using 1980 census data, 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. However, these census tracts are so isolated by distance or physical features that they are more rural than urban in character. Additional information regarding the Goldsmith modification can be found on the Internet at http://www.ruralhealth.hrsa.gov/Goldsmith.htm. We could not easily adopt and implement, within the constraints necessary to implement the fee schedule timely, a methodology for recognizing geographic population density disparities other than MSA/non-MSA. However, we will consider alternative methodologies that may more appropriately address payment to isolated, low-volume rural ambulance suppliers. Thus, the rural adjustment in this rule is a temporary proxy to recognize the higher costs of certain low-volume rural suppliers. Several difficult issues will need to be resolved to establish more precise criteria for suppliers that should receive the rural adjustment. Examples of such issues include: (1) Appropriately identifying an ambulance supplier as rural; (2) identifying the supplier's total ambulance volume (because Medicare has a record only of its Medicare services); and (3) identifying whether the supplier is isolated, because some suppliers might not furnish services to Medicare beneficiaries (thus, Medicare would have no record of their existence) and one of these suppliers might be located near an otherwise “isolated” supplier. Addressing these issues in some cases will require the collection of data that are currently unavailable. We intend to work with the industry and with the Office of Rural Health Policy to identify and collect pertinent data as soon as possible. We stated in our proposed rule that the application of the rural adjustment would be determined by the geographic location at which the beneficiary is placed on board the ambulance. Under the proposed rule, the rural adjustment would have been made using the following methodology: • Ground—A 50 percent add-on applied to only the mileage payment rate for the first 17 loaded miles and a 25 percent add-on applied to only the mileage payment rate for miles 18 through 50. • Air—A 50 percent add-on applied to the base rate and to all of the loaded mileage. Comment: Several commenters expressed concern that there should be a more precise definition of low-volume rural ambulance suppliers and that the rural payment rate should be higher. They suggested that we could use data from the Office of Rural Health (ORH) or the Administration on Aging that would give a more precise determination than the MSA/non-MSA classification. Another commenter suggested using any areas that are designated as rural by the State. One commenter suggested that until a better rural adjustment is implemented, rural suppliers and providers should be paid under their current payment methodologies. Response: We are exploring alternative means for identifying low-volume rural suppliers. We are exploring data from other sources, including the ORH, which has sponsored a study, Rural-Urban Commuting Areas (RUCA). This study was performed by the University of Washington Rural Health Research Center. We anticipate that a more precise definition of low-volume rural suppliers will reduce the number of suppliers who qualify for the higher rural payment, allowing us to better target the payment increases to these suppliers while adhering to the aggregate payment limit provided in the law. We do not have the legal authority to exempt rural ambulance services from the fee schedule and pay them under the current methodology with the exception of certain CAHs. (See discussion of section 205 of BIPA.) In addition, BIPA provided that the payment rate for rural ambulance mileage greater than 17 miles and up to 50 miles be increased by not less than one-half of the additional payment per mile established for the first 17 miles of a rural ambulance trip. Comment: A few commenters suggested that we adopt a more precise means of identifying rural areas for the fee schedule, using zip codes rather than MSAs as the basis for identification. Response: We are currently using zip codes to identify areas. However, we identify all zip codes as urban or rural, based on whether the zip code is located in an MSA or not, including the Goldsmith modifications. The zip code is the basis for determining point of pick-up and the payment of claims. As stated above, we are examining other alternatives for identifying rural and urban areas more precisely. Comment: Some commenters asked if the rural modifier applies if the supplier bills less than $5 for mileage. Response: The law requires that payment be based on the lower of the fee schedule amount or the actual charge. If the supplier/provider's charge for mileage is less than the rural mileage fee schedule amount, then payment is based on the lower actual billed amount. Comment: One commenter suggested that we double the payment to small, rural hospital ambulance providers in the following categories: sole community provider hospitals, hospitals eligible for the CAH program, and hospitals under 100 beds. Response: The Committee Statement does not include such a provision, and we would point out that, because of the requirements of section 1834(l)(3) of the Act, increased payments under such a provision would need to be offset by reduced payments to other ambulance providers and suppliers. Moreover, there is no authority to exempt these small rural hospitals from the fee schedule except as provided by the Congress in section 205 of BIPA. That section provides that only CAHs that are the only ambulance service provider/supplier within a 35-mile drive will be exempt from the fee schedule and will be paid based on their reasonable cost. 5. Mileage We proposed adding § 414.610(c)(1)(iii) that would state that mileage would be paid separately from the base rate. The payment for mileage reflects the costs attributable to the use of the ambulance vehicle (for example, maintenance and depreciation) which increase as the vehicle's mileage increases. Based on the Committee's agreement, the mileage rates for the base year 1998 would be as follows: $5 per mile for ground ambulance, $6 per mile for fixed wing ambulance, and $16 per mile for rotary wing ambulance. These rates will be adjusted by the ambulance inflation factor. However, payment for some mileage in rural areas is made at a higher rate as discussed in section II.A.4.b. of this final rule. 6. Structure of the Fee Schedule for Ambulance Services We proposed in § 414.610(a) that the fee schedule payment for ambulance services would equal a base rate payment plus payments for mileage and applicable adjustment factors. (See Table 1 for a description of the structure of the ambulance fee schedule.) 7. Ambulance Inflation Factor We proposed adding § 414.615, “Transition methodology for implementing the ambulance fee schedule,” which would state that the ambulance fee schedule would include the ambulance inflation factor specified in section 1834(l)(3) of the Act (recently amended by BIPA) and discussed below. 8. Phase-in Methodology We proposed adding § 414.615 that would provide for a 4-year transition period, as the result of the Committee agreement. (The phase-in schedule is described in section IV of this preamble.) B. Proposed Changes Not Based on Negotiated Rulemaking In the September 12, 2000 proposed rule, we proposed changes to certain policies that were not within the scope of the negotiated rulemaking process. These proposed changes were as follows: 1. Coverage of Ambulance Services In § 410.40(b), we proposed revising the introductory language to provide a cross-reference to § 414.605 for a description of the specific levels of services. We proposed to revise paragraph § 410.40(d)(1) to state that transportation includes fixed wing and rotary wing ambulances. Also, we proposed revising § 410.40(d)(3) by adding two options to document medical necessity. 2. Physician Certification Requirements On January 25, 1999, we published a final rule (64 FR 3637) that updated Medicare coverage policy concerning ambulance services. That final rule provided the documentation requirements for coverage of nonemergency ambulance services for Medicare beneficiaries. The rule requires ambulance suppliers to obtain, from the beneficiary's attending physician, a written order certifying the medical necessity of nonemergency scheduled and unscheduled ambulance transports. The final rule became effective February 24, 1999. Our present regulations (at §§ 410.40(d)(2) and 410.40(d)(3)) set forth the requirements for scheduled and unscheduled nonemergency ambulance transports. The regulations require ambulance suppliers to obtain, from the beneficiary's attending physician, a written physician statement certifying the medical necessity of requested ambulance transports. Section 410.40(d)(3)(i) specifies that, in cases when a beneficiary living in a facility and under the direct care of a physician requires nonemergency, unscheduled transport, the physician's certification can be obtained up to 48 hours after transport. After publication of this rule, we were made aware of instances in which ambulance suppliers, despite having provided ambulance transports, were experiencing difficulty in obtaining the necessary physician certification statements within the required 48-hour timeframe. While we still believe that the 48-hour timeframe is the appropriate standard, we recognize that there may be instances when, not through fault of their own, it may not be possible for the ambulance suppliers to meet the requirement. Therefore, we have determined that there is a need to revise and clarify this requirement (as described in § 410.40, “Coverage of ambulance services,” paragraph (d)(3)). We proposed that, before submitting a claim, the ambulance supplier must obtain— (1) A signed physician certification statement from the attending physician; or (2) If the ambulance supplier is unable to obtain a signed physician certification statement from the attending physician, a signed physician certification must be obtained from either the physician, physician assistant, nurse practitioner, clinical nurse specialist, registered nurse, or discharge planner who is employed by the hospital or facility where the beneficiary is being treated and who has personal knowledge of the beneficiary's condition at the time the transport is ordered or the service was furnished (the term “physician certification statement” will also be applicable to statements signed by other authorized individuals); or (3) If the supplier is unable to obtain the required statement as described in (1) and (2) above within 21 calendar days following the date of service, the ambulance supplier must document its attempts to obtain the physician certification statement and may then submit the claim. Acceptable documentation must include a signed return receipt from the U.S. Postal Service or similar delivery service. A signed return receipt will serve as documentation that the ambulance supplier attempted to obtain the required physician certification statement from the beneficiary's attending physician. In all cases, the appropriate documentation must be kept on file and, upon request, presented to the carrier or intermediary. It is important to note that the presence of the signed physician certification statement does not necessarily demonstrate that the transport was medically necessary. The ambulance supplier must meet all coverage criteria in order for payment to be made. Comment: Several commenters, including a national ambulance association and an association representing medical professionals, state that the proposed regulation permits physician certification statements to be signed by physician assistants (PA), nurse practitioners (NP), and clinical nurse specialists (CNS), but only if employed by the facility in which the beneficiary is being treated. The commenters state, however, that, in most cases, practitioners are employed not by the facility but by the attending physician. The commenters recommended that the requirements of § 410.40(d)(3)(iii) be revised to specify that, in keeping with Medicare regulations, the PA, NP, or CNS may also be employed by the attending physician. Response: We agree with the commenters and are revising § 410.40(d)(3)(iii) to clarify that the PA, NP, or CNS may be employed either by the facility or by the beneficiary's attending physician. Comment: Many commenters recommended that we revise § 410.40(d)(3)(iv) to conform to Program Memorandum B-00-09 that clarified the circumstances under which a physician certification is required for both scheduled and unscheduled transports. Response: Program Memorandum B-00-09 was issued in response to an inquiry that specifically addressed the 48-hour time requirement set forth in § 410.40(d)(3)(i). The program memorandum specifies that, in cases where a beneficiary who is living in a facility and who is under the direct care of a physician requires nonemergency, unscheduled transport, the physician's certification can be obtained 48 hours after transport has been provided. Based on comments, we are, however, revising the regulation to clarify that § 410.40(d)(3) is applicable to nonrepetitive, nonemergency, scheduled ambulance services. In specifying that the rule applies to nonrepetitive transports, we are aware that § 410.40(d)(2), as currently written, contains a requirement that suppliers obtain the required documentation no earlier than 60 days before the date the service is furnished. We are revising § 410.40(d)(2) to clarify that the 60-day requirement is applicable only to repetitive transports, not nonrepetitive ones. Comment: Many commenters, including a national ambulance association, expressed a concern that carriers may be interpreting the revised definition of “bed confined” to mean that the beneficiary be bed-confined even in cases where the medical condition of the beneficiary would otherwise indicate that transportation by means other than ambulance would be contraindicated. The commenters recommended that § 410.40(d)(1) be revised as follows: For nonemergency transportation, transportation by ambulance is appropriate if the beneficiary is bed-confined or if his or her medical condition, regardless of bed confinement, is such that transportation by ambulance is medically required. In determining whether a beneficiary is bed-confined, the following criteria must be met: (i) The beneficiary is unable to get up from the bed without assistance. (ii) The beneficiary is unable to ambulate. (iii) The beneficiary is unable to sit in a chair or wheelchair. Response: In the June 17, 1997 proposed rule (62 FR 32719), these three criteria were developed to define bed-confinement. These criteria identify individuals who may need ambulance services: we identified as bed-confined only those individuals who are “completely confined to bed and unable to tolerate any activity out of bed.” Subsequent instructional guidelines (PM AB-99-53, AB-99-83, AB-00-103) were issued in an effort to clarify that the bed-confined criteria are not meant to be the sole criteria in determining medical necessity; bed-confinement is one factor to be considered. It is important that all factors relating to the beneficiary's condition are considered in evaluating whether the medical necessity criteria for ambulance services have been met. As always, it is the responsibility of the ambulance supplier to furnish complete and accurate documentation of the beneficiary's condition to demonstrate that the ambulance service being furnished meets the medical necessity criteria. It is not our intent either to require that the bed-confined condition be met in every case in order for an ambulance transport to be covered or to mandate coverage of an ambulance transport solely because a beneficiary is bed-confined. We agree with the commenters that our proposed revision was unclear. We are revising proposed § 410.40(d)(1). In addition to the identifying criteria on bed-confinement, the final rule will now state that: For nonemergency ambulance transportation, transportation by ambulance is appropriate if the beneficiary is bed-confined and it is documented that the beneficiary's medical condition is such that other methods of transportation are contraindicated, or if his or her medical condition, regardless of bed-confinement, is such that transportation by ambulance is medically required. In determining whether a beneficiary is bed-confined, the following criteria must be met: * * * 3. Payment During the First Year As explained below in more detail, we stated that we would use the universe of claims paid in 1998 (reduced by the $65 million savings that would have been realized through implementation of the BLS and ALS definitions proposed in the June 17, 1997 proposed rule (62 FR 32718)) to establish the CF and would index the 1998 dollars to CY 2002 dollars using the compounded inflation factors derived from section 1834(l)(3) of the Act. (The transition and the inflation factors are described in § 414.615.) 4. Billing Method In proposed § 414.610, we stated that, after the transition period, we would bundle into the base rate payment all items and services furnished within the ambulance benefit. This would eliminate billing on an itemized basis for any items and services related to the ambulance service (for example, oxygen, drugs, extra attendants, and EKG testing). In addition, only the base rate code and the mileage code would be used to bill Medicare. (This decision was made in accordance with section 1834(l)(7) of the Act, which gives us the authority to specify a uniform coding system, as well as with section 1834(l)(2)(B) of the Act.) During the transition period, suppliers who currently use billing methods 3 or 4 may continue to bill for supplies separately (see section I.B. for a description of these billing methods). 5. Local or State Ordinances In proposed § 414.610, we stated that, regardless of any local or State ordinances that contain provisions on ambulance staffing or furnishing of all ambulance services by ALS suppliers, we would pay the appropriate ambulance fee schedule rate for the services that are actually required by the condition of the beneficiary. We proposed this policy pursuant to the Medicare statutory requirement (see section 1834(l)(2)(B) of the Act) to use definitions of services that link payments to the types of services furnished. 6. Mandatory Assignment In proposed § 414.610, we stated that, effective January 1, 2001, all payments for ambulance services must be made on an assignment-related basis, as mandated by section 1834(l)(6) of the Act. Ambulance suppliers must accept the Medicare allowed charge as payment in full and not bill the beneficiary any amount other than unmet Part B deductible or coinsurance amounts. There is no transitional period for mandatory assignment. Comment: One commenter asked whether the fee schedule and mandatory assignment apply when Medicare is the secondary payer. Response: Yes, both the ambulance fee schedule and mandatory assignment apply when Medicare is the secondary payer. Comment: Several commenters objected to the requirement of mandatory assignment for claims when the fee schedule is implemented. They claim that because the rates in some areas are so low, some ambulance suppliers will go out of business without balance billing. One commenter indicated that we have the discretion to delay implementation of mandatory assignment until the end of the phase-in period. The commenter also requested clarification that mandatory assignment pertains only to services that are covered by Medicare. Response: Mandatory assignment is required by section 1834(l)(6) of the Act. We do not agree that there is discretion to delay its implementation until the fee schedule is fully phased-in. The implementation date given in the proposed rule will be changed to coincide with the actual implementation of the fee schedule. Historically, ninety-five percent of ambulance services have been submitted under assignment, and, while the fee schedule redistributes payments, we do not anticipate that the assignment requirement is a major issue nationally. It is correct that mandatory assignment pertains only to Medicare covered services. Comment: Some commenters asked whether the provider/supplier may bill the beneficiary for the non-covered charges for transportation to a facility beyond the nearest appropriate facility, or whether mandatory assignment prevents the provider/supplier from billing for this additional mileage. Response: Mandatory assignment does not preclude billing for this additional mileage. Mandatory assignment refers only to services that are covered by the Medicare program. Comment: Some commenters asked about the correlation between “Medicare+Choice” (M+C) plan payments and the ambulance fee schedule. The commenters asked if the amount paid by M+C plans is affected by the fee schedule amounts and if the liability of M+C enrollees is affected by the mandatory assignment requirement for the fee schedule. Response: For ambulance services that are under contract with the plan, Medicare rates do not affect the payment amounts by the M+C or the enrollee's copay. For ambulance services that are not under contract (for example, out-of-area emergency transports), the M+C is liable for the Medicare allowance in that area less any copay that the beneficiary pays pursuant to the M+C plan's rule for coinsurance. 7. Miscellaneous Payment Policies The following payment policies were in effect before publication of the proposed rule; however, we used the proposed rule as an opportunity to clarify them. a. Multiple Patients Occasionally, an ambulance will transport more than one patient at a time. (For example, this may happen at the scene of a traffic accident.) In this case, we proposed to prorate the payment as determined by the ambulance fee schedule among all of the patients in the ambulance. If two patients were transported at one time, and one was a Medicare beneficiary and the other was not, we would make payment based on one-half of the ambulance fee schedule amount for the level of medically appropriate service furnished to the Medicare beneficiary. The Medicare Part B coinsurance, deductible, and assignment rules would apply to this prorated payment. Similarly, if both patients were Medicare beneficiaries, payment for each beneficiary would be made based on half of the ambulance fee schedule amount for the level of medically appropriate services furnished to each beneficiary. The Medicare Part B coinsurance, deductible, and assignment rules would apply to these prorated amounts. Comment: Some commenters disagree with our paying only the rate for one trip if two patients are transported. The commenters contend that it is not true that transporting two or more patients in the same vehicle costs no more than transporting one patient. Additional time will be required to load and unload each patient. Each patient will require specific individual care. The supplier will also incur additional liability for each patient for whom it is responsible. The commenters believe that one mileage fee should be paid, but that two base rates should be paid. Response: With respect to multiple patient transports, we agree with the commenters that there would be, on average, a higher cost for multiple patient transports than for those with only a single patient onboard. While commenters stated that an extra attendant would be onboard and additional supplies would be used for multiple patients, we do not believe this would always be true. Therefore, if two patients are transported simultaneously, for each Medicare beneficiary we will allow 75 percent of the payment allowance for the base rate applicable to the level of care furnished to that beneficiary. If three or more patients are transported simultaneously, then the payment allowance for the Medicare beneficiary (or each of them) is equal to 60 percent of the service payment allowance applicable for the level of care furnished to the beneficiary. However, a single payment allowance for mileage would continue to be prorated by the number of patients onboard. Also, we are establishing a modifier to identify these claims. b. Pronouncement of Death In the proposed rule, we stated that there are three rules that apply to ambulance services and the pronouncement of death. First, if the beneficiary was pronounced dead by an individual who is licensed to pronounce death in that State prior to the time that the ambulance is called, no payment would be made. Second, if the beneficiary is pronounced dead after the ambulance is called but before the ambulance arrives at the scene, payment for an ambulance trip would be made at the BLS rate, but no mileage would be paid. Third, if the beneficiary is pronounced dead after being loaded into the ambulance, payment would be made following the usual rules (that is, the same level of payment would be made as if the beneficiary had not died). Comment: Some commenters suggested that we pay at the ALS rate if the crew attempts to resuscitate, even though they may fail. Also, some commenters believe that the pronouncement of death needs to be clarified further, so that unnecessary transportation will be limited. Response: Program payment may be made only for medically necessary ambulance transports. There is no basis for us to pay under the ambulance benefit for services such as attempts to resuscitate, if no ambulance transport occurs. In this final rule, we are setting forth the following criteria to apply in the pronouncement of death: • If the beneficiary is pronounced dead by an individual who is authorized by the State to pronounce death prior to the time the ambulance is called, no payment will be made. • If the beneficiary is pronounced dead by an individual who is authorized by the State to pronounce death prior to the arrival of the ambulance, but after it is called, a BLS base rate payment will be made (except for air, as noted in the comment and response below). No payment for mileage will be made. • If the beneficiary is pronounced dead by an individual who is authorized by the State to pronounce death during the transport of the ambulance, the same payment rules apply as if the beneficiary were alive. Comment: Some commenters suggested that, in the case where a beneficiary dies while an air ambulance is enroute to the scene, we pay air ambulance at the air base rate, not the BLS ground rate. Response: We agree with the commenters. We will not pay mileage because there is no transport, but we will pay the applicable air base rate. c. Multiple Arrivals We stated in the proposed rule that, when multiple units respond to a call for services, we would pay the entity that provides the transportation for the beneficiary. The transporting entity would bill for all services furnished, as stated in current policy. For example, if BLS and ALS entities respond to a call and the BLS entity furnishes the transportation after an ALS assessment is furnished, the BLS entity would bill using the ALS1 rate. We would pay the BLS entity at the ALS1 rate. The BLS entity and the ALS entity would have to negotiate between themselves payment for the ALS assessment. Comment: Some commenters stated that the discussion of multiple arrivals in the proposed rule is confusing. They state that, although the issue was not discussed by the Committee, our discussion appears to be inconsistent with the industry's understanding that the ALS level of service may be billed only if an ALS supplier/provider is involved in the actual transportation. Response: According to the definition of “ALS assessment” that we are promulgating in this final rule, an assessment may result in the determination that no ALS level service is required and, in that instance, an ALS1-Emergency level payment may be made to the transporting BLS ambulance supplier even if no ALS paramedic rides onboard. Comment: One commenter stated that when two ALS ambulances respond, the ambulance fee schedule payment should be divided between them according to the services each provided. Response: We have always construed the Medicare law as permitting payment for services only to the entity that provides the services, in this case, ambulance transport. Any suppliers that furnish services other than the transport must look to the transporting supplier for payment for other services. As described above, there is a limited provision of the law for paramedic intercept services under which the Congress permitted payment to be made directly to the entity furnishing the intercept service, but only under special circumstances provided in the regulations in § 410.40(c). However, a provider (for example, a hospital or skilled nursing facility) may furnish ambulance services under arrangements in accordance with section 1861(w) of the Act. In this case, the provider may bill for the ambulance service, even if another supplier furnished the transport, if the service is furnished pursuant to an arrangement between the two entities in accordance with the law. d. BLS Services in an ALS Vehicle The proposed rule stated that effective with implementation of the fee schedule, claims would be paid at the BLS level where an ALS vehicle is used but no ALS level of service is furnished. Claims would be filed using the appropriate BLS code. Like the other rules describing levels of service, these rules would be applicable on the effective date of this rule; there would be no transitional period for the rule. Comment: Several commenters stated that our decision to pay at the BLS rate for the use of an ALS vehicle when no ALS service is furnished has the effect of not recognizing all-ALS mandates by local authorities (situations where the local government mandates that all ambulances within its jurisdiction be equipped to provide an ALS level of service). The commenters stated that this policy, which will result in an immediate budget savings for Medicare of approximately $70 million in 2002, should be phased in on the same schedule as the other regulatory changes. The commenters believe that we should apply the transition provisions in the negotiated rule to all payment changes, including those stemming from our decision to pay BLS rates when BLS services are provided using an ALS vehicle. Because we did not propose to phase in this policy (that is, we are not continuing to pay at the ALS level under the old portion of the transition payment), the commenters believe that many emergency medical systems will be threatened and Medicare beneficiaries will be at risk of not having access to emergency and other medical transportation services. Response: While we continue to believe that BLS services should be paid at the BLS rate, even when an ALS vehicle is used, we agree with the comment to phase in the implementation of this policy. Therefore, when an ALS vehicle is used to furnish non-emergency BLS services only, the “old” portion of the blended rate will be at the “old” ALS non-emergency payment level and the “new” portion of the blended rate will be at the BLS fee schedule amount. In addition, we are revising the definition of an ALS assessment needed to qualify for an ALS1-Emergency level of payment from the proposed definition. An emergency ambulance trip may be paid as an ALS1-Emergency even when the only ALS service furnished is an ALS assessment. This revision in the final rule will increase the trips paid at the ALS1-Emergency level, rather than at the BLS-Emergency level. Where the only ALS service furnished is an ALS assessment for an emergency, the “old” portion of the blended rate will be at the ALS emergency rate. We have also increased the amount of spending upon which the CF is based by the amount of savings that had been attributed to this policy. III. Methodology for Determining the Conversion Factor As discussed in the September 12, 2000 proposed rule (65 FR 55078), our approach to determining the conversion factor (CF) was: (1) To use the most recent complete year of ambulance claims; (2) To translate those claims into the format that would have been used under the fee schedule; and (3) To calculate the CF, that, when applied to the RVUs for each level of service, results in the same total program payment for those claims, less $67 million that would have been saved if the fee schedule legislation had not been passed. (Under the final rule, as discussed in section III.D, we have decided not to subtract this amount in calculation of the CF.) We would then inflate this CF in accordance with the inflation factor prescribed in the statute. (See section 1834(l)(3) of the Act, as amended by section 423 of BIPA.) We used 1998 as the base year because this was the most recent complete year for which claims data were available. For claims processed by carriers (that is, claims from independent ambulance suppliers), we used allowed charge data. For claims processed by fiscal intermediaries (FIs) for provider-based ambulance services, we used the submitted charges on the Medicare claims multiplied by the cost-to-charge ratio applicable to the ambulance costs for each provider. We modified the claims data in several ways to calculate the proposed fee schedule and its impact. First, we separated all claims into two groups: • Carrier-processed claims for ambulance services (8 million in 1998). • FI processed claims for ambulance services (900,000 in 1998). A. Carrier-Processed Claims We had to adjust some of the 1998 claims for purposes of the proposed ambulance fee schedule calculation. Some of the claims did not report mileage and, because mileage will be required for each ambulance service under the fee schedule, an adjustment had to be made for the missing miles (see above). In other cases, the billing codes under the old system did not translate directly into services that would be paid under the proposed fee schedule. Below is a more detailed explanation of the adjustments that were made to the 1998 base year data in order to accommodate missing data. 1. Mileage Approximately 1.1 million claims for ground ambulance services did not show any mileage. The proposed fee schedule for ambulance services will provide a payment for the trip and a payment per statute mile for the loaded mileage traveled. Therefore, in calculating the proposed CF, we added mileage to those claims that did not report mileage. We did so by assigning the mode value (that is, the number of miles billed most often) per trip in urban areas (1.0 miles) and the mode value or mileage per trip in rural areas (1.0 miles). Current billing instructions provide that only one ambulance trip may be billed per line on a claim. Because billing rules prohibit more than one trip to be reported on a line, we assumed any number greater than one was an error. Therefore, we did not count multiple trips billed on the same line of a claim. This reduced the total trip count processed by carriers by approximately 1 percent. This reduction of about 1 percent in the number of trips resulted in an increase of about 1 percent in the average allowed charge per trip. Comment: Some commenters stated that some billers do not bill for mileage and will continue not to bill mileage after the fee schedule is implemented. Commenters stated that in other cases a supplier's submitted charge for mileage is lower than the fee schedule rural mileage rate and asked that the Medicare carrier automatically increase the supplier's charge by 50 percent before comparing the submitted charge to the fee schedule rural mileage rate. (This comparison is made because the law requires that payment be based on the lower of the actual submitted charge or the fee schedule amount.) Also, commenters stated that some billers have a lower charge for mileage that would offset their higher charge for the ambulance base rate service, but that this will not be considered when we process the claim for the base rate for purposes of the fee schedule. Response: In the process of setting the conversion factor (CF), we found over one million claims that should have reported mileage but did not. As stated above, we assigned a value of 1 mile to each of these claims. This was the mode value of mileage for both urban and rural ambulance claims. The average value was 7 miles for urban and 17 miles for rural claims. Assuming 1 mile each for claims without mileage results in a higher CF than would have resulted if we used the average number of miles. We will monitor claims data after the fee schedule is initially implemented and recalibrate the CF to reflect actual, as opposed to projected, billing practices. With respect to comments that we take into account suppliers that have high service charges but low mileage charges, we do not believe that this result is necessary or practical. Section 1833(a)(1)(R) of the Act states that CMS pays the lower of “the actual charge for the services” or fee schedule. While some commenters argued that we should be comparing total charges (that is, base rate plus mileage) rather than looking at the service and mileage separately, we believe comparing the components of the charge is equally consistent with the law. Moreover, the entire Medicare claims processing system is set up to process claims on an individual line-item basis. To change the claims processing system would jeopardize timely implementation of the fee schedule. Comment: Many commenters suggested that the urban/rural designation for round trips should be based on the original point of pick-up, rather than from each point of pick-up. Response: Each trip consisting of a point of pick-up and a destination is considered to be a trip on its own and must be billed, processed and paid individually. Comment: One commenter presented this hypothetical: beneficiary becomes ill on a cruise near Alaska. Beneficiary is airlifted. The nearest facility cannot adequately care for the beneficiary. The nearest facility that can adequately attend to the beneficiary is in Anchorage, Alaska. The beneficiary lives in the continental United States. The beneficiary requests to be sent to Seattle, Washington. Can this be done? Response: The program covers mileage only to the nearest facility equipped to treat the beneficiary. Any additional mileage is not covered by Medicare. However, the beneficiary may arrange with the ambulance supplier to pay the difference. 2. Billing Codes We determined that the billing codes that represent items and services included under the ambulance fee schedule are all billing codes submitted by ambulance suppliers in the range of Health Care Common Procedure Coding System (HCPCS) A0030 through A0999 (excluding HCPCS code A0888, which is not covered by Medicare) and Common Procedural Terminology-Fourth Edition (CPT-4) 1 codes 93005 and 93041. HCPCS billing codes A0030 through A0999 represent ambulance services, supplies, and equipment that are covered by the ambulance fee schedule, and CPT codes 93005 and 93041 represent electrocardiogram (EKG) services that may be billed by ambulance suppliers. In addition, we incorporated all HCPCS billing codes in the range of A4000 through Z9999; these services could have been paid by a carrier to an ambulance supplier only if they represented items and services covered under the Medicare ambulance benefit. We excluded all other CPT billing codes in the range of 00001 through 99999 (except the two EKG codes listed above) because they represent services not covered by the ambulance fee schedule. 1 CPT codes and descriptions only are copyright 2001 of the American Medical Association. All Rights Reserved. Applicable FARS/DFARS Apply. Next, we adjusted all billing codes that represented an ALS vehicle when no ALS service was furnished. We removed the actual allowed charges on these claims and replaced them with the charges that would have been allowed by the carrier for the corresponding BLS level of service (that is, emergency for emergency and nonemergency for nonemergency). Comment: Several commenters stated that our decision to pay at the BLS rate for the use of an ALS vehicle when no ALS service is furnished has the effect of not recognizing all-ALS mandates by local authorities (situations where the local government mandates that all ambulances within its jurisdiction be equipped to provide an ALS level of service). The commenters stated that this reduction in the amount of spending used to set the CF was inappropriate. Response: While we continue to believe that BLS services should be paid at the BLS rate, even when an ALS vehicle is used, we have decided to increase the amount of spending upon which the CF is based by the amount of savings that had been attributed to this policy. 3. Crosswalking the Old Billing Codes to the New Billing Codes We converted the old billing codes in the base year data to the new billing codes as they will be under the final fee schedule. The old BLS codes convert directly to the final BLS codes. The old air ambulance codes (fixed wing and helicopter) convert to the final air ambulance codes. The old water ambulance code converts to the final BLS-Emergency code. The old mileage codes distinguished ALS miles from BLS miles; both of these old codes will convert to the single proposed mileage code. Codes used to report air mileage will convert to the final codes for fixed and rotary wing mileage, respectively. All air miles will be reported in statute miles. As mentioned earlier, we converted the codes for an ALS vehicle when no ALS services were furnished to the corresponding BLS codes. The conversion of the remaining old ALS codes (for example, when ALS services were furnished) to final ALS codes is less straightforward because there are more levels of ALS service under the final fee schedule than currently exist. All nonemergency ALS codes convert to the ALS1 (nonemergency) code. Based on advice from various members of the Committee, for purposes of calculating the CF, we proposed converting the old emergency ALS codes according to the following formulas: • For claims on which both the origin and destination was a hospital: 33 percent will convert to specialty care transport (SCT), 5 percent to advanced life support, level two (ALS2), and the remainder to ALS1-Emergency. • For all other claims: 8.3 percent will convert to ALS2, and the remainder to ALS1-Emergency. Comment: Commenters stated that the projected volume of 8.3 percent of current ALS emergency claims that will be billed under the fee schedule at the ALS2 rate is too high. The commenters stated that the projection provided by the Committee was only 2.3 percent. Response: This comment was in error. We have verified with the Committee that the 8.3 percent projection was correct. 4. Low Billers A concern was raised about low billers of ambulance services. Low billers are suppliers who currently bill less than the maximum charge allowed by Medicare. There are several reasons low billers exist. For example, an entity may have a low charge because the cost of its operation is subsidized by local taxes (for example, a municipal ambulance company); the entity may use volunteers; its charge may be regulated by local ordinances, limited by an inflation-indexed charge that is part of the Medicare program's current reasonable charge policy, or restricted for other reasons. In the proposed rule, we stated that we have neither a means to estimate the extent to which low billing will continue after the fee schedule is implemented and the inflation-indexed charge limit no longer applies, nor a means to estimate the extent to which volunteer and municipal ambulances will choose not to file Medicare claims at the fee schedule amounts to which they could be entitled. Therefore, given the uncertainty of suppliers' future behavior, we proposed not to attempt to adjust the CF based on assumptions that low billing will or will not continue. We also stated that we will monitor payment and billing data and recalculate the CF as appropriate. Because the total ambulance service payment amount is based on the actual allowed charges from the base year (1998), the CF will reflect historical charges for some suppliers that may have been lower than the reasonable charges of other suppliers. At the same time, if low billers of ambulance services continue to charge less than the ambulance fee schedule amount, we will continue to pay the lower amount as the law requires. Therefore, some members of the ambulance industry have urged us to increase the fee schedule CF, anticipating that, otherwise, savings would result from billers who continue to charge less than they could, in this case, less than the fee schedule amount. We have estimated that in the base year 1998, if all low billers had billed the maximum charges allowed by Medicare, total allowed charges for ambulance services would have been approximately $150 million more than they were. Approximately half of this amount is attributable to charges that are 70 percent of the maximum allowed charges or greater. Assuming that billers whose current charge is 70 percent or more of the maximum will charge the full fee schedule amount and that one-half of the entities whose current charge is less than 70 percent of the maximum allowed charge may continue to bill at less than the fee schedule amount, approximately $39 million in the base year 1998 might continue to be attributed to low billing. Adjusted for inflation, this amount (annualized) is approximately $42 million in 2002. Comment: We received many comments questioning our approach to low billers. In particular, commenters believe that we were calculating the CF in such a way that we would inappropriately achieve between $75 million and $150 million in savings by assuming all low billers would begin to bill at the full amount allowed under the fee schedule. Commenters stated that we were obligated to ensure that the implementation of the fee schedule was budget neutral. Response: We believe some commenters misunderstood our reasoning when we referred to the fact that an approximately $150 million difference existed in 1998 between ambulance suppliers' actual charges and the maximum charges allowed by Medicare and that approximately half of this amount (about $77 million) is attributable to charges that are 70 percent of the maximum allowed charge or greater. For those suppliers already charging 70 percent or greater of the maximum charges allowed, our reasoning was that they are likely to increase their charges when the inflation-indexed charge limit no longer applies. While we continue to believe that future billing behavior is unpredict [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A02-4548. Public record. Not legal advice.