Thursday,

July 1, 2004

Part IX

Department of 

Health and Human 

Services

Centers for Medicare & Medicaid Services 

42 CFR Part 414

Medicare Program; Medicare Ambulance 

MMA Temporary Rate Increases 

Beginning July 1, 2004; Interim Final 

Rule

40288 Federal Register / Vol. 69, No. 126 / Thursday, July 1, 2004 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 414

[CMS–1492–IFC] 

RIN 0938–AN24

Medicare Program; Medicare 

Ambulance MMA Temporary Rate 

Increases Beginning July 1, 2004

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS.

ACTION: Interim final rule with comment 

period. 

SUMMARY: This interim final rule 

codifies the four payment provisions for 

Medicare covered ambulance services 

contained in section 414 of the 

Medicare Prescription Drug, 

Improvement and Modernization Act of 

2003 (MMA).

DATES: Effective date: These provisions 

are effective on July 1, 2004. 

Comment date: To be assured 

consideration, comments must be 

received at one of the addresses 

provided below, no later than 5 p.m. on 

August 30, 2004.

ADDRESSES: In commenting, please refer 

to file code CMS–1492–IFC. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (fax) 

transmission. 

You may submit comments in one of 

three ways (no duplicates, please): 

1. Electronically. You may submit 

electronic comments to http://

www.cms.hhs.gov/regulations/

ecomments or to www.regulations.gov

(attachments must be in Microsoft 

Word, WordPerfect, or Excel; we prefer 

Microsoft Word). 

2. By mail. You may mail written 

comments (one original and two copies) 

to the following address only: Centers 

for Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: CMS–1492–IFC, 

P.O. Box 8011, Baltimore, MD 21244–

8011. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments (one original 

and two copies) before the close of the 

comment period to one of the following 

addresses. If you intend to deliver your 

comments to the Baltimore address, 

please call telephone number (410) 786–

9994 in advance to schedule your 

arrival with one of our staff members: 

Room 445–G, Hubert H. Humphrey 

Building, 200 Independence Avenue, 

SW., Washington, DC 20201; or 7500 

Security Boulevard, Baltimore, MD 

21244–1850. 

(Because access to the interior of the 

HHH Building is not readily available to 

persons without Federal Government 

identification, commenters are 

encouraged to leave their comments in 

the CMS drop slots located in the main 

lobby of the building. A stamp-in clock 

is available for persons wishing to retain 

a proof of filing by stamping in and 

retaining an extra copy of the comments 

being filed.) 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period.

FOR FURTHER INFORMATION CONTACT:

Anne E. Tayloe, (410) 786–4546.

SUPPLEMENTARY INFORMATION:

Submitting Comments: We welcome 

comments from the public on all issues 

set forth in this rule to assist us in fully 

considering issues and developing 

policies. You can assist us by 

referencing the file code CMS–1492–IFC 

and the specific ‘‘issue identifier’’ that 

precedes the section on which you 

choose to comment. 

Inspection of Public Comments:

Comments received timely will be 

available for public inspection as they 

are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

call telephone number: (410) 786–7197. 

I. Background 

[If you choose to comment on issues 

in this section, please include the 

caption ‘‘Background’’ at the beginning 

of your comments.] 

A. Legislative and Regulatory History 

Under section 1861(s)(7) of the Social 

Security Act (the Act), Medicare Part B 

(Supplementary Medical Insurance) 

covers and pays for ambulance services, 

to the extent prescribed in regulations, 

when the use of other methods of 

transportation would be contraindicated 

for the beneficiary. The House Ways and 

Means Committee and Senate Finance 

Committee Reports that accompanied 

the 1965 legislation creating the Act 

suggest that the Congress intended that: 

(1) The ambulance benefit cover 

transportation services only if other 

means of transportation are 

contraindicated by the beneficiary’s 

medical condition; and (2) only 

ambulance service to local facilities be 

covered unless necessary services are 

not available locally, in which case, 

transportation to the nearest facility 

furnishing those services is covered 

(H.R. Rep. No. 213, 89th Cong., 1st Sess. 

37 and S. Rep. No. 404, 89th Cong., 1st 

Sess., Pt. I, 43 (1965)). The reports 

indicate that transportation may also be 

provided from one hospital to another, 

to the beneficiary’s home, or to an 

extended care facility. 

Our regulations relating to ambulance 

services are located at 42 CFR Part 410, 

subpart B and 42 CFR Part 414, subpart 

H. Section 410.10(i) lists ambulance 

services as one of the covered medical 

and other health services under 

Medicare Part B. Ambulance services 

are subject to basic conditions and 

limitations set forth at § 410.12 and to 

specific conditions and limitations 

included at § 410.40. Part 414, subpart 

H describes how payment is made for 

ambulance services covered by 

Medicare.

The Medicare program pays for 

ambulance services for Medicare 

beneficiaries when other means of 

transportation are contraindicated. 

Ambulance services (air and ground) are 

divided into different levels of service 

based on the medically necessary 

treatment provided during transport. 

These services include the levels of 

service listed below. 

For Ground:

• Basic Life Support (BLS) 

• Advanced Life Support, Level 1 

(ALS1) 

• Advanced Life Support, Level 2 

(ALS2) 

• Specialty Care Transport (SCT) 

• Paramedic ALS Intercept (PI) 

For Air:

• Fixed Wing Air Ambulance (FW) 

• Rotary Wing Air Ambulance (RW) 

Historically, payment levels for 

ambulance services depended, in part, 

upon the entity that furnished the 

services. Before the implementation of 

the ambulance fee schedule on April 1, 

2002, providers (hospitals, including 

critical access hospitals, skilled nursing 

facilities, and home health agencies) 

were paid on a retrospective reasonable 

cost basis. Suppliers, which are entities 

that are independent of any provider, 

were paid on a reasonable charge basis. 

The Balanced Budget Act of 1997 

(BBA) (establishing section 1834(l) of 

the Act) mandated the development of 

an ambulance fee schedule through 

negotiated rulemaking. On February 27, 

2002, we published a final rule in the 

Federal Register (67 FR 9100) that 

established a fee schedule for the 

Federal Register / Vol. 69, No. 126 / Thursday, July 1, 2004 / Rules and Regulations 40289

payment of ambulance services under 

the Medicare program, effective for 

services furnished on or after April 1, 

2002. The fee schedule replaced the 

retrospective reasonable cost payment 

system for providers and the reasonable 

charge system for suppliers of 

ambulance services. Additionally, the 

final rule—implemented a statutory 

requirement that ambulance suppliers 

accept Medicare assignment; codified 

the establishment of new Health Care 

Common Procedure Coding System 

(HCPCS) codes to be reported on claims 

for ambulance services; established 

increased mileage 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; revised the certification 

requirements for coverage of 

nonemergency ambulance services; and 

provided for a 5-year transition period 

during which program payment for 

Medicare covered ambulance services 

would be based upon a blended rate 

comprised of a fee schedule portion and 

a reasonable cost (providers) or 

reasonable charge (suppliers) portion. 

We are now in the third year of that 

transition to full payment based solely 

on the fee schedule amount. 

B. Transitional Assistance for Rural 

Mileage 18 Through 50—Section 221 of 

the Medicare, Medicaid and SCHIP 

Benefits Improvement and Protection 

Act of 2000 (BIPA) 

Section 221 of the Benefits 

Improvement and Protection Act of 

2000 (BIPA) provided a temporary 

bonus mileage payment through 

December 31, 2003 for miles 18 through 

50 for ambulance transports originating 

in a rural area. This bonus amount 

could not be less than one-half of the 

rural bonus paid under the ambulance 

fee schedule for miles 1 through 17. 

This provision was implemented by 

§ 414.610(c) of the ambulance fee 

schedule final rule. 

C. Medicare Prescription Drug, 

Improvement and Modernization Act of 

2003 (MMA) 

Section 414 of the Medicare 

Prescription Drug, Improvement and 

Modernization Act of 2003 (MMA) 

contains four provisions affecting 

payment for Medicare-covered 

ambulance services. All four affect only 

the fee schedule (FS) portion of the 

program’s payment, and they affect only 

ground ambulance services. They are all 

cumulative; that is, they are percentage 

increases applied in concert with one 

another. They are all effective July 1, 

2004, but with different sunset dates. 

The four provisions are as follows: 

1. A percentage increase in the FS 

payment rates for ambulance services—

1 percent for urban and 2 percent for 

rural ambulance services. This increase 

sunsets on December 31, 2006. 

2. A 25 percent increase for the 

mileage rate for miles 51 and greater 

(both urban and rural). This increase 

sunsets on December 31, 2008. 

3. A Regional FS that provides a floor 

amount for the ground ambulance base 

rate. The floor amount is determined by 

establishing nine FSs based on each of 

the nine census divisions using the 

same methodology as was used to 

establish the national FS. This increase 

sunsets on December 31, 2009. 

4. An increase in the payment for the 

base rate where the ambulance transport 

originates in a rural area determined by 

the Secretary to be in the lowest 25th 

percentile of all rural populations 

arrayed by population density. Rural 

areas include Goldsmith areas (a type of 

rural census tract). To determine these 

rural areas, first, all areas (rural counties 

plus Goldsmith areas) are arrayed in 

ascending order by population density. 

Then, all of these rural areas are divided 

into quartiles by population. The rural 

areas that comprise the lowest quartile 

of population (that is, the lowest 25 

percent of rural population) comprise 

the areas eligible for this bonus 

payment. Approximately half of all rural 

areas (rural counties plus Goldsmith 

areas) are required to include 25 percent 

of the rural population when rural areas 

are arrayed by population density. The 

bonus amount is based on the 

Secretary’s estimate of the ratio of the 

average cost per trip for the rural areas 

in the lowest quartile compared to the 

average cost per trip for the rural areas 

in the highest quartile. In making this 

estimate, the Secretary may use data 

provided by the General Accounting 

Office (GAO). This provision sunsets on 

December 31, 2009. 

II. Provisions of the Interim Final Rule 

[If you choose to comment on issues 

in this section, please include the 

caption ‘‘Provisions of the Interim Final 

Rule’’ at the beginning of your 

comments.]

A. Percentage Increase in the Payments 

for Rural and Urban Ambulance 

Services 

Section 414.610 is amended by 

revising paragraph (c)(1) to specify that, 

for services furnished during the period 

July 1, 2004 through December 31, 2006, 

ambulance services originating in urban 

areas are paid based on a rate that is one 

percent higher than otherwise would be 

applicable under the ambulance FS, and 

ambulance services originating in rural 

areas are paid based on a rate that is two 

percent higher than otherwise would be 

applicable under the ambulance FS. 

B. Payment Rate for Mileage Greater 

Than 50 Miles 

Section 414.610 is amended by 

adding a new paragraph (c)(7) to specify 

that, for services furnished during the 

period July 1, 2004 through December 

31, 2008, each loaded ambulance mile 

greater than 50 (that is, miles 51 and 

greater) for ambulance transports 

originating in either urban areas or in 

rural areas are paid based on a rate that 

is 25 percent higher than otherwise 

would be applicable under the 

ambulance FS. 

C. Regional Ambulance Fee Schedule 

A new section 414.617 is added to 

specify that for services furnished 

during the period July 1, 2004 through 

December 31, 2009, the ground 

ambulance base rate is subject to a floor 

amount, which is determined by 

establishing nine fee schedules based on 

each of the nine census divisions, and 

using the same methodology as was 

used to establish the national FS. If the 

regional FS methodology for a given 

census division results in an amount 

that is lower than the national ground 

base rate, then it is not used, and the 

national FS amount applies for all 

providers and suppliers in the census 

division. If the regional fee schedule 

methodology for a given census division 

results in an amount that is greater than 

the national ground base rate, then the 

FS portion of the base rate for that 

census division is equal to a blend of 

the national rate and the regional rate in 

accordance with the following schedule:

Time period Regional 

percent 

National 

percent 

7/1/04–12/31/04 ........ 80 20 

CY 2005 .................... 60 40 

CY 2006 .................... 40 60 

CY 2007–CY 2009 ... 20 80 

CY 2010 and thereafter ....................... 0 100 

D. Super-Rural Bonus 

Section 414.610(c)(5) is amended to 

specify that, for services furnished 

during the period July 1, 2004 through 

December 31, 2009, the payment 

amount for the ground ambulance base 

rate is increased where the ambulance 

transport originates in a rural area 

included in those areas comprising the 

lowest 25th percentile of all rural 

populations arrayed by population 

density. Rural areas include Goldsmith 

40290 Federal Register / Vol. 69, No. 126 / Thursday, July 1, 2004 / Rules and Regulations 

areas (a type of rural census tract). 

Approximately half of all rural areas 

(rural counties plus Goldsmith areas) 

are required to include 25 percent of the 

rural population arrayed in order of 

population density. The amount of this 

increase is based on the Secretary’s 

estimate of the ratio of the average cost 

per trip for the rural areas comprised of 

the lowest quartile of population 

arrayed by density compared to the 

average cost per trip for the rural areas 

comprised of the highest quartile 

arrayed by density. In making this 

estimate, the Secretary may use data 

provided by the GAO. We have 

determined that the amount of this 

increase is equal to 22.6 percent. 

III. Methodology 

[If you choose to comment on issues 

in this section, please include the 

caption ‘‘Methodology’’ at the beginning 

of your comments.] 

A. Percentage Increase in the Payments 

for Rural and Urban Ambulance 

Services 

This provision is self-implementing. 

A plain reading of the statute requires 

a merely ministerial application of the 

mandated increase in rates, and there is 

no authority for any discretionary action 

by the Secretary. 

B. Payment Rate for Mileage Greater 

Than 50 Miles 

This provision is self-implementing. 

A plain reading of the statute requires 

a merely ministerial application of the 

mandated increase in rates, and there is 

no authority for any discretionary action 

by the Secretary. 

C. Regional Fee Schedule 

The statute requires that the same 

methodology be used to determine each 

of the regional fee schedules as was 

used to determine the national FS. We 

applied this methodology to Medicare 

claims data from calendar year 2001. We 

used 2001 data because they were the 

most recent complete data for a year in 

which Medicare payments were based 

solely on the reasonable charge/

reasonable cost payment methodologies 

and not blended with portions of the 

national ambulance fee schedule 

implemented on April 1, 2002. We 

needed to use these former payment 

amounts (that is, payments exclusive of 

the national FS amounts) to apply the 

methodology used for determining the 

national FS, which had originally used 

claims data from 1998. For a full 

description of this methodology, see the 

Federal Register (‘‘Medicare Program; 

Fee Schedule for Payment of 

Ambulance Services and Revisions to 

the Physician Certification 

Requirements for Coverage of 

Nonemergency Ambulance Services’’)—

Final Rule with Comment Period, 

published February 27, 2002 (67 FR 

9100). We then determined a regional 

conversion factor (CF) by using the 2001 

claims data from the states in each 

Census Division. Then we divided the 

regional CF by the national CF for 2001 

claims data. Where this result was less 

than 1.0, the value of 1.0 was used. 

Then we multiplied this number by 80 

percent, which is the statutory phase-in 

percentage of the regional FS for 2004, 

and added 0.2 (20 percent of 1.0) to that 

amount. In this way we created an index 

that reflects a blended FS amount of 80 

percent regional FS and 20 percent 

national FS. This index was then 

applied to the FS portion of the blended 

payment rate for the period July 1, 2004 

through December 31, 2004. In 

subsequent years, the blending 

percentage between the national FS 

amount and the regional FS amount will 

change as described in the chart, shown 

in section II.C., above.

D. Super-Rural Bonus 

The statute states that in establishing 

the super-rural bonus, CMS will 

estimate the average cost per trip in the 

lowest quartile (25 percentile) of rural 

population arrayed by population 

density as compared to the estimate of 

the average cost per trip in the highest 

quartile of rural population arrayed by 

population density. In order to 

implement this provision promptly, 

data may be used from the Comptroller 

General (GAO) of the U.S. We obtained 

the same data as the data that were used 

in the GAO’s September 2003 Report 

titled ‘‘Ambulance Services: Medicare 

Payments Can Be Better Targeted to 

Trips in Less Densely Populated Rural 

Areas’’ (GAO report number GAO–03–

986) and used the same general 

methodology in a regression analysis as 

that used in that report. We considered 

only the full cost providers that were 

included in the data set, just as the GAO 

had done. The regression analysis 

correlated the providers’ ambulance 

costs to the number of trips, the square 

of the number of trips, and the 

percentage of trips that were advanced 

life support (ALS) as opposed to those 

that were at the basic life support (BLS) 

level of care. The result of this 

regression was a formula that predicted 

the average cost per trip based on the 

variables just described. We then used 

the Medicare claims data from calendar 

year 2002 from every ambulance 

supplier and provider that furnished 

ambulance services in any rural area. 

These claims data showed the number 

of each level of ground ambulance 

services needed to satisfy the regression 

formula. The proxy that the GAO used 

for the total number of ambulance trips 

was the number of Medicare ambulance 

trips doubled. We then took the 

predicted average cost per trip in those 

rural areas in the lowest quartile of rural 

population arrayed by population 

density and compared that cost to the 

predicted average cost per trip in the 

rural areas in the highest quartile of 

rural population arrayed by population 

density. The result was that the average 

cost per trip in the lowest quartile was 

22.6 percent higher than the average 

cost per trip in the highest quartile. 

IV. Waiver of Proposed Rulemaking 

We ordinarily publish a proposed rule 

in the Federal Register and provide a 

period for public comment before we 

publish a final rule. We can waive this 

procedure, however, if we find good 

cause that notice and comment 

procedure is impracticable, 

unnecessary, or contrary to the public 

interest, and we incorporate a statement 

of this finding and its reasons in the rule 

issued. We find it unnecessary to 

undertake notice and comment 

rulemaking in this instance because the 

statute specifies that these provisions 

may be implemented on the basis of an 

interim final rule or program 

instruction, in recognition of the fact 

that the statutorily required 

implementation date could not be met 

otherwise. Pursuant to this authority, 

we have issued program instructions to 

our contractors implementing these 

provisions with an effective date of July 

1, 2004, as specified by the statute. The 

purpose of this IFC is to provide a 

vehicle for public comment and to 

conform the Code of Federal 

Regulations (CFR) to the statutory 

language. Chapter 8 of the Contract with 

America Advancement Act of 1996 

(CWAAA) generally requires an agency 

to submit a rule to Congress 60 days 

before it is to be effective. The CWAAA, 

however, contains an exception where 

the rule includes a waiver based on 

good cause, as here. For this reason, and 

because we have already implemented 

these provisions of the MMA under the 

authority cited, we have concluded that 

the requirement for a 60-day delay in 

effective date for congressional review 

of major rules does not apply in this 

case. 

V. Collection of Information 

Requirements 

This document does not impose 

information collection and record 

keeping requirements. Consequently, it 

need not be reviewed by the Office of 

Federal Register / Vol. 69, No. 126 / Thursday, July 1, 2004 / Rules and Regulations 40291

Management and Budget under the 

authority of the Paperwork Reduction 

Act of 1995. 

VI. Regulatory Impact Analysis 

[If you choose to comment on issues 

in this section, please include the 

caption ‘‘Regulatory Impact Analysis’’ at 

the beginning of your comments.] 

A. Overall Impact 

We have examined the impacts of this 

rule as required by Executive Order 

12866 (September 1993, Regulatory 

Planning and Review), the Regulatory 

Flexibility Act (RFA) (September 16, 

1980, Pub. L. 96–354), section 1102(b) of 

the Social Security Act, the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4), and Executive Order 13132. 

Executive Order 12866 (as amended 

by Executive Order 13258, which 

merely reassigns responsibility of 

duties) directs agencies to assess all 

costs and benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). A regulatory impact analysis 

(RIA) must be prepared for major rules 

with economically significant effects 

($100 million or more in any 1 year). We 

have determined that this is a major 

rule. 

The following impacts reflect the fact 

that the effective date of the MMA 

provisions is July 1, 2004 for all 

provisions. The figures are Medicare’s 

expenditures (that is, exclusive of the 

Part B coinsurance and deductible 

requirements). These impacts also 

reflect the fact that the MMA provisions 

affect only the FS portion of the blended 

payment during the transition period, 

and, in 2004, the FS portion is only 60 

percent of the total blended payment (40 

percent of the payment is from the 

former reasonable charge/reasonable 

cost methodology). 

Program Impact:

Fiscal year Cost

($millions) 

2004 ........................................ 20 

2005 ........................................ 200 

2006 ........................................ 220 

2007 ........................................ 160 

2008 ........................................ 120 

2009 ........................................ 120 

BREAKOUT OF 2004 REGIONAL FS IMPACT ON GROUND BASE RATES BY

CENSUS DIVISION

Census division 

Regional factor percentage increases 

1. New England (CT, ME, MA, 

NH, RI, VT) ......................... 23.3 

2. Middle Atlantic (NJ, NY, 

PA) ...................................... 4.7 

3. East North Central (IN, IL, 

MI, OH, WI) ......................... 0 

4. West North Central (IA, KS, 

MN, MO, NE, ND, SD) ........ 0 

5. South Atlantic (DE, DC, FL, 

GA, MD, NC, SC, VA, WV) 0 

6. East South Central (AL, 

KY, MS, TN) ........................ 0 

7. West South Central (AR, 

LA, OK, TX) ........................ 10.2 

8. Mountain (AZ, CO, ID, NM, 

MT, UT, NV, WY) ................ 9.9 

9. Pacific (AK, CA, HI, OR, 

WA) ..................................... 38.6 

The Regulatory Flexibility Act (RFA) 

requires agencies to analyze options for 

regulatory relief of small businesses. For 

purposes of the RFA, small entities 

include small businesses, nonprofit 

organizations, and government agencies. 

Most hospitals and most other providers 

and suppliers are small entities, either 

by nonprofit status or by having 

revenues of $6 million or less in any 1 

year. For purposes of the RFA, most 

ambulance providers and most 

ambulance suppliers are considered 

small businesses. Individuals and States 

are not included in the definition of a 

small entity. This rule will have a 

significant impact on all ambulance 

providers and suppliers to the extent 

that this rule authorizes higher 

payments to anyone furnishing 

Medicare-covered ambulance services to 

Medicare beneficiaries. There is a one 

percent increase in payments for all 

urban transports and a two percent 

increase in payments for all rural 

transports, as well as a 22.6 percent 

increase in payments for the base rate in 

the least populated rural areas in the 

country. Also, there is a 25 percent 

increase in the payments for mileage in 

excess of 50 miles, which we anticipate 

will occur primarily in rural areas. 

Finally, the ambulance entities 

furnishing services in 26 States will 

receive increased payments to their base 

rate because of the FS rate floor 

established by census division. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 604 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a Metropolitan Statistical Area and has 

fewer than 100 beds. This rule will 

impact small rural hospitals to the 

extent that they furnish Medicare 

covered ambulance services. As noted 

above, ambulance FS payments are 

increased by 2 percent for all rural trips, 

and there is a 22.6 percent increase in 

the base rate payments for ambulance 

transports in the least populated rural 

areas in the country. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule that may result in expenditure in 

any 1 year by State, local, or tribal 

governments, in the aggregate, or by the 

private sector, of $110 million. This rule 

does not have any unfunded mandates. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it issues a proposed 

rule (and subsequent final rule) that 

imposes substantial direct requirement 

costs on State and local governments, 

preempts State law, or otherwise has 

Federalism implications. This rule does 

not impose any compliance costs on the 

governments mentioned. 

B. Anticipated Effects 

This rule results in increased 

spending for all Medicare-covered 

ambulance services furnished to 

Medicare beneficiaries. Therefore, all 

entities that furnish these services will 

benefit from increased program 

revenues. Entities that furnish these 

services in rural areas will particularly 

benefit from increased revenue and 

especially those rural entities that 

furnish these services in the least 

populated areas in the country. Entities 

that furnish these services in 26 States 

will benefit from increased revenue 

resulting from the payment floor 

established based on the regional FS. 

There will be a commensurate cost to 

the Medicare program of approximately 

$840 million over the total 5-year period 

during which these provisions will be in 

effect. 

C. Alternatives Considered 

This rule conforms the Medicare 

program regulations to the statutory 

provisions contained in section 414 of 

the MMA. These provisions are 

essentially prescriptive in the statute 

and do not allow for discretionary 

alternatives on the part of the Secretary. 

In determining the super-rural bonus 

amount, we followed the statutory 

guidance of using the data from the 

40292 Federal Register / Vol. 69, No. 126 / Thursday, July 1, 2004 / Rules and Regulations 

GAO report cited above and followed 

the same regression analysis that was 

used in that report. 

D. Conclusion 

Because this rule results in higher 

payments to all entities that furnish 

Medicare-covered ambulance services to 

Medicare beneficiaries, we anticipate 

that the primary effect of this rule will 

be to increase revenues for these 

entities. This rule will not adversely 

affect any of these entities. Those 

entities that furnish ambulance services 

in rural areas will particularly benefit, 

especially for those services furnished 

in the least populated rural areas. 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget.

List of Subjects in 42 CFR Part 414 

Administrative practice and 

procedure, Health facilities, Health 

professions, Kidney diseases, Medicare, 

Reporting and record keeping 

requirements.

■ For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

chapter IV as set forth below:

PART 414—PAYMENT FOR PART B 

MEDICAL AND OTHER HEALTH 

SERVICES

Subpart H—Fee Schedule for 

Ambulance Services

■ 1. The authority citation for part 414 

continues to read as follows:

Authority: Secs. 1102, 1871, and 1881(b)(1) 

of the Social Security Act (42 U.S.C. 1302, 

1395hh, and 1395rr(b)(1)).

■ 2. Section § 414.610 is amended by—

■ A. Revising paragraph (c)(1).

■ B. Revising paragraph (c)(5).

■ C. Adding paragraph (c)(7).

The revisions and addition read as 

follows:

§ 414.610 Basis of payment.

* * * * *

(c) * * *

* * * * *

(1) Ground ambulance service levels.

The CF is multiplied by the applicable 

RVUs for each level of service to 

produce a service-level base rate. For 

services furnished during the period 

July 1, 2004 through December 31, 2006, 

ambulance services originating in urban 

areas (both base rate and mileage) are 

paid based on a rate that is one percent 

higher than otherwise is applicable 

under this section, and ambulance 

services originating in rural areas (both 

base rate and mileage) are paid based on 

a rate that is two percent higher than 

otherwise is applicable under this 

section. The service-level base rate is 

then adjusted by the GAF. Compare this 

amount to the actual charge. The lesser 

of the actual charge or the GAF adjusted 

base rate amount is added to the lesser 

of the actual mileage charges or the 

payment rate per mile, multiplied by the 

number of miles that the beneficiary 

was transported. When applicable, the 

appropriate RAF is applied to the 

ground mileage rate to determine the 

appropriate payment rates. The RVU 

scale for the ambulance fee schedule is 

as follows:

* * * * *

(5) Rural adjustment factor (RAF). (i) 

For ground ambulance services where 

the point of pickup is in a rural area, the 

mileage rate is increased by 50 percent 

for each of the first 17 miles and by 25 

percent for miles 18 through 50. The 

standard mileage rate applies to every 

mile over 50 miles. For air ambulance 

services where the point of pickup is in 

a rural area, the total payment is 

increased by 50 percent; that is, the 

rural adjustment factor applies to the 

sum of the base rate and the mileage 

rate. 

(ii) For services furnished during the 

period July 1, 2004 through December 

31, 2009, the payment amount for the 

ground ambulance base rate is increased 

by 22.6 percent where the point of 

pickup is in a rural area determined to 

be in the lowest 25 percent of rural 

population arrayed by population 

density. The amount of this increase is 

based on CMS’s estimate of the ratio of 

the average cost per trip for the rural 

areas in the lowest quartile of 

population compared to the average cost 

per trip for the rural areas in the highest 

quartile of population. In making this 

estimate, CMS may use data provided 

by the GAO.

* * * * *

(7) Payment rate for mileage greater 

than 50 miles. For services furnished 

during the period July 1, 2004 through 

December 31, 2008, each loaded 

ambulance mile greater than 50 (that is, 

miles 51 and greater) for ambulance 

transports originating in either urban 

areas or in rural areas are paid based on 

a rate that is 25 percent higher than 

otherwise is applicable under this 

section.

■ (3) A new § 414.617 is added to read 

as follows:

§ 414.617 Transition from regional to 

national ambulance fee schedule. 

For services furnished during the 

period July 1, 2004 through December 

31, 2009, the amount for the ground 

ambulance base rate is subject to a floor 

amount determined by establishing nine 

fee schedules based on each of the nine 

census divisions using the same 

methodology as used to establish the 

national fee schedule. If the regional fee 

schedule methodology for a given 

census division results in an amount 

that is less than or equal to the national 

ground base rate, then it is not used, and 

the national FS amount applies. If the 

regional fee schedule methodology for a 

given census division results in an 

amount that is greater than the national 

ground base rate, then the FS portion of 

the base rate for that census division is 

equal to a blend of the national rate and 

the regional rate in accordance with the 

following schedule:

Time period Regional 

percent 

National 

percent 

7/1/04–12/31/04 ........ 80 20 

CY 2005 .................... 60 40 

CY 2006 .................... 40 60 

CY 2007–CY 2009 ... 20 80 

CY 2010 and thereafter ....................... 0 100 

(Catalog of Federal Domestic assistance 

Program No. 93.774, Medicare—

Supplementary Medical Insurance Program)

Dated: May 27, 2004. 

Mark B. McClellan, 

Administrator, Centers for Medicare & 

Medicaid Services.

Approved: June 17, 2004. 

Tommy G. Thompson, 

Secretary.

[FR Doc. 04–15090 Filed 6–30–04; 8:45 am] 

BILLING CODE 4120–01–P