SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Medicare Ambulance 
Payment Reform and Rural Equity Act of 2004’’. 
SEC. 2. AMBULANCE PAYMENT RATES. 
(a) PAYMENT RATES.—Section 1834(l)(3) of the So-
cial Security Act (42 U.S.C. 1395m(l)(3)) is amended to 
read as follows: 
‘‘(3) PAYMENT RATES.—Subject to any adjust-
ment under subparagraph (B) and paragraph (13) 
and the full payment of a national mileage rate pur-
suant to paragraph (2)(E), the Secretary shall mod-
ify the fee schedule established under paragraph (1) 
as follows: 
‘‘(A) PAYMENT RATES IN 2006.— 
‘‘(i) 
GROUND
AMBULANCE
SERV-
ICES.—In the case of ground ambulance 
services furnished under this part in 2006, 
the Secretary shall set the payment rates 
under the fee schedule for such services at 
a rate based on the average costs (as de-
termined by the Secretary on the basis of 
the most recent and reliable information 
available) incurred by full cost ambulance 
suppliers in providing nonemergency basic 
life support ambulance services covered 
under this title, with adjustments to the
rates for other ground ambulance service 
levels to be determined based on the rule 
established under paragraph (1). For the 
purposes of the preceding sentence, the 
term ‘full cost ambulance supplier’ means 
a supplier for which volunteers or other 
unpaid staff comprise less than 20 percent 
of the supplier’s total staff and which re-
ceives less than 20 percent of space and 
other capital assets free of charge. 
‘‘(ii) OTHER AMBULANCE SERVICES.— 
In the case of ambulance services not de-
scribed in subclause (i) that are furnished 
under this part in 2006, the Secretary 
shall set the payment rates under the fee 
schedule for such services based on the 
rule established under paragraph (1). 
‘‘(B) PAYMENT
RATES
IN
SUBSEQUENT 
YEARS FOR ALL AMBULANCE SERVICES.—In the 
case of any ambulance service furnished under 
this part in 2007 or any subsequent year, the 
Secretary shall set the payment rates under the 
fee schedule for such service at amounts equal 
to the payment rate under the fee schedule for 
that service furnished during the previous year,
increased by the percentage increase in the 
Consumer Price Index for all urban consumers 
(United States city average) for the 12-month 
period ending with June of the previous year.’’. 
(b) CONFORMING AMENDMENT.—(1) Section 221(c) 
of the Medicare, Medicaid, and SCHIP Benefits Improve-
ment and Protection Act of 2000 (114 Stat. 2763A–487), 
as enacted into law by section 1(a)(6) of Public Law 106– 
554, is repealed. 
(2) The amendment made by paragraph (1) shall 
take effect on January 1, 2006, and shall apply to pay-
ments for ambulance services furnished on or after such 
date. 
SEC. 3. IMPROVEMENT IN PAYMENTS TO RETAIN EMER-
GENCY AND OTHER CAPACITY FOR AMBU-
LANCES IN RURAL AREAS. 
(a) IN GENERAL.—Section 1834(l) of the Social Se-
curity Act (42 U.S.C. 1395m(l)), as amended by section 
415(a) of the Medicare Prescription Drug, Modernization, 
and Improvement Act of 2003, is amended by adding at 
the end the following new paragraph: 
‘‘(15) ADDITIONAL PAYMENTS FOR PROVIDERS 
FURNISHING
AMBULANCES
SERVICES
IN
RURAL 
AREAS.—
‘‘(A) IN GENERAL.—In the case of ground 
ambulance services furnished on or after Janu-
ary 1, 2006, for which the transportation origi-
nates in a rural area (as determined under sub-
paragraph (B)), the Secretary shall provide for 
a percent increase in the base rate of the fee 
schedule for a trip identified under this sub-
section. 
‘‘(B) IDENTIFICATION OF RURAL AREAS.— 
The Secretary, in consultation with the Office 
of Rural Health Policy, shall use the Rural- 
Urban Commuting Areas (RUCA) coding sys-
tem, adopted by that Office, to designate rural 
areas for the purposes of this paragraph. A 
rural area is any area in RUCA level 2 through 
10 and any unclassified area. 
‘‘(C) TIERING
OF
RURAL
AREAS.—The 
Secretary shall designate 4 tiers of rural areas, 
using a zip code population-based methodology 
generated by the RUCA coding system, as fol-
lows: 
‘‘(i) TIER 1.—A rural area that is a 
high metropolitan commuting area, in 
which 30 percent or more of the com-
muting flow is to an urban area, as des-
ignated by the Bureau of the Census 
(RUCA level 2). 
‘‘(ii) TIER 2.—A rural area that is a 
low metropolitan commuting area, in which 
less than 30 percent of the commuting flow 
is to an urban area or to a large town, as 
designated by the Bureau of the Census 
(RUCA levels 3–6). 
‘‘(iii) TIER 3.—A rural area that is a 
small town core, as designated by the Bu-
reau of the Census, in which no significant 
portion of the commuting flow is to an 
area of population greater than 10,000 
people (RUCA levels 7–9). 
‘‘(iv) TIER 4.—A rural area in which 
there is no dominant commuting flow 
(RUCA level 10) and any unclassified area. 
The Secretary shall consult with the Office of 
Rural Health Policy not less often than every 2 
years to update the designation of rural areas 
in accordance with any changes that are made 
to the RUCA system. 
‘‘(D) PAYMENT ADJUSTMENTS FOR TRIPS 
IN RURAL AREAS.—The Secretary shall adjust 
the payment rate under this section for ambu-
(B) whether the tiered structure for mak-
ing such adjustments appropriately reflects the 
difference in costs of providing services in dif-
ferent types of rural areas. 
(2) REPORT.—Not later than January 1, 2009, 
the Secretary shall submit to Congress a report set-
ting forth the results of such review and any rec-
ommendations for revision to the systems for adjust-
ing payments for ambulance services in rural areas. 
(c) 
CONFORMING
AMENDMENTS.—(1) 
Section 
1834(l) of the Social Security Act (42 U.S.C. 1395m(l)), 
as amended by subsection (a), is further amended by add-
ing at the end the following new paragraph: 
‘‘(16) DESIGNATION
OF
RURAL
AREAS
FOR 
MILEAGE PAYMENT PURPOSES.—In establishing any 
differential in the amount of payment for mileage 
between rural and urban areas in the fee schedule 
established under paragraph (1), the Secretary shall 
identify rural areas in the same manner as provided 
in paragraph (15)(B).’’. 
(2) Section 1834(l)(12)(A) of the Social Security Act 
(42 U.S.C. 1395m(l)(12)(A)), as added by section 414(c) 
of the Medicare Prescription Drug, Modernization, and 
Improvement Act of 2003, is amended by striking ‘‘Janu-
ary 1, 2010’’ and inserting ‘‘January 1, 2006’’.
(3) Section 1834(l)(13)(A)(i) of the Social Security 
Act (42 U.S.C. 1395m(l)(13)(A)(i)), as added by section 
414(d) of the Medicare Prescription Drug, Modernization, 
and Improvement Act of 2003, is amended by striking 
‘‘paragraph (9)’’ and inserting ‘‘paragraph (15)(B)’’. 
SEC. 4. USE OF MEDICAL CONDITIONS FOR CODING AMBU-
LANCE SERVICES. 
Section 1834(l)(7) of the Social Security Act (42 
U.S.C. 1395m(l)(7)) is amended to read as follows: 
‘‘(7) CODING SYSTEM.— 
‘‘(A) IN GENERAL.—The Secretary shall, 
in accordance with section 1173(c)(1)(B) and 
not later than July 1, 2005, establish a system 
or systems for the coding of claims for ambu-
lance services for which payment is made under 
this subsection, including a code set specifying 
the medical condition of the individual who is 
transported and the level of service that is ap-
propriate for the transportation of an individual 
with that medical condition. 
‘‘(B) MEDICAL CONDITIONS.—The code set 
established under subparagraph (A) shall take 
into account the list of medical conditions devel-
oped in the course of the negotiated rulemaking 
process conducted under paragraph (1).’’. 
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