SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Ambulance Payment Reform 
Act of 2001''.

SEC. 2. AMBULANCE PAYMENT RATES.

    (a) Payment Rates.--
            (1) In general.--Section 1834(l)(3) of the Social Security 
        Act (42 U.S.C. 1395m(l)(3)) is amended to read as follows:
            ``(3) Payment rates.--
                    ``(A) In general.--Subject to any adjustment under 
                subparagraph (B) and paragraph (9) and the full payment 
                of a national mileage rate pursuant to subparagraph 
                (2)(E), in establishing such fee schedule, the 
                following rules shall apply:
                            ``(i) Payment rates in 2002.--
                                    ``(I) Ground ambulance services.--
                                In the case of ground ambulance 
                                services furnished under this part in 
                                2002, the Secretary shall set the 
                                payment rates under the fee schedule 
                                for such services at a rate based on 
                                the average costs (as determined 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 
                                receives less than 20 percent of space 
                                and other capital assets free of 
                                charge.
                                    ``(II) Other ambulance services.--
                                In the case of ambulance services not 
                                described in subclause (I) that are 
                                furnished under this part in 2002, the 
                                Secretary shall set the payment rates 
                                under the fee schedule for such 
                                services based on the rule established 
                                under paragraph (1).
                            ``(ii) Payment rates in subsequent years 
                        for all ambulance services.--In the case of any 
                        ambulance service furnished under this part in 
                        2003 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) Adjustment in rural rates.--For years 
                beginning with 2004, the Secretary, after taking into 
                consideration the recommendations contained in the 
                report submitted under section 221(b)(3) the Medicare, 
                Medicaid, and SCHIP Benefits Improvements and 
                Protection Act of 2000, shall adjust the fee schedule 
                payment rates that would otherwise apply under this 
                subsection for ambulance services provided in low 
                density rural areas based on the increased cost (if 
                any) of providing such services in such areas.''.
            (2) Conforming amendment.--Section 221(c) of the Medicare, 
        Medicaid, and SCHIP Benefits Improvement 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.
            (3) Technical amendment.--
                    (A) In general.--Paragraph (8) of section 1834(l) 
                of the Social Security Act (42 U.S.C. 1395m(l)), as 
                added by section 221(a) of the Medicare, Medicaid, and 
                SCHIP Benefits Improvement and Protection Act of 2000 
                (114 Stat. 2763A-487), as enacted into law by section 
                1(a)(6) of Public Law 106-554, is redesignated as 
                paragraph (9).
                    (B) Effective date.--The amendment made by 
                subparagraph (A) shall take effect as if included in 
                the enactment of such section 221(a).
    (b) Use of Medical Conditions for Coding Ambulance 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), establish a 
                system or systems for the coding of claims for 
                ambulance 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 appropriate for the 
                transportation of an individual with that medical 
                condition.
                    ``(B) Medical conditions.--The code set established 
                under subparagraph (A) shall--
                            ``(i) take into account the list of medical 
                        conditions developed in the course of the 
                        negotiated rulemaking process conducted under 
                        paragraph (1); and
                            ``(ii) notwithstanding any other provision 
                        of law, be adopted as a standard code set under 
                        section 1173(c).''.

SEC. 3. PRUDENT LAYPERSON STANDARD FOR EMERGENCY AMBULANCE SERVICES 
              UNDER MEDICARE AND MEDICAID.

    (a) Ambulance Services for Medicare Fee-For-Service 
Beneficiaries.--Section 1861(s)(7) of the Social Security Act (42 
U.S.C. 1395x(s)(7)) is amended by inserting before the semicolon at the 
end the following: ``, except that such regulations shall not fail to 
treat ambulance services as medical and other health services solely 
because the ultimate diagnosis of the individual receiving the 
ambulance services results in the conclusion that ambulance services 
were not necessary, as long as the request for ambulance services is 
made after the sudden onset of a medical condition that would be 
classified as an emergency medical condition (as defined in section 
1852(d)(3)(B)).''.
    (b) Ambulance Services for Medicare+Choice Enrollees.--Section 
1852(d)(3)(A) of the Social Security Act (42 U.S.C. 1395w-22(d)(3)(A)) 
is amended by inserting ``(including the services described in section 
1861(s)(7))'' after ``outpatient services'' in the matter preceding 
clause (i).
    (c) Ambulance Services in Medicaid Managed Care Plans.--Section 
1932(b)(2)(B) of the Social Security Act (42 U.S.C. 1396u-2(b)(2)(B)) 
is amended by inserting ``(including the services described in section 
1861(s)(7) (if covered by the State plan))'' after ``outpatient 
services'' in the matter preceding clause (i).
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to services provided on and after the date of 
enactment of the Act.
Output: Medicare Ambulance Payment Reform Act of 2001 - Amends title XVIII (Medicare) of the Social Security Act (SSA) to revise requirements for payment for ambulance services concerning: (1) the establishment of a fee schedule; and (2) the coding system specifying the medical condition of the individual transported by an ambulance and the appropriate level of transportation service.Amends SSA titles XVIII (Medicare) (including part C (Medicare+Choice) of the Medicare program) and XIX (Medicaid) to establish a prudent layperson standard for justification of emergency ambulance services under Medicare and Medicaid.