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MEDICARE PAYMENTS
(16-Apr-03)
Today CMS posted a federal register notice in response to a court action in
the Lifestar Ambulance Service, Inc. v. United States , No. 4:02-CV-127-1
(M.D. Ga. Jan. 16, 2003) Medicare Covered Ambulance Services lawsuit. In the
lawsuit, Lifestar and two other ambulance services claimed that the
Secretary of HHS violated federal law by not implementing the Medicare
ambulance fee schedule on January 1, 2000, as Congress directed in the 1997
BBA. The court ruled in Lifestar's favor. The court also granted class action
status to the case, which would allow any ambulance service that would have
received higher Medicare payments under the new fee schedule to join the
"class" and recover underpayments that are a result of the fee
schedule being delayed.
In the Federal
Register Notice today, CMS announces that it has appealed the decision.
However, it also announces a method by which they will comply with the court
order. The Notice also states that if CMS is successful in its appeal,
any payments made to ambulance services under this new method will have to be
re-paid to the government. This method is effective for the period
January 1, 2000 to April 1, 2002, when the fee schedule took effect (there is
also a provision regarding mileage that impacts ambulance services in the
states of North Carolina and Tennessee ONLY).
The method chosen
by CMS appears to be that they will apply "reverse inflation" (or
deflation) from the fee schedule implemented on April 1, 2002 for 2001/2002
(-2.2%) and for 2001/2000 (-3.7%) and then use blended rates for calendar year
2000 of 95% of the old payment system and 5% of the deflated fee schedule; for
calendar year 2001 of 90% of the old payment system blended with 10% of the
deflated fee schedule; and, for January 1, 2002 to March 31, 2002, of 80% of
the old payment system blended with 20% of the fee schedule.
The mechanics of
how the system will work are not detailed in the Notice. As time moves
forward, CMS, ambulance trade associations and law firms
specializing in EMS are likely to provide further analysis and
information. CMS projects that 2/3 of the ambulance services in the United
States will benefit from this action and that it will cost $81 million. As
more information is released, ambulance services should remember that CMS
has appealed the case.
The Federal
Register Notice text is below.
======================================================
[Federal Register: April 16, 2003 (Volume 68, Number 73)]
[Notices]
[Page 18654-18656]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16ap03-79]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
[CMS-1256-N]
RIN 0938-AM60
Medicare Program; Notice of Ambulance Fee Schedule in Accordance
With Federal District Court Order
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: This notice announces the steps CMS is taking to comply with
the Order in Lifestar Ambulance Service, Inc. v. United States, No.
4:02-CV-127-1 (M.D. Ga. Jan. 16, 2003) Medicare Covered Ambulance
Services.
EFFECTIVE DATE: This notice is effective on April 16, 2003.
FOR FURTHER INFORMATION CONTACT: Anne Tayloe, (410) 786-4546.
SUPPLEMENTARY INFORMATION:
I. Background
Section 4531 of the Balanced Budget Act of 1997 (BBA) required the
Secretary of the Department of Health and Human Services to establish a
national fee schedule (FS) for payment of ambulance services through a
negotiated rulemaking process. The statute provided that the Secretary
phase in the application of payment rates under the FS in an efficient
and fair manner and that the aggregate amount of payment for such
services under the new FS not exceed the amount that would have been
paid under the old system (42 U.S.C. Sec. 1395m(l)(1), (2), (3)). The
BBA provided that the FS would apply to services furnished on or after
January 1, 2000.
The September 12, 2000 proposed rule (65 FR 55078) and the February
27, 2002 final rule (67 FR 9100) both provide for payment for ambulance
services to be made in two parts: a base rate and a payment for
mileage. Section 423 of the Medicare, Medicaid and SCHIP Benefits
Improvement and Protection Act of 2000 (BIPA), which was passed after
the publication of the proposed rule and prior to the promulgation of
the final rule, provided that during the phase-in of the FS there would
be full payment of any national mileage rate for ambulance services
furnished by suppliers in States where the Medicare carrier did not
previously pay separately for all mileage within the county from which
the beneficiary is transported. Two States have been identified as
qualifying under this provision: North Carolina and Tennessee. The BIPA
states that this provision shall apply to services furnished on or
after July 1, 2001. The FS was implemented on April 1, 2002 by the
February 27, 2002 final rule. The final rule announced the 5-year
phase-in that is based on a blend of a percentage of the payment based
on the old payment system with a percentage of the payment based on the
FS according to the following schedule:
------------------------------------------------------------------------
Percentage
of old Percentage
Calendar year payment of fee
system schedule
------------------------------------------------------------------------
2002*....................................... 80 20
2003........................................ 60 40
2004........................................ 40 60
2005........................................ 20 80
2006........................................ 0 100
------------------------------------------------------------------------
\*\ April 1, 2002 through December 31, 2002 only.
The full national FS mileage rate in those States that qualify for
section 423 of the BIPA (North Carolina and Tennessee) has been paid as
of April 1, 2002.
In Lifestar Ambulance Service, Inc. v. United States, No. 4:02-CV-
127-1 (M.D. Ga. Jan 16, 2003), three ambulance suppliers seeking to represent
a nationwide class of ambulance suppliers sued the Secretary, arguing
that he has no discretion to give the FS an effective date other than
January 1, 2000. The district court agreed with the plaintiff suppliers
and issued an order certifying a nationwide class of ambulance
suppliers and requiring the Secretary to adopt a FS for the January 1,
2000 through March 31, 2002 period. The court's decision also requires
the Secretary to pay full mileage in accordance with the BIPA provision
for the July 1, 2001 through March 31, 2002 period. Id. at 20-21.
II. Provisions of the Notice
The purpose of this notice is to comply with the court's order
requiring a FS to be established for the January 1, 2000 through March
31, 2002 period. By this notice, the Secretary is establishing a FS
based on the FS as described in the February 27, 2002 final rule, with
a modified phase-in as follows:
------------------------------------------------------------------------
Percentage
of old Percentage
Calendar year payment of fee
system schedule
------------------------------------------------------------------------
2000*....................................... 95 5
2001........................................ 90 10
2002........................................ 80 20
------------------------------------------------------------------------
\*\ January 1, 2002 through March 31, 2002.
Additionally, in accordance with the district court's order, the
Medicare program will pay full BIPA mileage for services provided on or
after July 1, 2001.
The BBA provided that the Secretary shall phase in the application
of payment rates under the FS in an efficient and fair manner. As
previously detailed, based on the discretion afforded the Secretary by
the BBA, the final rule published on February 27, 2002 provided for a
linear progression from the prior payment system to FS payments,
commencing with a 20 percent/80 percent blended payment for the last
three quarters of FY 2002, and ending with a 100 percent FS payment for
FY 2006.
Five percent, 10 percent, and 20 percent is the most appropriate
progression of blending percentages for the January 1, 2000 through
March 31, 2002 period. For the first quarter of 2002, 20 percent is the
same blending percentage as the percentage already used for the FS
during the other 9 months in 2002. The 5 percent and 10 percent are the
most appropriate percentages for 2000 and 2001, in that they comply
with the statutory requirement for an efficient and fair phase-in, and
are consistent with the linear progression in blending percentages
promulgated in the February 27, 2002 final rule.
The Lifestar court recognized the Secretary's statutory discretion
to set the phase-in percentages for the January 1, 2000 through March
31, 2002 period. The court also stated that these phase-in percentages
must provide meaningful relief to the Lifestar plaintiffs. The FS
described in this notice provides meaningful relief as evidenced in
more detail under the impact section, below. We estimate that 2/3 of
15,000 suppliers will be receiving a total of $81 million for this
period.
The statute at 42 U.S.C. 1395(m)(l)(3)(B) provides that FS payment
amounts in subsequent years to the first year of the FS be set equal to
the FS payment amounts from the previous year increased by a
statutorily prescribed inflation factor. The FS final rule used data
from 1998 and inflated it using the statutorily prescribed inflation
factors to obtain the 2002 amounts. See 67 FR 9100, 9125. To determine
the FS amounts for earlier years (that is, the period of January 1,
2000 through December 31, 2001), we have deflated the FS amounts for
2002 by the same statutorily prescribed ambulance inflation factors.
These deflation factors are:
------------------------------------------------------------------------
Deflation
Calendar year percentage
------------------------------------------------------------------------
2000/2001................................................. 3.7
2001/2002................................................. 2.2
------------------------------------------------------------------------
III. Appeal of Lifestar Decision/Recoupment
The Secretary has appealed the Lifestar decision. In the event the
district court's decision is reversed on appeal, any FS or BIPA mileage
payment made in accordance with this notice for the January 1, 2000
through March 31, 2002 period will be subject to recoupment.
IV. Waiver of Proposed Rulemaking
We ordinarily publish a notice of proposed rulemaking in the
Federal Register and invite public comment on the proposed rule. The
notice of proposed rulemaking includes a reference to the legal
authority under which the rule is proposed, and the terms and
substances of the proposed rule or a description of the subjects and
issues involved. This procedure can be waived, however, if an agency
finds good cause that a notice-and-comment procedure is impracticable,
unnecessary, or contrary to the public interest and incorporates a
statement of the finding and its reasons in the rule issued.
The court's January 16, 2003 order in Lifestar requires
establishment of a FS for the January 1, 2000 through March 31, 2002
period within 90-days of the date of the order. It would be
impracticable to provide a period for prior notice and comment and
still meet the 90-day deadline. In fact, the Congress has recognized
the impracticability of providing prior notice and comment where a
statutory provision must be implemented within 150 days. See 42 U.S.C.
1395hh(b)(2)(B) (providing that a notice of proposed rulemaking is not
required if a statute establishes a specific deadline for
implementation that is less than 150 days from enactment).
Therefore, we find good cause to waive the notice of proposed
rulemaking and comment period with respect to the issuance of this
notice.
V. Collection of Information Requirements
This document does not impose information collection and
recordkeeping requirements. Consequently, it need not be reviewed by
the Office of Management and Budget under the authority of the
Paperwork Reduction Act of 1995 (44 U.S.C. 35).
VI. Regulatory Impact Statement
We have examined the impacts of this notice 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.
There are approximately 15,000 suppliers nationwide that submit
claims to Medicare for ambulance services. The Medicare program pays
approximately $2.1 billion in Medicare benefits per year for these
services. We estimate that approximately two-thirds of suppliers will
benefit from this January 1, 2000 through March 31, 2002 FS and that
the aggregate amount of program spending will be approximately $81
million. The break out of this expenditure is as follows:
------------------------------------------------------------------------
Program
Calendar year expenditures
(in millions)
------------------------------------------------------------------------
2000.................................................... $16
2001.................................................... $43
2002.................................................... $22
Total............................................... $81
------------------------------------------------------------------------
These amounts include approximately $16 million by which suppliers
in North Carolina and Tennessee will benefit due to implementation of
the BIPA ambulance mileage provision for the period of July 1, 2001
through March 31, 2002.
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). A regulatory impact
analysis (RIA) must be prepared for major rules with economically
significant effects ($100 million or more in any 1 year). The aggregate
amount of program spending to comply with the court's order will be
approximately $81 million. Therefore this notice is not a major notice
as defined in Title 5, United States Code, section 804(2) and is not an
economically significant notice under Executive Order 12866.
The RFA requires agencies to analyze options for regulatory relief
of small entities. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and government agencies.
Most hospitals and most other providers and suppliers are small
entities, either by nonprofit status or by having revenues of $6
million to $29 million in any 1 year. Individuals and States are not
considered to be small entities. We have determined that this notice
will not have a significant economic impact on a substantial number of
small entities. Therefore, we are not preparing an analysis for the
RFA.
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. We have determined that
this notice will not have a significant effect on the operations of a
substantial number of small rural hospitals. Therefore, we are not
preparing an analysis for section 1102(b) of the Act.
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 expenditures in any 1 year by
State, local, or tribal governments, in the aggregate, or by the
private sector, of $110 million. This notice has no consequential
effect on State, local, or tribal governments or on the private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a rule that imposes substantial
direct requirement costs on State and local governments, preempts State
law, or otherwise has Federalism implications. This notice will not
have a substantial effect on State or local governments.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
Authority: Sections 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
(Catalog of Federal Domestic Assistance Program No. 93.774,
Medicare--Supplementary Medical Insurance Program)
Dated: April 1, 2003.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
Dated: April 11, 2003.
Tommy G. Thompson,
Secretary.
[FR Doc. 03-9503 Filed 4-15-03; 8:45 am]
BILLING CODE 4120-01-P
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