FOR IMMEDIATE RELEASE
CMS Public Affairs Office
February 22, 2002

MEDICARE ESTABLISHES NEW AMBULANCE FEE SCHEDULE

The Centers for Medicare & Medicaid Services (CMS) announced a final regulation today creating a fee schedule to ensure that both beneficiaries and Medicare pay appropriately for ambulance services. Congress mandated this new payment mechanism in the Balanced Budget Act of 1997.

Under the new system ambulance service providers will be paid a pre-established fee for each different service provided.  This is similar to the method of payment Medicare has progressively adopted for hospitals, nursing homes, home health agencies and other health care providers, which has proven to be better for patients, providers and the program.  Previously, payment for ambulance services was based on providers' costs or charges.

A final regulation implementing the new ambulance payment system was put on display today at the Office of the Federal Register.  It will be published in the Federal Register on February 27, 2002.

An important new protection for beneficiaries requires ambulance service providers to accept the Medicare approved fee as their full payment.  This means beneficiaries will not pay more than 20 percent of the approved amount, once they have met their annual $100 Medicare Part B deductible.

"This new system will ensure that beneficiaries continue to get needed ambulance services and that Medicare pays ambulance service suppliers more fairly and accurately," said CMS Administrator Tom Scully.

Under the new fee schedule:
*     Seven categories of ground ambulance services, ranging from basic life support to specialty care transport, and two categories of air ambulance services are established.

*     Payment for each category is based on the relative value assigned to the service, adjusted to reflect wage differences in different parts of the country.  Mileage also will affect payment levels.
*     Ambulance providers will not be allowed to charge beneficiaries more than their deductible and 20 percent of Medicare's fee for the service.  Under the old payment system, providers could charge beneficiaries higher rates.
*     The fee schedule allows for increased payments when an ambulance service is provided in rural areas.

The final regulation contains a number of significant changes made in response to the large number of public comments CMS received following publication of a proposed rule in September 2000.  Major changes include:

*     Implementation of the fee schedule will begin on April 1, 2002 (rather than January 1, 2001, as stated in the proposed rule), and will be phased in over a 5-year period (instead of the proposed 4-year phase-in).
*     The final rule reflects changes in several assumptions, which allowed an increase in payments.  For example, CMS revised its previous estimate of the amount of "low billing" (when providers bill less than the Medicare approved amount) that will continue to occur after the fee schedule begins.
*     The new policy under which Medicare will pay a basic life support (BLS) rate for services furnished at the BLS level even when an advanced life support (ALS) vehicle is used is modified under the final rule.  Under the proposed rule the estimated savings from this change would have been deducted from the spending target for the fee schedule's first year.  The final rule phases in this policy along with other aspects of the new system.

The new ambulance payment system was produced under a negotiated rulemaking process that included affected industry, professional and governmental groups.  This fee schedule for ambulance services was mandated by the Balanced Budget Act of 1997.

The negotiating committee that developed the fee schedule expressed particular concern about ambulance access for beneficiaries in rural areas.  While the new plan includes several bonuses for rural providers, CMS will continue to consider alternative approaches to ensure adequate payment for isolated, essential, low-volume, rural ambulance suppliers as experience under the fee schedule becomes available.

The new fee schedule will be phased-in over five years, starting April 1, 2002, blending current payment with the new fee schedule rates.  In 2002 the blend will be 20 percent of the fee schedule and 80 percent of current rates. In 2003 the blend will be 40 percent of the fee schedule rates and 60 percent of current rates.  In 2004 the blend will be 60 percent fee schedule and 40 percent current rates.  In 2005 the blend will be 80 percent fee schedule and 20 percent current rates.  Beginning in 2006 payment will be based entirely on the fee schedule.

By law Medicare pays for medically necessary ambulance services in emergencies and other situations when other methods of transportation are contraindicated by the beneficiary's condition.  Medicare covers almost 9 million ambulance transports each year on behalf of 39 million elderly and disabled Americans enrolled in the program.

In addition to CMS the negotiated rulemaking committee included the American Ambulance Association, the American Hospital Association, the Association of Air Medical Services, the International Association of Firefighters, the International Association of Fire Chiefs, the National Volunteer Fire Council, the National Association of Counties, the National Association of State Emergency Medical Services (EMS) Directors, and the National Association of EMS Physicians.

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