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Health and Human Services Secretary Donna E. Shalala announced today that the Health Care Financing Administration (HCFA) is taking steps to ensure that Medicare beneficiaries continue to receive high-quality ambulance services and that Medicare pays only for needed ambulance services.

HCFA today published a notice in the Federal Register announcing the creation of a negotiated rulemaking committee to establish a Medicare ambulance fee schedule. The fee schedule, using new authority in the Balanced Budget Act of 1997, will replace the current system of reimbursing suppliers based on their charges or costs, which gives them little incentive for efficiency with a system that pays them a set amount based on the service provided.

HCFA also is scheduled to publish a final rule in the Jan. 25 Federal Register outlining new Medicare ambulance coverage requirements.

"We want to make sure that beneficiaries get needed ambulance services and that Medicare pays ambulance suppliers fairly and accurately," Secretary Shalala said. "Both of the actions announced today will help us meet these goals." By law, Medicare pays for medically necessary ambulance services only when other methods of transportation would endanger a beneficiary's health. To better achieve this goal, the final ambulance coverage rule tightens requirements for determining medical necessity, requires better documentation from ambulance companies, and requires physician certification for non-emergency ambulance services.

"The new ambulance coverage rule and the creation of an ambulance fee schedule will improve the quality of services for beneficiaries, while helping to ensure that Medicare pays only for needed ambulance services," HCFA Administrator Nancy-Ann DeParle said.

Other major provisions of the final ambulance coverage rule include minimum vehicle and staffing requirements and a standard definition of "bed-confined." Non-emergency ambulance services for beneficiaries who are bed-confined are generally presumed to be medically necessary. The term bed-confined, as defined in the rule, applies to a beneficiary who is unable to get up from bed without assistance, unable to walk and unable to sit in a chair or wheelchair.

The final coverage rule also allows scheduled round-trip ambulance services if medically necessary for beneficiaries with end-stage renal disease from their home to the nearest appropriate freestanding or hospital-based dialysis facility. Previously, ambulance services for these beneficiaries were limited to hospital-based dialysis facilities.

Additionally, as authorized by the Balanced Budget Act of 1997, Medicare in certain circumstances will now cover services provided by paramedics who operate separately from an ambulance supplier. The coverage of what's known as paramedic "intercept" services will be limited to rural areas where volunteer ambulance squads that provide only basic-life support services are prohibited by state law from charging for their services. "Intercept" services are typically provided by a paramedic who operates separately from an ambulance supplier and who provides advanced-life support services to a beneficiary. Under previous Medicare policy, there was no provision to pay for these services separately from the ambulance service.

As required by the Balanced Budget Act of 1997, HCFA will use negotiated rulemaking to establish the Medicare ambulance fee schedule. Negotiated rulemaking brings together regulators and those affected by a regulation to reach consensus in recommending the content or language of a proposed rule.

The Balanced Budget Act also directed that the new national ambulance fee schedule establish mechanisms to control increases in expenditures for Part B ambulance services, establish definitions for ambulance services that link payments to the type of services furnished, consider appropriate regional and operational differences, and phase in the fee schedule in an efficient and fair manner.

Today's announcements add to other action HCFA has taken to ensure Medicare pays appropriately for ambulance services, including issuing a fraud alert on questionable billing practices. HCFA also instructed Medicare contractors to assign new codes for ambulance services to show whether emergency or non-emergency services were provided, whether basic or advanced-life support services were provided and whether an all-inclusive payment rate or base rate with mileage and supplies billed separately was used. These changes created a consistent method to process claims and allowed HCFA to collect specific information about what kinds of ambulance services were being provided to Medicare beneficiaries.

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