SUBJECT:  Implementation of Section 414 of the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003

I.      GENERAL INFORMATION

Section 4531 (b) (2) of the Balanced Budget Act (BBA) of 1997 added section 1834 (1) to the Social Security Act, which mandates implementation of a national fee schedule for ambulance services furnished as a benefit under Medicare Part B.  On April 1, 2002, CMS implemented a new fee schedule (FS) that applies to all ambulance services, including volunteer, municipal, private, independent, and institutional providers, i.e., hospitals, critical access hospitals, and skilled nursing facilities.  The fee schedule is effective for claims with dates of service on or after April 1, 2002.  Under the fee schedule, ambulance services covered under Medicare are paid based on the lower of the actual billed amount or the Ambulance Fee Schedule amount.

 

As discussed in previously issued instructions, the FS will be phased in over a 5-year period. When fully implemented, the FS will replace the current retrospective reasonable cost reimbursement system for providers and the reasonable charge system for ambulance suppliers.

 

A.     Background:

 

Section 414 of the MMA of 2003 provides for additional payments for ground ambulance services.  The following changes to the payment rates for rural and urban ground ambulance transports become effective on July 1, 2004:

 

o        Phase-In Providing Floor Using Blend of Fee Schedule and Regional Fee Schedules (Transition Period effective July 1, 2004 - December 31, 2009): 

 

Under the current Ambulance FS, effective for claims with dates of service on or after April 1, 2002, ambulance providers/suppliers are reimbursed using a blended payment of the reasonable cost/charge amount and the applicable FS amount.  The blended percentages change each year during the 5-year transition period, ending December 31, 2005.  Providers/suppliers will be reimbursed using the FS amount only beginning on January 1, 2006. 

 

This provision of MMA establishes a floor amount for the FS portion of the payment.  For the period July 1, 2004 to December 31, 2009, the FS portion of the payment will be either the regular (national) fee schedule amount, or a blended amount of the national rate and the regional fee schedule amount calculated by CMS.  Providers/suppliers will be reimbursed using the higher of these two amounts.

 

 

 

o        Adjustment in Payment for Certain Long Trips (Effective July 1, 2004 to December 31, 2008):

 

This provision of the MMA establishes a 25 percent bonus on the mileage rate for ground miles 51 and greater.  This bonus amount is payable for ground transports originating in both rural and urban areas.

 

o        Improvement in Payments to Retain Emergency Capacity for Ambulance Services in Rural Areas (Effective July 1, 2004 to December 31, 2009):

 

This provision of the MMA directs the Secretary to provide an increase in the base payment rate for ground ambulance trips that originate in a rural area with a population density in the lowest quartile of all rural county populations, through 2009.  The bonus amount to be applied for the designated rural areas will be a multiplier determined by CMS and applied by Medicare contractors where the point of pickup (POP) is in one of a group of designated rural ZIP codes.

 

o        Temporary Increase for Ground Ambulance Services (Effective July 1, 2004 to December 31, 2006):

 

This provision of MMA establishes an overall increase of 1 percent for ground transports originating in urban areas and 2 percent for ground transports originating in rural areas.  The percentage increase applies to both the base rate and the mileage amount for the FS portion of the payment for ground ambulance services.

 

B.     Policy:

 

Contractor instructions for implementing the provisions of  Section 414 of MMA are as follows:

 

1.  Regional Ambulance FS Payment Rate Floor for Ground Ambulance Transports

 

For services furnished during the period July 1, 2004 through December 31, 2009, the base rate portion of the payment under the ambulance FS  for ground ambulance transports is subject to a minimum amount.  This minimum amount depends upon the area of the country in which the service is furnished.  The country is divided into 9 census divisions and each of the census divisions has a regional FS that is constructed using the same methodology as the national FS.  Where the regional FS is greater than the national FS, the base rates for ground ambulance transports are determined by a blend of the national rate and the regional rate in accordance with the following schedule:

 

 

Where the regional FS is not greater than the national FS, there is no blending and only the national FS applies. This floor amount is calculated by CMS Central Office and is incorporated into the FS amount that appears in the FS file maintained by CMS and downloaded by CMS contractors.  There is no calculation to be done by the Medicare carrier or intermediary in order to implement this provision.  However, carriers and intermediaries must continue to apply the appropriate FS and reasonable charge/cost blended percentages to determine the payment rates through December 31, 2005, in accordance with the rules of the transition period. 

 

2.  Adjustment to the Ground Mileage Payment Amount for Miles Greater than 50

 

For services furnished during the period July 1, 2004 through December 31, 2008, a 25 percent increase is applied to the appropriate ambulance FS mileage rate to each mile of a transport (both urban and rural POP) that exceeds 50 miles (i.e., mile 51 and greater) when the beneficiary is onboard the ambulance.

 

3.  Adjustments for FS Payment Rate for Certain Rural Ground Ambulance Transports

 

For services furnished during the period July 1, 2004 through December 31, 2009, the base rate portion of the payment under the FS for ground ambulance transports furnished in certain rural areas is increased by an amount determined by CMS centrally.  This increase applies where the POP is in a rural county (or Goldsmith area) that is comprised by the lowest quartile by population of all such rural areas arrayed by population density.  CMS will determine the bonus amount to be applied for ground transports originating in the designated POP rural ZIP codes.  Beginning on July 1, 2004, rural areas qualifying for the additional bonus amount will be identified with a ?B? indicator on the national ZIP code file.  (See Chapter 15 of the Pub. 100-04 Medicare Claims Processing Manual, ?A.  Special Instructions for Transition (Intermediaries and Carriers),? in Section §20.1.6 for the national ZIP code file layout and further directions for downloading the file.)  Contractors must apply the additional rural bonus amount as a multiplier to the base rate portion of the FS payment for all ground transports originating in the designated POP ZIP codes.

 

4.  Adjustments for FS Payment Rates for Ground Ambulance Transports

 

The payment rates under the FS for ground ambulance transports (both the fee schedule base rates and the mileage amounts) are increased for services furnished during the period July 1, 2004 through December 31, 2006.  For services furnished where the POP is urban, the rates are increased by 1 percent, and for services furnished where the POP is rural, the rates are increased by 2 percent.  These amounts are incorporated into the fee schedule amounts that appear in the Ambulance FS file maintained by CMS and downloaded by CMS contractors.  There is no calculation to be done by the carrier or intermediary in order to implement this provision.

 

The following chart summarizes the MMA payment changes for ground ambulance services that become effective on July 1, 2004:

 

Summary Chart of Additional Payments for Ground Ambulance Services Provided by MMA

 

 

NOTES: * All payments are percentage increases and all are cumulative.

** Carrier/intermediary systems perform this calculation.  All other increases are incorporated into the CMS Medicare Ambulance FS file.  However, carriers and intermediaries must continue to apply the applicable FS and reasonable charge/cost blended percentages to determine the payment rates through December 31, 2005, in accordance with the rules of the transition period.

 

C.     Provider Education: 

 

A provider education article related to this instruction will be available at www.cms.hhs.gov/medlearn/matters shortly after the CR is released.  You will receive notification of the article release via the established "medlearn matters" listserv.  Contractors shall post this article to their website, and include it in a listserv message if applicable, within one week of the availability of the provider education article.  In addition, the provider education article must be included in your next regularly scheduled bulletin.  Prior to July 1, 2004, CMS will also provide Medicare contractors with a provider education website for further information concerning the regional FS associated with each of the 9 census divisions.