Health Care Financing Administration
Department of Health and Human Services
Attention: BPD-813-P
P.O. Box 26676
Baltimore, MD 21207-0476
Dear Docket Management Clerk:
On June 17, 1997, the Health Care Financing Administration (HCFA) published a notice of proposed rulemaking concerning Medicare coverage of ambulance services. The goal of the rule is to reduce Medicare costs resulting from the use of ambulances where no medical necessity exists or where reduced services may suffice. To accomplish this goal, HCFA proposes to base Medicare reimbursement on the beneficiary's medical condition rather than the type of vehicle used. The rule forces ambulance services to document and submit to HCFA a record of the level of medical care needed by a beneficiary based on certain pre-determined codes. The rule also narrows the definition of an ambulance by requiring a certain number of personnel to operate each vehicle as well as requiring certain minimum first-aid supply and equipment levels.
The Office of the Chief Counsel for Advocacy of the U.S. Small Business Administration was created in 1976 to represent the views and interests of small businesses in federal policy making activities.(1) The Chief Counsel participates in rulemakings when he deems it necessary to ensure proper representation of small business interests. In addition to these responsibilities, the Chief Counsel monitors agencies' compliance with the Regulatory Flexibility Act (RFA),(2) and works with federal agencies to ensure that their rulemakings demonstrate an analysis of the impact that their decisions will have on small businesses. We apologize for the untimely filing of these comments, but unforeseen events and limited resources prevented us from filing by the closing date.
The following RFA discussion must be prefaced by a general statement of concern that the proposed rule seems to be based upon data which has been misconstrued to the point of inaccuracy. The agency cites a 1994 report which demonstrates that Medicare's allowed charges for ambulance services have risen at an average annual rate of 20 percent since 1974. The agency also relies upon a 1992 audit report of the Office of Inspector General which states that there was a significant increase in the use of and payment for the Advanced Life Support (ALS) level of ambulance services when compared to the Basic Life Support (BLS) level of ambulance services. The problem is that the agency assumes that ALS is being used when a lesser level of service would suffice and/or that fraud is occurring-thereby causing the increase in ALS use. The agency does not adequately account for emerging trends, demographics, state laws, etc. that may be contributing to the increased use and cost of ALS ambulance service. Therefore, the entire rationale underlying the regulation seems suspect. Notwithstanding, the Office of Advocacy will address the rulemaking based on the merits of its analysis of impacts on small entities and compliance with the Regulatory Flexibility Act.
In order to comply with the RFA, an agency head must either certify that a proposed rule will not have a significant economic impact on a substantial number of small entities; or, in the alternative, perform an initial regulatory flexibility analysis (IRFA). The instant proposed rule does not appear to meet either requirement. Instead, the agency makes the following curious statement:
"...the impact of this regulation does not meet the criteria under E.O. 12866 to require a regulatory impact analysis; however, the following information, together with information provided elsewhere in this preamble constitute a voluntarily analysis and moot the requirements of the RFA." (3)
Whatever the agency intended this statement to mean, it clearly is not a certification. Therefore, the statement can only be interpreted to mean that there will be a significant economic impact on a substantial number of small entities, and that an IRFA will follow. However, the Office of Advocacy does not believe that an adequate level of analysis exists to constitute a proper IRFA.
At least two of the five elements required for an IRFA are addressed insufficiently in the instant proposed rule: (4) 1) a description of and, where feasible, an estimate of the number of small entities to which the proposed rule will apply; and 2) a description of the projected reporting, recordkeeping and other compliance requirements of the proposed rule, including an estimate of the classes of small entities which will be subject to the requirement and the type of professional skills necessary for preparation of the report or record. Moreover, § 603(c) of the RFA requires a description of any significant alternatives to the proposed rule which accomplish the stated objectives of applicable statutes and which minimize any significant economic impact of the proposed rule on small entities. An IRFA should not be an exercise of merely filling in the blanks of the outline provided in the RFA. Rather, it should be a thoughtful analysis consistent with the purposes of the RFA.
There is no formula for determining what a "significant economic impact" is, but a preliminary regulatory flexibility analysis should address the likely degree to which small entities will be impacted. There is no discussion in the proposed rule, for instance, regarding percentage of cost over sales, gross income or output-the types of indicators normally associated with an economic analysis.
Moreover, a more basic problem is that there is no discussion in the proposed rule regarding the total cost of the regulation. This lack of data and cost analysis is a formula for an RFA disaster. If an agency's data is faulty or incomplete, then the subsequent analysis will be misleading and the resulting conclusions about impact will be incorrect. While the agency may lack specific cost estimates, the Office of Advocacy believes that the agency could provide a range of possible costs that would at least provide a basis upon which the public and affected entities could comment intelligently. In addition, the estimated savings projected by the agency seem overstated because they are based on unsubstantiated assumptions about fraud and necessity of use. It would seem impossible, therefore, to provide a reliable analysis when the costs are not explained and the benefits are unsubstantiated.
In one instance, the agency states that, "the proposed rule may cause some suppliers to have to upgrade their vehicles, equipment or staff training and certification so that the vehicles meet the definition of ambulance...[and] some...may not be able to upgrade their vehicles or staff." The agency then downplays the significance of the impact on suppliers by further stating that, "[w]e do not know how may suppliers this requirement would affect; however, because we believe the entities that may be affected by this proposal primarily provide transportation services, such as wheelchair van transportation, we do not believe the number to be substantial." There does not appear to be any data or anecdotal information in the proposed rule to support this conclusion.
The agency, in certifying the proposed rule for regulatory flexibility purposes, does not take into account the fairly obvious economic impact which would result from implementation of the definition and other provisions of the proposed rule. Hence, it is difficult to agree with the agency's conclusion that the proposed rule will not have a significant economic impact.
Estimates of the number of ambulance suppliers do not appear until the discussion of paperwork burden. Even then, the agency makes no attempt to provide estimates regarding the number of small entities affected.(5) The time to determine the number of entities is before the RFA certification or any analysis takes place. The agency should be able to determine the number of small entities affected by organizing a reasonable outreach effort to the industry. Trade associations representing the ambulance industry may be able to provide this information.(6)
After determining a reasonable approximation of the number of small entities in the industry, the next question should be which small entities in the industry are subject to the proposed regulation. In this case, all ALS and BLS suppliers are subject to at least some portion of the proposed rule. Therefore, all small businesses will be affected. There is no hard and fast rule, nor is there any case law, describing what a "substantial number" is for RFA purposes; but it is not presumptuous to conclude that all small businesses constitute a "substantial number."
It is reasonable to conclude that the proposed rule will have a significant economic impact on a substantial number of small entities. Therefore, the preliminary analysis required for the certification determination should be fleshed-out more thoroughly in the initial regulatory flexibility analysis (IRFA). This type of analysis will reveal, among other things, which sectors of the industry are impacted most and whether other alternatives would result in reduced burden. Besides increased costs to suppliers, the proposed changes to the Medicare reimbursement rules will also impact patients' health, response times and levels of care. The IRFA should reflect consideration of all these important factors. The individual requirements of the proposed rule and a discussion of their impact follows.
Presently, Medicare policy dictates coverage for pre-scheduled, non-emergency and emergency ALS service when medically necessary due to a patient's condition or in areas where such service is mandated by local law as a minimum standard. The agency's proposed changes restrict coverage to situations where a specific ALS procedure is performed and also ignore the minimum standard mandate.
According to industry experts, treatment of patients in the field is based on assessment of symptoms, not diagnosis of condition. Paramedics and other ambulance personnel are not, after all, physicians. Diagnoses are not always immediately apparent-even to physicians. Moreover, adherence to local and state medical protocol like minimum standard mandates is a matter of law and not a matter of supplier discretion. State and local minimum standard mandates for ALS service were not developed to defraud or overcharge the Medicare system, but to reduce mortality and morbidity rates and to accommodate rural communities that can only afford to maintain a single level of service.
The agency's proposal would cause a predicament that could only be solved by a psychic. How does a supplier determine coverage based on the level of medical services needed before the patient has been treated or even seen? Should the supplier first send a scout to assess the situation? Should a supplier second guess the 911 caller? Imagine a scenario where a small child calls 911 and complains that, "my mommy has a backache." It doesn't sound serious and therefore may be classified as "backache, unspecified"-requiring only BLS coverage. The caller is not sophisticated enough to know that her mother has a severed spinal chord and is beginning to show signs of respiratory distress. The caller's age, mental state, and ability to speak English (among other things) can all contribute to dispatching an inappropriate level of service. Notwithstanding the practical impossibilities of implementing such a regulation, the agency contends that the proposed changes would result in simplification through uniformity and reduced cost.
The code designations also present serious problems. Various code designations, like "unconscious" (BLS level), are so vague that a determination of the level of service needed would be nearly impossible. Perhaps someone fainted, or perhaps someone had a stroke. Recent studies have demonstrated that rapid treatment of certain stroke patients with drug therapy can result in more rapid recovery. Lost time in the proper level of treatment can be deadly.
Moreover, the list of codes is incomplete and does not contain many common illnesses or injuries that otherwise do not neatly fit into the broad categories suggested by the agency. This leads to the important issue of the need for transparency in the agency's rulemaking process. The method used by the agency to designate the codes is anything but transparent. How were the codes derived? Why were other codes rejected? What costs/benefits result from the list of chosen codes?
At a minimum, if the agency insists on using codes, the agency should study the alternative of expanding the list to include additional and more specific conditions. However, the Office of Advocacy believes that use of codes does not take into account the fact that ambulance personnel are not physicians and that their services are necessarily focused on stabilizing the patient until the patient reaches the hospital.
Since the agency provides no definition for "emergency" versus "non-emergency" transportation, the terms are subject to varying interpretations. Providers would again need some sort of psychic powers to understand the requirements of the proposed rule. Moreover, the cost and logistical hurdles faced by providers and the potential for imperiling patients make this proposed change unacceptable.
Patients receiving home care and nursing home care may require non-emergency transportation when no doctor is available to provide a certification. It is not currently the practice of doctors to sign such certifications, so if doctors are first required to come to the patient's bedside to assess whether or not an emergency exists, physician costs would escalate. Not to mention, physicians rarely visit individuals' private homes/residences.
The Office of Advocacy does support, however, the recommendation of the American Ambulance Association to provide "prior authorization" at 60-day intervals for repetitive patients receiving dialysis, radiation therapy, etc. Individual certifications in such cases would be unnecessary, time consuming, costly, and do not accomplish any legitimate objective.
The agency attempts to minimize the burden on rural communities that may only have ALS services by carving out an exception for them. However, a more careful analysis would have revealed that physical location outside a Metropolitan Statistical Area (MSA) is not the best test for purposes of the exception. This test ignores other areas inside MSAs which also may have access problems. That is, access to an appropriate treatment facility and not just access to transportation. The Office of Advocacy, therefore, recommends that the agency broaden its exception for ALS service.
The proposed rule also requires suppliers to "submit to the carrier, on an annual basis, financial information demonstrating that without payment at the ALS level, the financial impact would jeopardize beneficiary access to ambulance services in the area."(7) The burden of demonstrating cost is inappropriately placed on suppliers. It should be the job of the agency to carefully analyze the cost-perhaps through survey data-of complying with the regulation.
What about limiting supplier liability? The proposed rule provides for limiting beneficiary liability when BLS services were provided, but ALS services were charged. The rationale is that beneficiaries cannot be expected to know which services are not covered under Medicare. This begs the questions raised earlier about the determination of which level of service is appropriate based on information provided by a frantic caller and use of the codes.
Goodbye labor unions, hello Unfunded Mandates Act. Aside from small suppliers, the issue of minimum equipment and staff requirements poses the potential problem of Unfunded Mandates on the states and small governments. The agency states, "we would also require that, at a minimum, an ambulance contain a stretcher, linens, emergency medical supplies, oxygen equipment, and other lifesaving emergency medical equipment and be equipped with emergency warning lights, sirens, and two-way telecommunications."(8) If all of these requirements are not met, then the vehicle is not an ambulance and cannot receive Medicare reimbursement despite state regulations and despite a history of providing adequate patient care. The agency seems willing to put certain suppliers out of business and to impose additional costs on states and local governments without demonstrating whether certain equipment is commonly used or needed to provide patient care.
With regard to minimum staffing requirements, the agency states, "[w]e propose that the [BLS] vehicle be staffed by at least two persons each trained to provide first aid and certified as an emergency medical technician-basic (EMT-B)..."(9) The agency further states, "[t]he ALS-level ambulance would include at least two staff members [, o]ne trained and certified as a paramedic or as an emergency medical technician-advanced (EMT-A) who must also be trained and certified to perform one or more ALS services."(10) The Office of Advocacy fails to see the issue here. It is fairly safe to say that an ice cream truck staffed by two Good Humor men are not going to be dispatched to treat and transport a sick or injured patient. States do and should continue to regulate standards of ambulances.
In any event, the Office of Advocacy is uncertain of the Health Care Financing Administration's authority to regulate minimum standards for transportation services.
Those pesky ICD-9-CM codes rear their ugly heads again. Not only are the codes as proposed too broad for determination of the service level and accurate diagnosis, they are also too broad for billing purposes. As mentioned earlier in the example of the unconscious patient who may be a stroke victim rather than someone who fainted, only the BLS-level would be covered. For billing purposes, absent a narrative by the supplier, how would the supplier be reimbursed for the actual services performed?
Regarding the extensive form developed by the agency to provide a report on certification and licensure requirements, the Office of Advocacy defers to industry experts. Generally speaking, however, it seems that many of the questions are not appropriate to ask on a vehicle-by-vehicle basis because of equipment and staff sharing practices in some areas.
According to the agency's own reports and industry experts, the physician paperwork requirements contained in the rule are vastly underestimated. Physician certifications for non-emergency transportation would not number 3,000 as indicated in the proposed rule, but number 4,467,413-3,608,778 1996 BLS claims processed, plus 858,635 1996 ALS claims processed. Based on the agency's estimate of 32 minutes to complete the form, the paperwork burden amounts to 744,569 hours annually.
While the agency's objective may be to reduce fraud and cost in the Medicare system, the result of imposing this regulation on the states and ambulance suppliers may be to reduce ALS service (or at least reduce ALS payments regardless of services performed), but also to increase mortality and morbidity, and increase costs to suppliers, physicians, hospitals, states, etc. The estimated savings of $50 million dollars almost immediately and $55 million by fiscal year 1999 is unfounded. The agency provides no basis for either figure. What specific provisions of the proposed rule are triggering the cost savings? From what body of data are the estimates derived? All of this information should be contained in the IRFA.
Patient demand is not likely to decrease any time soon, physician paperwork costs are vastly different than those estimated by the agency, state unfunded mandates are at issue, suppliers must either comply or die (or comply and die in some cases) based on the new requirements and costs imposed by this proposed rule. It is therefore bothersome that the agency would fail to perform the analyses required under the Regulatory Flexibility Act.
The Office of Advocacy recommends that the agency perform a final regulatory flexibility analysis prior to publication of the final rule. In the meantime, please do not hesitate to contact the Office of Advocacy if the agency requires any assistance on this matter.
Sincerely,
Jere W. Glover
Chief Counsel for Advocacy
Shawne Carter McGibbon
Asst. Chief Counsel for Advocacy
ENDNOTES
1. Pub. L. No. 94-305 (codified as amended at 15 U.S.C. §§ 634a-g, 637).
2. Pub. L. No. 96-354, 94 Stat. 1164 (1980) (to be codified as amended at 5 U.S.C. §§ 601-612)
3. 62 Fed. Reg. at 32,724.
4. See 5 U.S.C § 603(b).
5. See 62 Fed. Reg. 32,723 (HCFA estimates that there are 9000 ambulance suppliers).
6. The Office of Advocacy generally can help provide industry data regarding the number of firms and establishments in a particular business enterprise. However, ambulances fall into a general category and are lumped with a variety of other industries like limosines and van pools.
7. 62 Fed. Reg. at 32,720.
8. 62 Fed. Reg. at 32,721.
9. 62 Fed. Reg. at 32,721.
10.52 Fed. Reg. at 32,722.
* Last Modified: 6/14/01