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Statement of Need: CMS annually revises the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital-related costs to implement changes arising from our continuing experience with these systems. In addition, we describe the proposed changes to the amounts and factors used to determine the rates for Medicare hospital inpatient services for operating costs and capital-related costs. The proposed rule solicits comments on the proposed IPPS payment rates and new policies. CMS will issue a final rule containing the payment rates for the 2010 IPPS at least 60 days before October 1, 2009.

Summary of the Legal Basis: The Social Security Act (the Act) sets forth a system of payment for the operating costs of acute care hospital inpatient stays under Medicare Part A (Hospital Insurance) based on prospectively set rates. The Act requires the Secretary to pay for the capital-related costs of hospital inpatient stays under a prospective payment system (PPS). Under these PPSs, Medicare payment for hospital inpatient operating and capital-related costs is made at predetermined, specific rates for each hospital discharge. These changes would be applicable to services furnished on or after October 1, 2009.

Alternatives: None. This is a statutory requirement.

Anticipated Costs and Benefits: Total expenditures will be adjusted for FY 2010.

Risks: If this regulation is not published timely, inpatient hospital services will not be paid appropriately beginning October 1, 2009.