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Statement of Need: Medicare pays over 4,200 hospitals for outpatient department services under the hospital outpatient prospective payment system (OPPS). The OPPS is based on groups of clinically similar services called ambulatory payment classifications (APCs). CMS annually revises the APC payment amounts based on claims data, proposes new payment polices, and updates the payments for inflation using the market basket. The proposed rule solicits comments on the proposed OPPS payment rates and new policies. This rule does not impact payments to critical access hospitals as they are not paid under the OPPS. CMS will issue a final rule containing the payment rates for the 2010 OPPS at least 60 days before January 1, 2010.

Summary of the Legal Basis: Section 1833 of the Social Security Act establishes Medicare payment for hospital outpatient services. The final rule revises the Medicare hospital OPPS to implement applicable statutory requirements and changes arising from our continuing experience with this system and to implement certain related provisions of the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003. In addition, the proposed and final rules describe changes to the outpatient APC system, relative payment weights, outlier adjustments, and other amounts and factors used to determine the payment rates for Medicare hospital outpatient services paid under the prospective payment system. These changes would be applicable to services furnished on or after January 1, 2010.

Alternatives: None. This is a statutory requirement.

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

Risks: If this regulation is not published timely, outpatient hospital services will not be paid appropriately beginning January 1, 2010.