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This annual proposed rule would revise the Medicare hospital inpatient and long-term care hospital prospective payment systems for operating and capital-related costs. This proposed rule would implement changes arising from our continuing experience with these systems.

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. Also, CMS annually updates the payment rates for the Medicare prospective payment system (PPS) for inpatient hospital services provided by long-term care hospitals (LTCHs). The rule solicits comments on the proposed IPPS and LTCH payment rates and new policies. CMS will issue a final rule containing the payment rates for the FY 2019 IPPS and LTCHs at least 60 days before October 1, 2018.

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 and Long Term Care stays under a PPS. Under these systems, Medicare payment for hospital inpatient and Long Term Care 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, 2018.

Alternatives:

This proposed rule will provide descriptions of the statutory provisions that are addressed, identify the proposed policies, and present rationales for our decisions and alternatives that were considered.

Anticipated Costs and Benefits:

Total expenditures will be adjusted for FY 2019; however, at this time, the impact is expected to affect transfers only and not contain costs/benefits outside of Medicare spending.

Risks:

If this regulation is not published timely, inpatient hospital and LTCH services will not be paid appropriately beginning October 1, 2018.