Medicare Hospital Outpatient
Prospective Payment System: Overview
The Balanced Budget Act of 1997 (BBA) required HCFA to develop
an outpatient prospective payment system (OPPS). The OPPS
began in Augst, 2000.
The OPPS applies to facility-level operating and capital
costs; it does not affect physician payments. Under the OPPS,
outpatient services (such as surgical procedures, clinic visits,
and diagnostic services) as identified by the HCFA Common
Procedure Coding System (HCPCS) are classified into one of
nearly 500 ambulatory payment classification (APC) groups.
Payment for each outpatient HCPCS code will be based on the
relative weight assigned to each APC group and a conversion
factor. The OPPS also includes the following features:
- Expenses associated with items such as operating room,
recovery room, anesthesia, pharmaceuticals (except for chemotherapeutic
agents), and other various incidental services are "packaged"
into the payment rate for the primary service being provided,
such as a surgical procedure;
- APC payments are adjusted for geographic wage differences;
- there is an outlier policy;
- there are transitional payment pass-throughs for certain
medical devices, drugs, and biologicals;
- transitional payments for the first three years of the
OPPS for hospitals that lose money under the OPPS; and
- there are no special payment adjustments for teaching
hospitals;
Due to the transitional payments and other changes that lessened
the financial impact on teaching hospitals CMS chose not to
include an indirect medical education (IME) adjustment in
the OPPS but will monitor the situation over time.
Contact
Karen Fisher, Senior Associate Vice President
AAMC Health Care Affairs
kfisher@aamc.org
(202) 862-6140
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