Outpatient PPS

Outpatient care has become increasingly important, as technological innovations and patient preferences drive changes in care delivery.

Medicare beneficiaries receive a wide range of services in hospital outpatient departments, from injections to complex procedures that require anesthesia. Payment policies for services furnished in hospital outpatient departments are constantly changing due to technological advances and changes in law and regulation.

Medicare originally based payments for outpatient care on hospitals’ costs, but CMS began using the outpatient prospective payment system in August 2000. The OPPS sets payments for individual services using a set of relative weights, a conversion factor, and adjustments for geographic differences in input prices. Hospitals also can receive additional payments in the form of outlier adjustments for extraordinarily high-cost services and pass-through payments for some new technologies.

The unit of payment under the OPPS is the individual service as identified by Healthcare Common Procedure Coding System (HCPCS) codes. CMS classifies services into ambulatory payment classifications (APCs) on the basis of clinical and cost similarity. In recent years, the agency has revised payment policy to increase the amount of packaging of costs within the APCs. This includes the advent of comprehensive APCs, that package together an expanded number of related items and services contained on the same claim into a single payment for a comprehensive primary service under the OPPS.

While Congress has made numerous changes over time to the OPPS, the most significant change moving forward was the implementation of site-neutral payment via Congress’s enactment of Section 603 of the Bipartisan Budget Act of 2015 (BiBA), as modified by the 21st Century Cures Act. Site-neutral payment policy requires that new off-campus provider-based departments are no longer paid under the OPPS. Instead, these services are covered and paid under the Physician Fee Schedule at a lower rate than would be paid for the same services under the OPPS.

Given the constantly evolving payment policy for outpatient services, hospitals will require new strategies for the effective management of outpatient information, resources, and services.

Read on to explore resources and other educational tools to learn more about the OPPS.

Site-Neutral Payment

However, these roles are not explicitly funded; instead, they are built into the overall hospital cost structure and supported by revenues received from providing direct patient care. Hospitals are also subject to more comprehensive licensing, accreditation and regulatory requirements t...

Related Resources

Factsheet
Member
For calendar year 2017, the Centers for Medicare & Medicaid Services finalized the physician fee
Letter
Public
Letter
Public
Medicare pays long-term care hospitals less than half the cost of care for site-neutral cases under the LTCH prospective payment system, AHA told CMS.
Infographics
Public
Americans rely heavily on hospitals to provide 24/7 access to care for all types of patients, to serve as a safety net provider for vulnerable popu
Legal Documents
Plaintiffs-Appellants, three hospital associations and three hospital systems, move to expedite this appeal from an order dismissing Appellants' co
Letter
Public