Medicare's Hospital Outpatient Prospective Payment System: OPPS 101 (part 1 of 2)

Abstract

The Balanced Budget Act of 1997 granted authority to the Centers for Medicare and Medicaid Services (CMS) to establish a prospective payment system for hospital outpatient services.Further modifications were granted under the Balanced Budget Refinement Act of 1999.The main intent was to provide CMS with a system to better predict and manage program expenditures by assigning fixed payment amounts to groups of services similarly to the inpatient prospective payment system (based on Diagnosis-Related Groups).The hospital outpatient prospective payment system (OPPS) in place today classifies all hospital outpatient services into Ambulatory Payment Classifications (APCs).Healthcare Common Procedure Coding System codes (HCPCS codes) are assigned to APCs by CMS, and these assignments are updated at least annually (HCPCS code sets include the full Current Procedural Terminology code set).The services assigned to any APC are considered by CMS to be clinically similar and similar in terms of the resources required to provide each service.Thus, one APC may be applied to numerous HCPCS codes, whereas any individual HCPCS code can be assigned to only one APC.Notably, many HCPCS codes are not assigned to any APC.Some are considered "packaged" into some other code, some are identified as appropriate only for the inpatient setting, and some are simply not considered by CMS to be payable under the OPPS.Thus, one must actually refer to the CMS files listing all HCPCS codes 1 in order to determine whether the service is paid.This will be noted on those CMS files (in addendum B) as the Status Indicator.Status Indicators for 2010 are shown in Table 1.A hospital may, depending on a variety of factors, be paid for more than one APC or for more than one occurrence of the same APC at any given encounter.