Outpatient Prospective

Payment Systems
(OPPS)

Assignment 3.4
Michele M. Hornick
Medaille College
Author Note
This paper was prepared on 4/5/2016 for Reimbursement
Methodologies-HIA407E-07, taught by Teresa Reinhardt .
 Table of Contents

Introduction
Coverage Provided
OPPS, APCs, & HCPCS
Payment Rates
Payment Rates Charted
Exceptions to the Payment Rate
Updating the OPPS
Conclusion
 Introduction

The Balanced Budget Act of 1997 called for
the establishment of a prospective payment
system for hospital outpatient services. The
assignment of this task was given to the
Centers for Medicare and Medicaid Services
(CMS). The OPPS was implemented in 2000.
Organizations that are eligible for payment
under the OPPS system are those who file
claims using the CMS 1450 form.
The following presentation will highlight the
fundamentals of the OPPS.
Coverage Provided

According to the Balanced Budget Act of 1997, the OPPS
provided payment for:
Designated hospital outpatient services
Certain Medicare Part B services; when Part A payment cannot be made
Partial hospitalization services (hospitals or Community Mental Health Centers)
Hepatitis B vaccines and their administration, splints, casts, and antigens
furnished by a Home Health Agency (HHA) to patients who are not under a Home
Health plan of care or to Hospice patients for treatment of non-terminal illness
An initial preventive physical examination performed within the first 12 months
of Medicare Part B coverage.
Additional provisions were made for OPPS under the Balanced Budget
Refinement Act of 1999.
 OPPS, APCs, & HCPCS

The OPPS classifies all hospital outpatient services
into Ambulatory Payment Classifications.
Healthcare Common Procedure Coding System
(HCPCS) codes are assigned to APCs by the CMS
One APC can be applied to multiple HCPCS
Some codes are packaged, some codes are only
appropriate for the inpatient setting, and some are
not payable under the OPPS.
It is essential to refer to the CMS files that lists all HCPCS codes to
determine if a service is paid.
 Payment Rates

For most separately payable medical and surgical services the payment
rate is determined by multiplying the established scaled relative weight
for the services clinical APC by a conversion factor. This equation will
arrive at a national unadjusted payment rate for the APC.
To account for geographical differences in input prices, the labor
portion of the national unadjusted payment rate is further adjusted by
the wage index for the area. This accounts for 60% of the unadjusted
rate, the other 40%is not adjusted.
Payment rates are established by alternative means for the following
items and services:
Separately payable drugs, and biologicals
Brachytherapy sources
Therapeutic radio-pharmaceuticals
Services that are assigned to New technology APCs
Payment Rates Charted
Geographic
Payment Based on
Complexity of Service Adjustment

40%
APC 60%
Non-
Conversio Relative Labor Payment
Labor
n Factor Weight Related
Related

Index
Wage Index
APC
Measures
relative
resources
Hospital Wage
of services
Hospital
 Exceptions to the Payment
Rate

If the patient is exceptionally costly, then the
payment is calculated with the additional high
cost outlier.
Pertaining to rural Sole Community Hospitals
(SCH) the payment is multiplied by 1.071
Regarding a cancer or childrens hospital that
is eligible for transitional outpatient payment,
the payment is added to the transitional
outpatient payment. The final payment is
determined at cost settlement.
 Updating the OPPS

The OPPS payment files are updated quarterly.
Certain elements that affect these updates
include:
The addition of new pass-through drugs/devices
The addition of new services and procedures to
clinical and New Technology APCs
The recognition of new HCPCS codes
The updating of payment rates for separately
payable drugs and biologicals based on the most
recent average sales prices
It should also be noted that the APCs and their
relative weighs are subject to annual reviews.
 Conclusion

This presentation should have provided you
with a brief introduction into the Outpatient
Prospective Payment System. Furthermore,
you should have gained an understanding of
the relationship between the OPPS, APCs, and
HCPCS, the payment rates, and how the OPPS
is updated.
 References

Hospial Outpatient Prospective Payment System - Payment System
Fact Sheet Series. (2014, January). Retrieved from Department of
Health and Human Services - Center for Medicare and Medicaid
Services: https://medaille.dcollege.net/bbcswebdav/pid-363696-dt-
content-rid-1255076_1/courses/10782.201510/Hospital%20OPPS
%20and%20APCs.pdf
Medicare Learning Network. (2016, January). Retrieved from
Hospital Outpatient Prospective Payment System:
https://www.cms.gov/Outreach-and-education/Medicare-Learning-
Network-MLN/MLNProducts/downloads/HospitalOutpaysysfctsht.pdf
LaTour, K. M., Eichenwald Maki, S. M., & Oachs, P. K. (2013). Health
Information Management Concepts, Principals, and Practice Fourth
Edition. Chicago: AHiMA.