In response to the rapidly growing Medicare expenditures for outpatient services and large co-payments being made by Medicare beneficiaries, Congress mandated that the Centers for Medicare and Medicaid Services (CMS) develop a Hospital Outpatient Prospective Payment System (HOPPS) and reduce beneficiary co-payments. This payment system, implemented August 1, 2000, is used by CMS to reimburse for hospital outpatient services.
The hospital outpatient prospective payment system (OPPS) in place today classifies all hospital outpatient services into Ambulatory Payment Classifications (APCs). Ambulatory Payment Classifications (APCs) are CMS’ grouping system developed for facility reimbursement for hospital outpatient services. All covered outpatient services to an APC group. Each group of procedure (i.e.,codes) within an APC is supposed to be “similar clinically and with regard to resource consumption.” 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 in order to determine whether the service is paid.