Hospital Outpatient Prospective Payment System (HOPPS)

Hospital Outpatient Prospective Payment System (HOPPS)

The Hospital Outpatient Prospective Payment System was implemented in 2000.  Most hospitals are reimbursed by Medicare for outpatient procedures under the Hospital Outpatient Prospective Payment System (HOPPS).

Under the HOPPS payment most procedures are assigned to APCs (ambulatory payment classifications) The APC is to determines the methodology of payment and the reimbursement amount for each procedure codes.

When Outpatient claims are submitted to Medicare they are passed through the OCE (Outpatient code editor) This is software that screens the claim for missing data, claims not meeting date of service requirements, matches sex of patient with procedure performed, as well as other components.

The APC reimbursement system has a system of bundling and discounting. Many procedures,
such as surgical procedures, are determined to have reduced costs when more that one procedure
is done in one session. As a result, reimbursement may be reduced for subsequent procedures. 

For Eg.

Two breast biopsies are done at the same setting the 2nd biopsy is reimbursed less. because the first biopsy procedure includes the patient preparation, room set up, sterile instruments.

APCs are assigned into categories based on how they are paid. The categorization system is described by status indicators.

There are ten status indicators that impact interventional radiology coding.

STATUS INDICATOR B

Procedures that are assigned to status indicator B are codes that can not be reported to Medicare by hospitals paid under HOPPS.

STATUS INDICATOR C

Procedures that are assigned to status indicator C are procedures that must be done on an inpatient basis only.

STATUS INDICATOR E

Procedures that are assigned to status indicator E are non-reportable.

STATUS INDICATOR H

Devices and therapeutic radiopharmaceutical agents are assigned to status indicator H and are reimbursed by the following two methods: a) separate cost-based Pass-Through device payment or b) separate cost-based Non-Pass-Through radiopharmaceutical payment.

STATUS INDICATOR K

Non-Pass-Through drugs, biologicals, and radiopharmaceuticals are assigned to status indicator K and are reimbursed under the HOPPS with a separate APC payment. Status indicator K includes brachytherapy sources.

STATUS INDICATOR N

Procedure codes that are assigned to status indicator N are procedures that are not performed alone.

STATUS INDICATORS Q1, Q2, Q3

STATUS INDICATOR S

Each procedure will be reimbursed at 100%

STATUS INDICATOR T

The First code is paid fully, but the second code with Status indicator T is paid only 50% of the APC payment rate. 

STATUS INDICATOR V

Status indicator V is assigned to E&M, Emergency room and other clinic room charges.

STATUS INDICATOR X

Procedures that are assigned to status indicator X are procedures that are considered ancillary services.