Hospital outpatient prospective payment under Medicare: understanding the system and its implications

Abstract

The newly implemented Medicare hospital outpatient prospective payment system provides fixed prospectively determined reimbursement for technical and other nonphysician services provided to beneficiaries in the hospital outpatient setting. As such, it represents the latest attempt by the federal government to control health care costs through prospective bundled payment systems such as the well-known Medicare diagnosis-related group system for hospital inpatients. The new system is complex, however, with several discrete reimbursement mechanisms possible for the same service. This complexity, in concert with the major change in outpatient reimbursement that the system represents, creates considerable uncertainty for radiologists and for medicine in general. It is incumbent on the radiology community to understand and assess the hospital outpatient prospective payment system and to work with the Centers for Medicare and Medicaid Services to minimize any potential negative effects on the profession and on patients.