Medicare's fee schedule for hospital outpatient care

Medicare's hospital outpatient prospective payment system (OPPS) went live on August 1, 2000, after a decade of developmental work. The new system introduced a fee schedule that replaced the cost-related methods that Medicare previously used to reimburse various hospital outpatient services. Hospitals are now paid predetermined rates or fees based on the Ambulatory Patient Classification (APC) groups assigned to the services that Medicare patients receive during outpatient encounters. The new system aims to simplify Medicare's intricate cost-based reimbursement policies, improve hospital efficiency, ensure that payments are sufficient to compensate hospitals for reasonable Medicare costs, and reduce Medicare coinsurance amounts for beneficiaries. Implementation of OPPS-related administrative and operational changes has been a major challenge for hospitals.