HOPPS: evolution of a CMS process

Area of Science:

• Health Economics
• Healthcare Policy
• Medical Billing

Background:

• Medicare's hospital outpatient prospective payment system (HOPPS) was established to control escalating outpatient expenses.
• The Balanced Budget Act of 1997 mandated HOPPS, effective August 1, 2000.
• Centers for Medicare and Medicaid Services (CMS) utilized hospital charge data for ambulatory patient classification (APC) payment weights.

Purpose of the Study:

• To analyze the development and evolution of Medicare's HOPPS.
• To understand the methodologies used in developing APC payment weights.
• To examine proposed changes to HOPPS, including its application in nonhospital settings.

Main Methods:

• Review of legislative mandates and policy documents related to HOPPS.
• Analysis of the data sources used by CMS for payment weight development.
• Examination of proposed legislative changes impacting HOPPS.

Main Results:

• HOPPS was developed due to a significant increase in Medicare outpatient costs.
• CMS employed hospital charge data, distinct from the Medicare Physician Fee Schedule, for APC weights.
• Legislative actions led to an advisory panel and the exclusion of diagnostic mammography from APCs.
• The Deficit Reduction Act suggested extending HOPPS to nonhospital technical fees.

Conclusions:

• HOPPS has undergone significant evolution driven by legislative action and policy adjustments.
• The system's development highlights the use of charge data and the impact of specific exclusions.
• Future policy may expand HOPPS beyond traditional hospital settings.