Medicare Claims Processing Manual 
Chapter 4 - Part B Hospital  
(Including Inpatient Hospital Part B and OPPS) 
 
Table of Contents 
(Rev. 12421; Issued: 12-21-23) 
 
 
 
 
Transmittals for Chapter 4 
 
10 - Hospital Outpatient Prospective Payment System (OPPS) 
10.1 - Background 
10.1.1 - Payment Status Indicators 
10.2 - APC Payment Groups 
10.2.1 - Composite APCs 
10.2.2 - Cardiac Resynchronization Therapy 
10.2.3 - Comprehensive APCs 
 10.2.4. - Reporting for Certain Outpatient Department Services (That Are 
Similar to Therapy Services) (Non-Therapy Outpatient Department 
Services) and Are Adjunctive to Comprehensive APC Procedures  
10.3 - Calculation of APC Payment Rates 
10.4 - Packaging 
10.4.1 - Combinations of Packaged Services of Different Types That are 
Furnished on the Same Claim 
10.5 - Discounting 
10.6 - Payment Adjustments 
10.6.1 - Payment Adjustment for  Rural  Sole Community Hospitals 
10.6.2 - Payment Adjustment for Failure to Meet the Hospital Outpatient 
Quality Reporting Requirements 
10.6.2.1 - Hospitals to which the Payment Reduction Applies 
10.6.2.2 - Services to which the Payment Reduction Applies  10.6.2.3 - Contractor Responsibilities 
10.6.2.4 - Application of the Payment Reduction Factor in 
Calculation of the Reduced Payment and Reduced Copayment 
10.6.3 - Payment Adjustment for Certain Cancer Hospitals 
10.6.3.1 - Payment Adjustment for Certain Cancer Hospitals for CY 
2012 and CY 2013 
10.6.3.2 - Payment Adjustment for Certain Cancer Hospitals for CY 
2014 
 
10.6.3.3 - Payment Adjustment for Certain Cancer Hospitals 
Beginning CY 2015 
10.6.3.4 - Payment Adjustment for Certain Cancer Hospitals   
Beginning CY 2016 
10.6.3.5 - Payment Adjustment for Certain Cancer Hospitals 
Beginning CY 2017 
10.6.3.6 - Payment Adjustment for Certain Cancer Hospitals 
Beginning CY 2018 
       10.6.3.7 - Payment Adjustment for Certain Cancer Hospitals 
       Beginning CY 2019 
       10.6.3.8 - Payment Adjustment for Certain Cancer Hospitals 
       Beginning CY 2020 
    10.6.4 - Payment Adjustment for Rural Emergency Hospitals 
 
10.7 - Outliers 
10.7.1 - Outlier Adjustments 
10.7.2 - Outlier Reconciliation 
10.7.2.1 - Identifying Hospitals and CMHCs Subject to Outlier 
Reconciliation 
10.7.2.2 - Reconciling Outlier Payments for Hospitals and CMHCs 
10.7.2.3 - Time Value of Money 
10.7.2.4 - Procedures for Medicare Contractors to Perform and 
Record Outlier Reconciliation Adjustments 
10.8 - Geographic Adjustments 
10.8.1 - Wage Index Changes 
10.9 - Updates  10.10 - Biweekly Interim Payments for Certain Hospital Outpatient Items and 
Services That Are Paid on a Cost Basis, and Direct Medical Education Payments, 
Not Included in the Hospital Outpatient Prospective Payment System (OPPS) 
10.11 - Calculation of Overall Cost to Charge Ratios (CCRs) for Hospitals Paid 
Under the Outpatient Prospective Payment System (OPPS) and Community 
Mental Health Centers (CMHCs) Paid Under the Hospital OPPS 
10.11.1 - Requirement to Calculate CCRs for Hospitals Paid Under OPPS 
and for CMHCs 
10.11.2 - Circumstances in Which CCRs are Used 
10.11.3 - Selection of the CCR to be Used 
10.11.3.1 - CMS Specification of Alternative CCR 
10.11.3.2 - Hospital or CMHC Request for Use of a Different CCR 
10.11.3.3 - Notification to Hospitals Paid Under the OPPS of a 
Change in the CCR 
10.11.4 - Use of CCRs in Mergers, Acquisitions, Other Ownership 
Changes, or Errors Related to CCRs 
10.11.5 - New Providers and Providers with Cost Report Periods Less 
Than a Full Year 
10.11.6 - Substitution of Statewide CCRs for Extreme OPPS Hospital 
Specific CCRs 
10.11.7 - Methodology for Calculation of Hospital Overall CCR for 
Hospitals that Do Not Have Nursing and Paramedical Education Programs 
for Cost Reporting Periods Beginning Before  May 1, 2010, Under Cost 
Report Form 2552-96 
10.11.7.1 - Methodology for Calculation of Hospital Overall CCR 
for Hospitals That Do Not Have Nursing and Paramedical 
Education Programs for Cost Reporting Periods Beginning On or 
After May 1, 2010, Under Cost Report 2552-10 
10.11.8 - Methodology for Calculation of Hospital Overall CCR for 
Hospitals That Have Nursing and Paramedical Education Programs for 
Cost Reporting Periods Beginning Before  May 1, 2010, Under Cost 
Report Form 2552-96 
10.11.8.1 - Methodology for Calculation of Hospital Overall CCR for 
Hospitals That Have Nursing and Paramedical Education Programs 
for Cost Reporting Periods Beginning On or After May 1, 2010, 
Under Cost Report 2552-10 
10.11.9 - Methodology for Calculation of CCR for CMHCs 
10.11.10 - Location of Statewide CCRs, Tolerances for Use of Statewide 
CCRs in Lieu of Calculated CCRs and Cost Centers to be Used in the 
Calculation of CCRs  10.11.11 - Reporting of CCRs for Hospitals Paid Under OPPS and for 
CMHCs 
10.12 - Payment Window for Outpatient Services Treated as Inpatient Services 
20 - Reporting Hospital Outpatient Services Using Healthcare Common Procedure 
Coding System (HCPCS) 
20.1 - General 
20.1.1 - Elimination of the 90-day Grace Period for HCPCS (Level I and 
Level II) 
20.2 - Applicability of OPPS to Specific HCPCS Codes 
20.3 - Line Item Dates of Service 
20.4 - Reporting of Service Units 
20.5 - Clarification of HCPCS Code to Revenue Code Reporting 
20.6 - Use of Modifiers 
20.6.1 - Where to Report Modifiers on the Hospital Part B Claim 
20.6.2 - Modifiers -50 
20.6.3 - Modifiers -LT and -RT 
20.6.4 - Modifiers 73 and 74 
20.6.5 - Modifiers 76 and 77 
20.6.6 - Modifiers for Radiology Services 
20.6.7 - Modifier CA 
20.6.8 - HCPCS Level II Modifiers 
20.6.9 - Modifier FB 
20.6.10 -Modifier FC 
20.6.11 - Modifier PO 
20.6.12 -Modifier PN  
20.6.13 - Modifier CT 
20.6.14 - Modifier FX 
20.6.15 - Modifier FY 
20.6.16- Modifier JG 
20.6.17- Modifier TB 
20.6.18- Modifier ER 
20.6.19 - Modifier CG 
20.7 - Billing of C HCPCS Codes by Non-OPPS Providers  30 - OPPS Coinsurance 
30.1 - Coinsurance Election 
30.2 - Calculating the Medicare Payment Amount and Coinsurance 
40 - Outpatient Code Editors (OCEs) 
40.1 - Integrated OCE (July 2007 and Later) 
40.1.1 - Patient Status Code and Reason for Patient Visit for the Hospital 
OPPS 
40.2 - Outpatient Prospective Payment System (OPPS) OCE (Prior to July 1, 
2007) 
40.2.1 - Patient Status Code and Reason for Patient Visit for the Hospital 
OPPS 
40.3 - Non-OPPS OCE (Rejected Items and Processing Requirements) Prior to 
July 1, 2007 
40.4 - Paying Claims Outside of the IOCE 
40.4.1 - Requesting to Pay Claims Without IOCE Approval 
40.4.2 - Procedures for Paying Claims Without Passing through the IOCE 
40.5 - Transitional Pass - Throughs for Designated Drugs or Biologicals  
 
50 - Outpatient PRICER 
50.1 - Outpatient Provider Specific File 
50.2 - Deductible Application 
50.3 - Transitional Pass-Through Payments for Designated Devices 
50.4 - Changes to Pricer Logic Effective April 1, 2002 
50.5 - Changes to the OPPS Pricer Logic Effective January 1, 2003 
50.6 - Changes to the OPPS Pricer Logic Effective January 1, 2003 Through  
January 1, 2006 
50.7- Annual Updates to the OPPS Pricer for Calendar Year (CY) 2007 and Later 
50.8 - Annual Updates to the OPPS Pricer for Calendar Year (CY) 2007 and Later 
60 - Billing for Devices Eligible for Transitional Pass-Through Payments and Items 
Classified in New Technology APCs 
60.1 - Categories for Use in Coding Devices Eligible for Transitional Pass-
Through Payments Under the Hospital OPPS 
60.2 - Roles of Hospitals, Manufacturers, and CMS in Billing for Transitional 
Pass-Through Items 
60.3 - Devices Eligible for Transitional Pass-Through Payments  60.4 -  General Coding and Billing Instructions and Explanations                                     
60.4.1 - Explanations of Terms 
60.4.2 - Complete List of Device Pass-through Category Codes 
60.4.3. - Explanations of Certain Terms/Definitions Related to Device Pass-
Through Category Codes 
60.5 - Services Eligible for New Technology APC Assignment and Payments 
61 - Billing for Devices under the OPPS 
61.1 - Requirements that Hospitals Report Device Codes on Claims on Which 
They Report Specified Procedures 
61.2 - Edits for Claims on Which Specified Procedures are to be Reported With 
Device Codes and For Which Specified Devices are to be Reported With 
Procedure Codes 
61.2.1  Bypass Edit Modifier CG for Claims on Which Specified 
Procedures are to be Reported With Device Codes 
61.3 - Billing for Devices Furnished Without Cost to an OPPS Hospital or 
Beneficiary or for Which the Hospital Receives a Full or Partial Credit and 
Payment for OPPS Services Required to Furnish the Device 
61.3.1 - Reporting and Charging Requirements When a Device is 
Furnished Without Cost to the Hospital Prior to January 1, 2014 
61.3.2 - Reporting and Charging Requirements When the Hospital 
Receives Full Credit for the Replaced Device against the Cost of a More 
Expensive Replacement Device Prior to January 1, 2014 
61.3.3 - Reporting Requirements When the Hospital Receives Partial 
Credit for the Replaced Device Prior to January 1, 2014 
61.3.4 - Medicare Payment Adjustment Prior to January 1, 2014 
61.3.5 - Reporting and Charging Requirements When a Device is 
Furnished Without Cost to the Hospital or When the Hospital Receives a 
Full or Partial Credit for the Replacement Device Beginning January 1, 
2014 
61.3.6 - Medicare Payment Adjustment Beginning January 1, 2014 
61.4 - Billing and Payment for Brachytherapy Sources 
61.4.1 - Billing for Brachytherapy Sources - General 
61.4.2 - Definition of Brachytherapy Source for Separate Payment 
61.4.3 - Billing of Brachytherapy Sources Ordered for a Specific Patient 
61.4.4 - Billing for Brachytherapy Source Supervision, Handling and 
Loading Costs 
61.4.5 - Payment for New Brachytherapy Sources  61.5 - Billing for Intracoronary Stent Placement 
70 - Transitional Corridor Payments 
70.1 - TOPs Calculation for CY 2000 and CY 2001 
70.2 - TOPs Calculation for CY 2002 
70.3 - TOPs Calculation for CY 2003 
70.4 - TOPs Calculation for CY 2004 and CY 2005 
70.5 - TOPs Calculation for CY 2006 - CY 2008 
70.6 - Transitional Outpatient Payments (TOPs) for CY 2009 
70.7 - Transitional Outpatient Payments (TOPs) for CY 2010 through CY 2012 
70.8 - TOPs Overpayments 
80 - Shared system Requirements to Incorporate Provider-Specific Payment-to-Cost 
Ratios into the Calculation of Interim Transitional Outpatient Payments Under OPPS 
80.1 - Background - Payment-to-Cost Ratios 
80.2 - Using the Newly Calculated PCR for Determining Final TOP Amounts 
80.3 - Using the Newly Calculated PCR for Determining Interim TOPs 
90 - Discontinuation of Value Code 05 Reporting 
100 - Medicare Summary Notice (MSN) 
110 - Procedures for Submitting Late Charges Under OPPS 
120 - General Rules for Reporting Outpatient Hospital Services 
120.1 - Bill Types Subject to OPPS 
120.2 - Routing of Claims 
140 - All-Inclusive Rate Hospitals 
141 - Maryland Waiver Hospitals 
150 - Hospitals That Do Not Provide Outpatient Services 
160 - Clinic and Emergency Visits 
160.1-Critical Care Services 
170 - Hospital and CMHC Reporting Requirements for Services Performed on the Same 
Day 
180 - Accurate Reporting of Surgical and Medical Procedures and Services 
180.1 - General Rules 
180.2 - Selecting and Reporting Procedure Codes 
180.3 - Unlisted Service or Procedure 
180.4 - Proper Reporting of Condition Code G0 (Zero)  180.5 - Proper Reporting of Condition Codes 20 and 21 
180.6 - Emergency Room (ER) Services That Span Multiple Service Dates 
180.7 - Inpatient-only Services 
190  Payer Only Codes Utilized by Medicare 
200 - Special Services for OPPS Billing 
200.1 - Billing for Corneal Tissue 
200.2 - Hospital Dialysis Services For Patients with and without End Stage Renal 
Disease (ESRD) 
200.3 - Billing Codes for Intensity Modulated Radiation Therapy (IMRT) and 
Stereotactic Radiosurgery (SRS) 
200.3.1 - Billing Instructions for IMRT Planning and Delivery 
200.3.2 - Billing for Multi-Source Photon (Cobalt 60-Based) Stereotactic 
Radiosurgery (SRS) Planning and Delivery 
200.4 - Billing for Amniotic Membrane 
200.5 - Reserved 
200.6 - Billing and Payment for Alcohol and/or Substance Abuse Assessment and 
Intervention Services 
200.7 - Billing for Cardiac Echocardiography Services 
200.7.1 - Cardiac Echocardiography Without Contrast 
200.7.2 - Cardiac Echocardiography With Contrast 
200.8 - Billing for Nuclear Medicine Procedures 
200.9 - Billing for Sometimes Therapy Services that May be Paid as Non-Therapy 
Services for Hospital Outpatients 
200.10 - Billing for Cost Based Payment for Certified Registered Nurse Anesthetists 
(CRNA) Services Furnished by Outpatient Prospective Payment System (OPPS) 
Hospitals 
200.11  Billing Advance Care Planning (ACP) 
230 - Billing and Payment for Drugs and Drug Administration  
230.1 - Coding and Payment for Drugs and Biologicals and Radiopharmaceuticals 
230.2 - Coding and Payment for Drug Administration 
231 - Billing and Payment for Blood, Blood Products, and Stem Cells and Related 
Services Under the Hospital Outpatient Prospective Payment System (OPPS) 
231.1 - When a Provider Paid Under the OPPS Does Not Purchase the Blood or 
Blood Products That It Procures from a Community Blood Bank, or When 
a Provider Paid Under the OPPS Does Not Assess a Charge for Blood or  Blood Products Supplied by the Providers Own Blood Bank Other Than 
Blood Processing and Storage 
231.2 - When a Provider Paid Under the OPPS Purchases Blood or Blood 
Products from a Community Blood Bank or When a Provider Paid Under 
the OPPS Assesses a Charge for Blood or Blood Products Collected By 
Its Own Blood Bank That Reflects More Than Blood Processing and 
Storage 
231.3 - Billing for Autologous Blood (Including Salvaged Blood) and Directed 
Donor Blood 
231.4 - Billing for Split Unit of Blood 
231.5 - Billing for Irradiation of Blood Products 
231.6 - Billing for Frozen and Thawed Blood and Blood Products 
231.7 - Billing for Unused Blood 
231.8 - Billing for Transfusion Services 
231.9 - Billing for Pheresis and Apheresis Services 
231.10 - Billing for Autologous Stem Cell Transplants 
231.11 - Billing for Allogeneic Stem Cell Transplants 
231.12 - Correct Coding Initiative (CCI) Edits 
240 - Inpatient Part B Hospital Services 
240.1 - Editing of Hospital Part B Inpatient Services: Reasonable and Necessary 
Part A Hospital Inpatient Denials 
240.2 - Editing Of Hospital Part B Inpatient Services: Other Circumstances in 
Which Payment Cannot Be Made under Part A 
240.3 - Implantable Prosthetic Devices 
240.4 - Indian Health Service/Tribal Hospital Inpatient Social Admits 
240.5 - Payment of Part B Services in the Payment Window for Outpatient 
Services Treated as Inpatient Services when Part A Payment Cannot Be Made 
240.6 - Submitting Provider-Liable No-Pay Part A Claims and Beneficiary 
Liability 
250 - Special Rules for Critical Access Hospital Outpatient Billing 
250.1 - Standard Method - Cost-Based Facility Services, With Billing of A/B 
MAC (B) for Professional Services 
250.1.1 - Special Instructions for Non-covered Time Increments in 
Standard Method Critical Access Hospitals (CAHs) 
250.2 - Optional Method for Outpatient Services: Cost-Based Facility Services 
Plus 115 percent Fee Schedule Payment for Professional Services 
250.2.1 - Billing and Payment in a Physician Scarcity Area (PSA)  250.2.2 - Zip Code Files 
250.3 - Payment for Anesthesia in a Critical Access Hospital 
250.3.1 - Anesthesia File 
250.3.2 - Physician Rendering Anesthesia in a Hospital Outpatient Setting 
250.3.3 - Anesthesia and CRNA Services in a Critical Access Hospital 
(CAH) 
250.3.3.1 - Payment for CRNA Pass-Through Services 
250.3.3.2 - Payment for Anesthesia Services by a CRNA (Method 
II CAH only) 
250.4 - CAH Outpatient Services Part B Deductible and Coinsurance 
250.5 - Medicare Payment for Ambulance Services Furnished by Certain CAHs 
250.6 - Clinical Diagnostic Laboratory Tests Furnished by CAHs 
250.7 - Payment for Outpatient Services Furnished by an Indian Health Service 
(IHS) or Tribal CAH 
250.8 - Coding for Administering Drugs in a Method II CAH 
250.8.1 - Coding for Low Osmolar Contrast Material (LOCM) 
250.8.2 - Coding for the Administration of Other Drugs and Biologicals 
250.9 - Coding Assistant at Surgery Services Rendered in a Method II CAH 
250.9.1 - Use of Payment Policy Indicators for Determining Procedures 
Eligible for Payment of Assistants at Surgery 
250.9.2 - Payment of Assistant at Surgery Services Rendered in a Method 
II CAH 
250.9.3 - Assistant at Surgery Medicare Summary Notice (MSN) and 
Remittance Advice (RA) Messages 
250.9.4 - Assistant at Surgery Services in a Method II CAH Teaching 
Hospital 
250.9.5 - Review of Supporting Documentation for Assistants at Surgery 
Services in a Method II CAH 
250.10 - Coding Co-surgeon Services Rendered in a Method II CAH 
250.10.1 - Use of Payment Policy Indicators for Determining Procedures 
Eligible for Payment of Co-surgeons 
250.10.2 - Payment of Co-surgeon Services Rendered in a Method II CAH 
250.10.3 - Co-surgeon Medicare Summary Notice (MSN) and Remittance 
Advice (RA) Messages 
250.10.4 - Review of Supporting Documentation for Co-surgeon Services 
in a Method II CAH  250.11 - Coding Bilateral Procedures Performed in a Method II CAH 
250.11.1 - Use of Payment Policy Indicators for Determining Bilateral 
Procedures Eligible for 150 Percent Payment Adjustment 
250.11.2 - Payment of Bilateral Procedures Rendered in a Method II CAH 
250.12 - Primary Care Incentive Payment Program (PCIP) Payments to Critical 
Access Hospitals (CAHs) Paid Under the Optional Method 
250.12.1 - Definition of Primary Care Practitioners and Primary Care 
Services 
250.12.2 - Identifying Services Eligible for the PCIP 
250.12.3 - Coordination with Other Payments 
250.12.4 - Claims Processing and Payment for CAHs Paid Under the 
Optional Method 
250.13 - Health Professional Shortage Areas (HPSA) Surgical Incentive Payment 
Program (HSIP) for Surgical Services Rendered in Critical Access Hospitals 
(CAHs) Paid under the Optional Method 
250.13.1 Overview of the HSIP 
250.13.2 - HPSA Identification 
250.13.3 - Coordination with Other Payments 
250.13.4 - General Surgeon and Surgical Procedure Identification for 
Professional Services Paid under the Physician Fee Schedule (PFS) 
250.13.5 - Claims Processing and Payment 
250.14 - Payment of Licensed Clinical Social Workers (LCSWs) in a Method II 
CAH 
250.15 - Coding and Payment of Multiple Surgeries Performed in a Method II 
CAH 
250.16 - Multiple Procedure Payment Reduction (MPPR) on Certain Diagnostic 
Imaging Procedures Rendered by Physicians 
250.17 - Payment of Global Surgical Split Care in a Method II CAH Submitted 
with Modifier 54 and/or 55 
260 - Outpatient Partial Hospitalization Services 
260.1 - Special Partial Hospitalization Billing Requirements for Hospitals, 
Community Mental Health Centers, and Critical Access Hospitals 
260.1.1 - Bill Review for Partial Hospitalization Services Received in 
Community Mental Health Centers (CMHC) 
260.2 - Professional Services Related to Partial Hospitalization 
260.3 - Outpatient Mental Health Treatment Limitation for Partial Hospitalization 
Services  260.4 - Reporting Service Units for Partial Hospitalization 
260.5 - Line Item Date of Service Reporting for Partial Hospitalization 
260.6 - Payment for Partial Hospitalization Services 
270 - Billing for Hospital Outpatient Services Furnished by Clinical Social Workers 
(CSW) 
270.1 - Fee Schedule to be Used for Payment for CSW Services 
270.2 - Outpatient Mental Health Payment Limitation for CSW Services 
270.3 - Coinsurance and Deductible for CSW Services 
280 - Hospital-Based Rural Health Clinics (RHCs) and Federally Qualified Health 
Centers (FQHCs) Billing for Non RHC/FQHC Services 
290 - Outpatient Observation Services 
290.1 - Observation Services Overview 
290.2 - General Billing Requirements for Observation Services 
290.2.1 - Revenue Code Reporting 
290.2.2 - Reporting Hours of Observation 
290.4 - Billing and Payment for Observation Services Furnished Between January 
1, 2006 and December 31, 2007 
290.4.1 - Billing and Payment for All Hospital Observation Services 
Furnished Between January 1, 2006 and December 31, 2007 
290.4.2 - Separate and Packaged Payment for Direct Referral for 
Observation Services Furnished Between January 1, 2006 and December 
31, 2007 
290.4.3 - Separate and Packaged Payment for Observation Services 
Furnished Between January 1, 2006 and December 31, 2007 
290.5 - Billing and Payment for Observation Services Furnished on or After 
January 1, 2008 
290.5.1 - Billing and Payment for Observation Services Furnished 
Between January 1, 2008 and December 31, 2015 
290.5.2 - Billing and Payment for Direct Referral for Observation Care 
Furnished Beginning January 1, 2008 
290.5.3 - Billing and Payment for Observation Services Furnished 
Beginning January 1, 2016 
290.6 - Services Not Covered as Observation Services 
300 - Medical Nutrition Therapy (MNT) Services 
300.1 - General Conditions and Limitations on Coverage 
300.2 - Referrals for MNT Services  300.3 - Dietitians and Nutritionists Performing MNT Services 
300.4 - Payment for MNT Services 
300.5 - General Claims Processing Information 
    300.5.1 - Rural Health Centers (RHCs)/Federally Qualified Health Centers 
(FQHCs) Special Billing Instructions  
300.6 - Common Working File (CWF) Edits 
310 - Lung Volume Reduction Surgery 
320 - Outpatient Intravenous Insulin Treatment (OIVIT) 
320.1 - HCPCS Coding for OIVIT 
320.2 - Medicare Summary Notices (MSN), Reason Codes, and Remark Codes  10 - Hospital Outpatient Prospective Payment System (OPPS) 
(Rev. 1, 10-03-03) 
A-01-93 
 
10.1 - Background 
(Rev. 3941; Issued: 12-22-17; Effective: 01- 01-18; Implementation: 01-02-18) 
 
Section 1833(t) of the Social Security Act (the Act) as amended by 4533 of the 
Balanced Budget Act (BBA) of 1997, authorizes CMS to implement a Medicare PPS for: 
 
 Hospital outpatient services, including partial hospitalization services; 
 
 Certain Part B services furnished to hospital inpatients who have no Part A 
coverage; 
 
 Partial hospitalization services furnished by CMHCs; 
 
 Hepatitis B vaccines and their administration, splints, cast, and antigens provided by 
HHAs that provide medical and other health services; 
 
 Hepatitis B vaccines and their administration provided by CORFs; and 
 
 Splints, casts, and antigens provided to hospice patients for treatment of non-
terminal illness. 
 
The Balanced Budget Refinement Act of 1999 (BBRA) contains a number of major 
provisions that affect the development of the OPPS.  These are: 
 
 Establish payments under OPPS in a budget neutral manner based on estimates of 
amounts payable in 1999 from the Part B Trust Fund and as beneficiary 
coinsurance under the system in effect prior to OPPS (Although the base rates 
were calculated using the 1999 amounts, these amounts are increased by the 
hospital inpatient market basket, minus one percent, to arrive at the amounts 
payable in the year 2000.  See 10.3 for Benefits and Improvement Protection Act 
(BIPA) changes in market basket updates.); 
   Extend the 5.8 percent reduction in operating costs and 10 percent reduction in 
capital costs (which had been due to sunset on December 31, 1999) through the 
first date the OPPS is implemented; 
 
 Require annual updating of the OPPS payment weights, rates, payment adjustments 
and groups; 
 
 Require annual consultation with an expert provider advisory panel in review and 
updating of payment groups; 
 
 Establish budget neutral outlier adjustments based on the charges, adjusted to costs, 
for all OPPS services included on the submitted outpatient bill for services 
furnished before January 1, 2002, and thereafter based on the individual services 
billed; 
 
 Provide transitional pass-through payment for the additional costs of new and 
current medical devices, drugs, and biologicals for at least two years but not more 
than three years; 
 
 Provide payment under OPPS for implantable devices including durable medical 
equipment (DME), prosthetics and those used in diagnostic testing; 
 
 Establish transitional payments to limit providers losses under OPPS; the additional 
payments are for 3 1/2 years for CMHCs and most hospitals, and permanent for 
the 10 cancer hospitals; and 
 
 Limit beneficiary coinsurance for an individual service paid under OPPS to the 
inpatient hospital deductible. 
 
The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 
(BIPA), which was signed into law on December 21, 2000, made a number of revisions 
to the Outpatient Prospective Payment System (OPPS).  These are: 
 
 Accelerated reductions of beneficiary copayments; 
 
 Increase in market basket update for 2001; 
   Transitional corridor provision for transitional outpatient payments (TOPs) for 
providers that did not file 1996 cost reports; and 
 
 Special transitional corridor treatment for childrens hospitals. 
 
The Secretary has the authority under 1883(t) of the Act to determine which services are 
included (with the exception of ambulance services for which a separate fee schedule is 
applicable starting April 1, 2002).  Medicare will continue to pay for clinical diagnostic 
laboratory services, orthotics, prosthetics (except as noted above), and for take-home 
surgical dressings on their respective fee schedules.  Medicare will also continue to pay 
for chronic dialysis using the composite rate (certain CRNA services, PPV, and influenza 
vaccines and their administration, orphan drugs, and ESRD drugs and supplies are not 
included in the composite rate), for screening mammographies based on the current 
payment limitation, which changes to payment under the Medicare Physician Fee 
Schedule (MPFS), effective January 1, 2002, and for outpatient rehabilitation services 
(physical therapy including speech language pathology and occupational therapy) under 
the MPFS.  Acute dialysis, e.g., for poisoning, will be paid under OPPS.  The 10 cancer 
centers exempt from inpatient PPS are included in this system, but are eligible for hold 
harmless payment under the Transitional Corridor provision. 
 
The Outpatient Prospective Payment System (OPPS) applies to all hospital outpatient 
departments except for hospitals that provide Part B only services to their inpatients; 
Critical Access Hospitals (CAHs); Indian Health Service hospitals; hospitals located in 
American Samoa, Guam, and Saipan; hospitals located in the Virgin Islands; and 
effective January 1, 2017 non-excepted off-campus provider-based departments of a 
hospital. The OPPS also applies to partial hospitalization services furnished by 
Community Mental Health Centers (CMHCs). 
 
Certain hospitals in Maryland that are paid under Maryland waiver provisions are also 
excluded from payment under OPPS but not from reporting Healthcare Common 
Procedure Coding System (HCPCS) and line item dates of service. 
 
10.1.1 - Payment Status Indicators 
(Rev. 1445; Issued:  02-08-08; Effective:  01-01-08; Implementation:  03-10-08) 
 
An OPPS payment status indicator is assigned to every HCPCS code.  The status 
indicator identifies whether the service described by the HCPCS code is paid under the 
OPPS and if so, whether payment is made separately or packaged.  The status indicator 
may also provide additional information about how the code is paid under the OPPS or 
under another payment system or fee schedule.  For example, services with status 
indicator A are paid under a fee schedule or payment system other than the OPPS.  
Services with status indicator N are paid under the OPPS, but their payment is packaged  into payment for a separately paid service.  Services with status indicator T are paid 
separately under OPPS but a multiple procedure payment reduction applies when two or 
more services with a status indicator of T are billed on the same date of service. 
 
The full list of status indicators and their definitions is published in Addendum D1 of the 
OPPS/ASC proposed and final rules each year.  The status indicator for each HCPCS 
code is shown in OPPS Addendum B. 
 
10.2 - APC Payment Groups 
(Rev. 1445; Issued:  02-08-08; Effective:  01-01-08; Implementation:  03-10-08) 
 
Each HCPCS code for which separate payment is made under the OPPS is assigned to an 
ambulatory payment classification (APC) group. The payment rate and coinsurance 
amount calculated for an APC apply to all of the services assigned to the APC.  A 
hospital may receive a number of APC payments for the services furnished to a patient on 
a single day; however, multiple surgical procedures furnished on the same day are subject 
to discounting.  (See section 10.5 for discussion of multiple procedure discounting under 
the OPPS). 
 
Services within an APC are similar clinically and with respect to hospital resource use. 
The law requires that the median cost for the highest cost service within the APC may not 
be more than 2 times the median cost for the lowest cost service in the APC, and the 
Secretary may make exceptions in unusual cases, such as low volume items and services.   
This is commonly called the 2 times rule.  The median costs of services change from 
year to year as a result of changes in hospitals charge, changes to cost-to-charge ratios as 
determined from hospital cost reports, and changes in the frequency of services.  
Therefore, the APC assignment of a service may change from one year to the next year as 
is needed to avoid a violation of the 2 times rule or to improve clinical and/or resource 
homogeneity of APCs.  This APC reconfiguration may result in significant changes in the 
payment rate for the APC and, therefore, for the service being billed. 
 
10.2.1 - Composite APCs 
(Rev. 3941; Issued: 12-22-17; Effective: 01- 01-18; Implementation: 01-02-18) 
 
Composite APCs provide a single payment for a comprehensive diagnostic and/or 
treatment service that is defined, for purposes of the APC, as a service typically reported 
with multiple HCPCS codes.  When HCPCS codes that meet the criteria for payment of 
the composite APC are billed on the same date of service, CMS makes a single payment 
for all of the codes as a whole, rather than paying individually for each code. 
 
See Addendum A at www.cms.hhs.gov/HospitalOutpatientPPS/ for the national 
unadjusted payment rates for these composite APCs. 
  10.2.2 - Cardiac Resynchronization Therapy 
(Rev. 2386, Issued: 01-13-12, Effective: 01-01-12, Implementation: 01-03-12) 
 
Effective for services furnished on or after January 1, 2012, cardiac resynchronization 
therapy involving an implantable cardioverter defibrillator (CRT-D) will be recognized as 
a single, composite service combining implantable cardioverter defibrillator procedures 
(described by CPT code 33249 (Insertion or repositioning of electrode lead(s) for single 
or dual chamber pacing cardioverter-defibrillator and insertion of pulse generator )) and 
pacing electrode insertion procedures (described by CPT code 33225 (Insertion of pacing 
electrode, cardiac venous system, for left ventricular pacing, at time of insertion of pacing 
cardioverter-defibrillator or pacemaker pulse generator (including upgrade to dual 
chamber system))) when performed on the same date of service.  When these procedures 
appear on the same claim but with different dates of service, or appear on the claim 
without the other procedure, the standard APC assignment for each service will continue 
to be applied. 
 
Medicare will make a single payment for those procedures that qualify for composite 
service payment, as well as any packaged services furnished on the same date of service.  
Because CPT codes 33225 and 33249 may be treated as a composite service for payment 
purposes, CMS is assigning them status indicator Q3 (Codes that may be paid through 
a composite APC) in Addendum B. 
 
Hospitals will continue to use the same CPT codes to report CRT-D procedures, and the 
I/OCE will evaluate every claim received to determine if payment as a composite service 
is appropriate. Specifically, the I/OCE will determine whether payment will be made 
through a single, composite payment when the procedures are done on the same date of 
service, or through the standard APC payment methodology when they are done on 
different dates of service. 
 
CMS is also implementing claims processing edits that will return to providers 
incorrectly coded claims on which a pacing electrode insertion procedure described by 
CPT code 33225 is billed without one of the following CPT codes for insertion of an 
implantable cardioverter defibrillator or pacemaker: 
 
  33206 (Insertion or replacement of permanent pacemaker with transvenous 

electrode(s); atrial); 
 
  33207 (Insertion or replacement of permanent pacemaker with transvenous 

electrode(s); ventricular); 
 
  33208 (Insertion or replacement of permanent pacemaker with transvenous 

electrode(s); atrial and ventricular); 
 
  33212 (Insertion or replacement of pacemaker pulse generator only; single 

chamber, atrial or ventricular); 
    33213 (Insertion or replacement of pacemaker pulse generator only; dual 

chamber, atrial or ventricular); 
 
  33214 (Upgrade of implanted pacemaker system, conversion of single chamber 

system to dual chamber system (includes removal of previously placed pulse 
generator, testing of existing lead, insertion of new lead, insertion of new pulse 
generator)); 
 
  33216 (Insertion of a single transvenous electrode, permanent pacemaker or 

cardioverter-defibrillator); 
 
  33217 (Insertion of 2 transvenous electrodes, permanent pacemaker or 

cardioverter-defibrillator); 
 
  33221(Insertion of pacemaker pulse generator only; with existing multiple leads); 

 
  33222 (Revision or relocation of skin pocket for pacemaker); 

 
  33230 (Insertion of pacing cardioverter-defibrillator pulse generator only; with 

existing dual leads); 
 
  33231 (Insertion of pacing cardioverter-defibrillator pulse generator only; with 

existing multiple leads) 
 
  33233 (Removal of permanent pacemaker pulse generator); 

 
  33234 (Removal of transvenous pacemaker electrode(s); single lead system, atrial 

or ventricular); 
 
  33235 (Removal of transvenous pacemaker electrode(s); dual lead system, atrial 

or ventricular); 
 
  33240 (Insertion of single or dual chamber pacing cardioverter-defibrillator pulse 

generator); or 
 
  33249 (Insertion or repositioning of electrode lead(s) for single or dual chamber 

pacing cardioverter-defibrillator and insertion of pulse generator). 
 
10.2.3 - Comprehensive APCs 
(Rev. 12421; Issued: 12-21-23; Effective: 01-01-24; Implementation: 01-02-24)  
 
The following services are excluded from comprehensive APC packaging:  
 ambulance services  
 brachytherapy sources (status indicator U)    diagnostic and mammography screenings  
 physical therapy, speech-language pathology and occupational therapy services reported 
on a separate facility claim for recurring services  
 pass-through drugs, biologicals, and devices (status indicators G or H)  
 preventive services defined in 42 CFR 410.2  
 self-administered drugs (SADs) - drugs that are usually self-administered and do not 
function as supplies in the provision of the comprehensive service  
 services assigned to OPPS status indicator F (including certain CRNA services, 
Hepatitis B vaccines and corneal tissue acquisition)  
 services assigned to OPPS status indicator L (including influenza, pneumococcal 
pneumonia, and COVID-19 vaccines)  
 certain Part B inpatient services  Ancillary Part B inpatient services payable under Part 
B when the primary J1 service for the claim is not a payable Medicare Part B inpatient 
service (for example, exhausted Medicare Part A benefits, beneficiaries with Part B only) 
  services assigned to a New Technology APC  
 Any drug or biological described by HCPCS code C9399 (Unclassified drugs or 
biologicals)  
 
10.2.4 - Reporting for Certain Outpatient Department Services (That 
Are Similar to Therapy Services) (Non-Therapy Outpatient 
Department Services) and Are Adjunctive to Comprehensive APC 
Procedures  
(Rev. 10541; Issued: 12-31-20; Effective: 01-01-21; Implementation: 01-04-21) 
 
This language was originally published in the October 2016 Update of the Outpatient 
Perspective Payment System (OPPS) (Transmittal R3602CP). We are updating this 
language based on the removal of the regulations at 42 CFR 410.59(a)(4) and 42 CFR 
410.60(a)(4) related to functional reporting for therapy services.  
 
Non-therapy outpatient department services are services such as physical therapy, 
occupational therapy, and speech-language pathology provided during the perioperative 
period (of a Comprehensive APC (C-APC) procedure) without a certified therapy plan of 
care. These are not therapy services as described in section 1834(k) of the Act, regardless 
of whether the services are delivered by therapists or other non-therapist health care 
workers. Therapy services are those provided by therapists under a plan of care in 
accordance with section 1835(a)(2)(C) and section 1835(a)(2)(D) of the Act and are paid 
for under section 1834(k) of the Act, subject to annual therapy caps as applicable (78 FR 
74867 and 79 FR 66800), until they were repealed by Bipartisan Budget Act of 2018, 
effective January 1, 2018. Because these services are outpatient department services and 
not therapy services, the requirement for functional reporting under the regulations at 42 
CFR 410.59(a)(4) and 42 CFR 410.60(a)(4) does not apply. The functional reporting 
requirements were applicable until January 1, 2019 at which time the regulations at 42 
CFR 410.59(a)(4) and 42 CFR 410.60(a)(4) were removed (83 FR 41786 and 83 FR 
59452). 
  The comprehensive APC payment policy packages payment for adjunctive items, 
services, and procedures into the most costly primary procedures under the OPPS at the 
claim level. When non-therapy outpatient department services are included on the same 
claim as a C-APC procedure (status indicator (SI) = J1) (see 80 FR 70326) or the specific 
combination of services assigned to the Observation Comprehensive APC 8011 (SI = J2), 
these services are considered adjunctive to the primary procedure. Payment for non-
therapy outpatient department services is included as a packaged part of the payment for 
the C-APC procedure.  
 
Effective for claims received on or after October 1, 2016 with dates of service on or after 
January 1, 2015, providers may report non-therapy outpatient department services (that 
are similar to therapy services) that are adjunctive to a C-APC procedure (SI = J1) or the 
specific combination of services assigned to the Observation Comprehensive APC 8011 
(SI = J2), in one of two ways:  
 
1. Without using the therapy CPT codes and instead reporting these non-therapy services 
with Revenue Code 0940 (Other Therapeutic Services); or  
2. Reporting non-therapy outpatient department services that are adjunctive to J1 or J2 
services with the appropriate occurrence codes, CPT codes, modifiers, and revenue 
codes. 
 
10.3 - Calculation of APC Payment Rates 
(Rev. 1445, Issued:  02-08-08; Effective:  01-01-08; Implementation:  03-10-08) 
 
The OPPS national unadjusted payment rates for APCs other than drugs and biologicals 
are calculated as the products of the scaled relative weight for the APC and the OPPS 
conversion factor.  Hospital specific payments for these APCs are derived after 
application of applicable adjustment factors (e.g., multiple surgery reduction, rural sole 
community adjustment, etc.) and the post reclassification wage index that applies to the 
hospital to which payment is being made.  Payment rates for separately paid drugs and 
biologicals are generally established based on a percentage of the average sales price of 
the drug or biological. 
 
An APCs scaled relative weight is generally calculated based on the median cost 
(operating and capital) of all of the services included in the APC group.  Median costs are 
developed from a database of the most currently available hospital outpatient claims 
using the most recently filed cost report data. 
 
The following is a simplified description of the process used to calculate the OPPS 
payment rates for services for which the rate is based on the median cost. 
 
  Hospital-specific, department-specific cost-to-charge ratios are used to convert 
billed charges to costs for each HCPCS code; 
 
  For most APCs, single procedure bills (claims that contain only one separately 
paid procedure code) for all of the procedures within a particular APC are used to  calculate the median costs on which APC payment weights are based to ensure 
that the median captures the full cost of the procedure when it is the only service 
furnished. The costs on the bill are summed to add the costs of any packaged 
services into the procedure with which the packaged services are packaged.  
Composite APCs are an exception to this statement since the payment for them is 
calculated only from multiple procedure claims that meet the criteria for 
composite APC payment; 
 
  60 percent of the total cost is wage neutralized and the set of claims for each APC 
is trimmed at +/- 3 standard deviations from the geometric mean; 
 
  A median cost is calculated for each APC, using the claims for the procedures that 
meet the criteria for being assigned to that APC and the array of costs determined 
from those claims.  In some cases, a subset of single procedure bills that meet 
specified criteria are used to calculate the median cost for the APC.  For example, 
CMS uses only claims with correct device codes, no token charges for devices, no 
interrupted procedures, and without no cost or full credit devices to set the 
median cost for device-dependent APCs.  Similarly, the median costs for 
composite APCs are calculated using only claims that meet the criteria for the 
composite APC. 
 
  Median costs are converted to relative weights by dividing each APCs median 
cost by the median cost for the Level 3 Hospital Clinic Visit APC. 
 
  Relative weights are scaled for budget neutrality. 
 
  Scaled weights are converted to payment rates using a conversion factor which 
takes into account pass-through payments to be made in the coming year, changes 
to the wage index (see section 10.8.1), the cost of outlier payments (see section 
10.7) and the annual market basket update factor. 
 
CMS issues a proposed rule with a 60 day comment period in the summer of the year 
before the year in which the proposed payment rates would be applicable.  There is a 60 
day comment period, after which CMS issues a final rule with comment period to 
announce the forthcoming years payment policies and rates.  The CMS OPPS Webpage 
at http://www.cms.hhs.gov/HospitalOutpatientPPS/ is the best source for both rules and 
the supporting files. 
 
10.4 - Packaging 
(Rev. 3941; Issued: 12-22-17; Effective: 01- 01-18; Implementation: 01-02-18) 
 
Under the OPPS, packaged services are items and services that are considered to be an 
integral part of another service that is paid under the OPPS.  No separate payment is 
made for packaged services, because the cost of these items and services is included in 
the APC payment for the service of which they are an integral part.  For example, routine  supplies, anesthesia, recovery room use, and most drugs are considered to be an integral 
part of a surgical procedure so payment for these items is packaged into the APC 
payment for the surgical procedure. 
 
A. Packaging for Claims Resulting in APC Payments  
 
If a claim contains services that result in an APC payment but also contains packaged 
services, separate payment for the packaged services is not made since payment is 
included in the APC.  However, charges related to the packaged services are used for 
outlier and Transitional Corridor Payments (TOPs) as well as for future rate setting.  
Therefore, it is extremely important that hospitals report all HCPCS codes consistent with 
their descriptors; CPT and/or CMS instructions and correct coding principles, and all 
charges for all services they furnish, whether payment for the services is made separately 
paid or is packaged. 
 
B. Packaging for Claims Resulting in No APC Payments 
 
If the claim contains only services payable under cost reimbursement, such as corneal 
tissue, and services that would be packaged services if an APC were payable, then the 
packaged services are not separately payable.  In addition, these charges for the packaged 
services are not used to calculate TOPs. 
 
If the claim contains only services payable under a fee schedule, such as clinical 
diagnostic laboratory tests, and also contains services that would be packaged services if 
an APC were payable, the packaged services are not separately payable. In addition, the 
charges are not used to calculate TOPs. 
 
If a claim contains services payable under cost reimbursement, services payable under a 
fee schedule, and services that would be packaged services if an APC were payable, the 
packaged services are not separately payable. In addition, the charges are not used to 
calculate TOPs payments. 
 
C. Packaging Types Under the OPPS 
 
1. Unconditionally packaged services are services for which separate payment is never 
made because the payment for the service is always packaged into the payment for other 
services.  Unconditionally packaged services are identified in the OPPS Addendum B 
with status indictor of N. See the OPPS Web site at 
http://www.cms.hhs.gov/HospitalOutpatientPPS/ for the most recent Addendum B 
(HCPCS codes with status indicators).  In general, the charges for unconditionally  packaged services are used to calculate outlier and TOPS payments when they appear on 
a claim with a service that is separately paid under the OPPS because the packaged 
service is considered to be part of the package of services for which payment is being 
made through the APC payment for the separately paid service. 
 
2. STV-packaged services are services for which separate payment is made only if there 
is no service with status indicator S, T, or V reported on the same claim.  If a claim 
includes a service that is assigned status indicator S, T, or V reported on the same claim 
as the STV- packaged service, the payment for the STV-packaged service is packaged 
into the payment for the service(s) with status indicator S, T, V and no separate payment 
is made for the STV-packaged service.  STV-packaged services are assigned status 
indicator Q1. See the OPPS Webpage at http://www.cms.hhs.gov/HospitalOutpatientPPS/ 
for identification of STV-packaged codes. 
 
3. T-packaged services are services for which separate payment is made only if there is 
no service with status indicator T reported on the same claim.  When there is a claim that 
includes a service that is assigned status indicator T reported on the same claim as the T-
packaged service, the payment for the T-packaged service is packaged into the payment 
for the service(s) with status indicator T and no separate payment is made for the T-
packaged service.  T-packaged services are assigned status indicator Q2. See the OPPS 
Web site at http://www.cms.hhs.gov/HospitalOutpatientPPS/ for identification of T-
packaged codes. 
 
4. A service that is assigned to a composite APC is a major component of a single 
episode of care.  The hospital receives one payment through a composite APC for 
multiple major separately identifiable services.  Services mapped to composite APCs are 
assigned status indicator Q3.  See the discussion of composite APCs in section 10.2.1. 
 
5. Q4 services are assigned to laboratory HCPCS codes that appear on the Clinical 
Laboratory Fee Schedule (CLFS).  Status indicator Q4 designates packaged APC 
payment if billed on the same claim as a HCPCS code assigned status indicator J1, 
J2, S, T, V, Q1, Q2, or Q3. When a Q4 service is not billed on the same 
claim as another separately payable service then the IOCE automatically changes their 
status indicator to A and separate payment is made at the CLFS payment rate. 
 
6. J1 services are assigned to comprehensive APCs.  Payment for all adjunctive services 
reported on the same claim as a J1 service is packaged into payment for the primary J1 
service. See the discussion of comprehensive APCs in section 10.2.3. 
 
7. J2 services are assigned to comprehensive APCs when a specific combination of 
services are reported on the claim.  Payment for all adjunctive services reported on the  same claim as a J2 service is packaged into payment for the J2 service when certain 
conditions are met.  See the discussion of comprehensive APCs in section 10.2.3. 
 
10.4.1 - Combinations of Packaged Services of Different Types That are 
Furnished on the Same Claim 
(Rev. 3685, Issued: 12-22-16, Effective: 01-01-17, Implementation: 01-03-17) 
 
Where a claim contains multiple codes that are STV-packaged codes and does not 
contain a procedure with status indicator S, T, or V on the same claim, separate payment 
is made for the STV-packaged code that is assigned to the highest paid APC and payment 
for the other STV-packaged codes on the claim is packaged into the payment for the 
highest paid STV-packaged code. 
 
Where a claim contains multiple codes that are T-packaged codes and does not contain a 
procedure with status indicator T on the same claim, separate payment is made for the T-
packaged code assigned to the highest paid APC and payment for the other T-packaged 
codes on the claim is packaged into the payment for the highest paid T-packaged code. 
 
Where a claim contains a combination of STV-packaged and T-packaged codes and does 
not contain a procedure with status indicator S, T, or V, separate payment is made for the 
STV-packaged or T-packaged code with the highest payment rate and payment for the 
other STV-packaged and T-packaged codes is packaged into the payment for the highest 
paid STV-packaged or T-packaged procedure. 
 
Where a claim contains a combination of STV-packaged and T-packaged codes and 
codes that could be paid through composite APCs, payment for the STV-packaged and/or 
T-packaged services is packaged into separate payment for the composite APC. 
 
10.5 - Discounting 
(Rev. 1445, Issued:  02-08-08; Effective:  01-01-08; Implementation:  03-10-08) 
 
  Fifty percent of the full OPPS amount is paid if a procedure for which anesthesia is 
planned is discontinued after the patient is prepared and taken to the room where the 
procedure is to be performed but before anesthesia is provided. 
 
  Fifty percent of the full OPPS amount is paid if a procedure for which anesthesia is 
not planned is discontinued after the patient is prepared and taken to the room where 
the procedure is to be performed. 
 
  Multiple surgical procedures furnished during the same operative session are 
discounted. 
 
  The full amount is paid for the surgical procedure with the highest weight; 
    Fifty percent is paid for any other surgical procedure(s) performed at the same 
time; 
 
  Similar discounting occurs now under the physician fee schedule and the 
payment system for ASCs; 
 
  When multiple surgical procedures are performed during the same operative 
session, beneficiary coinsurance is discounted in proportion to the APC payment. 
 
10.6 - Payment Adjustments 
(Rev. 1445, Issued:  02-08-08; Effective:  01-01-08; Implementation:  03-10-08) 
 
Payments are adjusted to reflect geographic differences in labor-related costs.  In 
addition, beginning January 1, 2006, rural sole community hospitals (SCHs) receive a 7.1 
percent increase in payments for most services, with certain exceptions, including 
separately paid drugs and biologicals.  This adjustment is authorized under section 
1833(t)(13)(B) of the Act, and implemented in accordance with section 419.43(g) of the 
regulations.  The adjustment is automatically applied in Pricer. 
 
The Secretary may also establish other adjustments or special adjustments for certain 
classes of hospitals. 
 
10.6.1 - Payment Adjustment for Rural Sole Community Hospitals 
(Rev. 12369, Issued: 11-17-23; Effective: 01-01-2023; Implementation: 01-03-2023) 
 
Beginning January 1, 2006, rural sole community hospitals (SCHs), including essential 
access community hospitals (EACHs), receive a 7.1 percent increase in payments for 
most services, with certain exceptions.  Services which are excepted from the increase in 
payments include, but are not limited to, separately paid drugs and biologicals and items 
paid at charges adjusted to cost.  This adjustment is authorized under Section 
1833(t)(13)(B) of the Act, and implemented in accordance with Section 419.43(g) of the 
regulations.  The adjustment is automatically applied in Pricer. 
 
10.6.2 - Payment Adjustment for Failure to Meet the Hospital 
Outpatient Quality Reporting Requirements 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
Effective for services furnished on or after January 1, 2009, Section 1833(t)(17)(A) of the 
Act requires that Subsection (d) hospitals that have failed to meet the specified hospital 
outpatient quality reporting requirements for the relevant calendar year will receive 
payment under the OPPS that reflects a 2 percentage point reduction of the annual OPPS 
update factor.  See www.qualitynet.org for information on complying with the reporting 
requirements and standards that must be met to receive the full update. 
 
10.6.2.1 - Hospitals to Which the Payment Reduction Applies 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09)   
The reduction applies only to hospitals that are identified as Subsection (d) hospitals.  
Subsection (d) hospitals have the same definition for hospitals paid under the OPPS as 
for hospitals paid under the IPPS.  Specifically, Subsection (d) hospitals are defined 
under Section 1886(d)(1)(B) of the Act as hospitals that are located in the 50 states or the 
District of Columbia other than those categories of hospitals or hospital units that are 
specifically excluded from the IPPS, including psychiatric, rehabilitation, long-term care, 
childrens and cancer hospitals or hospital units.  In other words, the provision does not 
apply to hospitals and hospital units excluded from the IPPS or to hospitals located in 
Maryland, Puerto Rico or the U.S. territories.  Hospitals that are not required to submit 
quality data (i.e., those that are not Subsection (d) hospitals) will receive the full OPPS 
update.  Similarly, the reduced update will not apply to Subpart (d) hospitals that are not 
paid under the OPPS (e.g., Indian Health Service hospitals). 
 
10.6.2.2 - Services to which the Payment Reduction Applies 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
The reduction to the annual update factor for failure to meet the quality reporting 
requirements applies to most, but not all, services paid under the OPPS.  The reduction of 
payments does not apply to services paid under the OPPS if the payment amounts are not 
calculated using the conversion factor to which the annual update factor applies (e.g., 
drugs and biologicals paid based on the average sales price (ASP) methodology, new 
technology services paid at a fixed amount, and services paid at charges adjusted to cost).  
The reduction also does not apply to hospital outpatient services paid through other fee 
schedules or other mechanisms.  Examples of these exceptions are services paid under the 
physician fee schedule (e.g., physical therapy and diagnostic and screening 
mammography), services paid at reasonable cost (e.g., influenza and pneumococcal 
vaccines), and services paid under other fee schedules (e.g., clinical laboratory services 
and durable medical equipment). 
 
The specific services to which this policy applies can be identified by OPPS status 
indicator.  CMS will identify the status indicators of the HCPCS codes to which the 
reduction applies each year in the change request that announces changes to the OPPS for 
the forthcoming calendar year.  Also, the status indicators for the services (identified by 
HCPCS codes) to which the reduction applies can be found in the OPPS final rule for the 
year of interest under Hospital Outpatient Regulations and Notices at 
www.cms.hhs.gov/HospitalOutpatientPPS/.  The services excluded from the payment 
reduction may change each year if the method of calculating payment under the OPPS 
changes. 
 
10.6.2.3 - Contractor Responsibilities 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
CMS claims processing software will automatically reduce payment to Subsection (d) 
hospitals when those hospitals that fail to meet the quality reporting requirements bill 
for services to which the reduced update applies.  However, contractors must update the  Outpatient Provider Specific File (OPSF) quality reporting field when CMS furnishes the 
list of hospitals to which the payment reduction applies.  The FISS auto-populates the 
Hospital Quality Indicator field of the OPSF field with a 1 for all hospitals.  Once CMS 
has issued the list of hospitals failing to meet the requirements, Medicare contractors 
must remove the 1 in the Hospital Quality Indicator field for each Subsection (d) 
hospital that fails to meet the quality reporting requirements.  Contractors make no 
changes to the 1 indicator for hospitals that are not Subsection (d) hospitals providing 
OPPS services or for hospitals that are Subsection (d) hospitals providing OPPS services 
that are not listed as failing the requirements. 
 
CMS sends Medicare contractors the file of hospitals to which the reduction applies for a 
given calendar year by a Joint Signature Memorandum/Technical Direction Letter as 
soon as the list is available.  This will be sent as soon as possible, expected to be on or 
about December 1 of each year preceding the calendar year to which the payment 
reduction applies.  Should a Subsection (d) hospital later be determined to have met the 
criteria after dissemination of this list, CMS will change the hospitals status.  CMS will 
notify Medicare contractors of the change in status and contractors must update the OPSF 
as needed and must mass adjust paid claims. 
 
For new hospitals, Medicare contractors must provide information to the Quality 
Contractor to be specified by CMS as soon as possible so that the Quality Contractor can 
enter the provider information into the Program Resource System and follow through 
with ensuring provider participation with the requirements for quality data reporting, if 
applicable.  CMS will notify Medicare contractors of how to contact the Quality 
Contractor each year in the annual OPPS update change request.  This allows the Quality 
Contractor the opportunity to contact new facilities as early as possible in the calendar 
year to inform them of the hospital outpatient quality reporting requirements.  As soon as 
possible, Medicare contractors must provide the following information on newly 
participating hospitals to the Quality Contractor to be specified by CMS: 
 
  State code; 
  Provider name; 
  Provider ID numbe; 
  Medicare accept dat;e 
  Contact name (if available); and 
  Telephone number. 
 
10.6.2.4 - Application of the Payment Reduction Factor in Calculation 
of the Reduced Payment and Reduced Copayment 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
For services to which the payment adjustment applies, CMS calculates a payment 
reduction factor that is used in the OPPS Pricer to adjust the payments for hospitals that 
fail to meet the reporting requirements.  CMS calculates this factor by dividing the 
OPPS conversion factor that incorporates the reduced update factor by the OPPS 
conversion factor that incorporates the full update factor for the applicable  calendar year.  This ratio is applied to the full national unadjusted payment amount for a 
service subject to the payment reduction in order to calculate the reduced payment 
amount.  Similarly, this ratio is applied to the full national unadjusted copayment for an 
applicable service to calculate the reduced copayment that may be collected from the 
beneficiary by the hospital.  The payment reduction factor will be included in the annual 
OPPS update change request and may also be found in the applicable OPPS final rule, 
which can be found at www.cms.hhs.gov/HospitalOutpatientPPS/ under Hospital 
Outpatient Regulations and Notices. 
 
10.6.3 - Payment Adjustment for Certain Cancer Hospitals 
(Rev. 2453, Issued: 04-26-12, Effective: 01-01-12, Implementation: 05-29 -12) 
 
Section 3138 of the Affordable Care Act requires CMS to conduct a study to determine 
if, under the OPPS, outpatient costs incurred by 11 specified cancer hospitals exceed the 
costs incurred by other hospitals furnishing services under the OPPS.  In addition, 
Section 3138 of the Affordable Care Act provides that if the specified cancer hospitals 
costs are determined to be greater than the costs of other hospitals furnishing services 
under the OPPS, CMS shall provide a payment adjustment to the 11 specified cancer 
hospitals that will appropriately reflect these higher outpatient costs.  We determined that 
outpatient costs incurred by the 11 specified cancer hospitals were greater than the costs 
incurred by other OPPS hospitals.  Therefore, consistent with Section 3138 of the 
Affordable Care Act, we adopted a policy to provide additional payments to each of the 
11 cancer hospitals so that each cancer hospitals final payment to cost ratio (PCR) for 
services provided in a given calendar year is equal to the weighted average PCR (which 
we refer to as the target PCR) for other hospitals paid under the OPPS.  The target PCR 
is set in advance of the calendar year and is calculated using the most recent submitted or 
settled cost report data that are available at the time of final rulemaking for the calendar 
year. 
 
The cancer hospital payment adjustment will be made through interim monthly payments 
with the final payment adjustment amount calculated based on the providers settled cost 
report.  The calculation for the monthly cancer hospital payment adjustment amount is 
described as follows:   
 
Step 1 - Compute the cancer hospital target payment amount for each month by first 
multiplying the total charges for covered services for all OPPS services on claims paid 
during the month and adjust the total charges to cost by multiplying them by the 
outpatient cost-to-charge ratio and then multiplying this amount by the target PCR for the 
calendar year. 
 
Step 2 - Add together the total Medicare program payments, unreduced coinsurance and 
deductible applied for all APCs, as well as all outlier payments (including reconciled 
outlier payments and the time value of money) and transitional pass-through payments 
for drugs, biological and/or devices for those same claims paid during the month as those 
used in Step 1.   If the result is greater than the result of Step 1, go to Step 4.  No 
additional payment is due this month.   
Step 3 - Subtract the result of Step 2 from the result of Step 1 and pay .85 times this 
amount.   
 
Step 4 - When the result of step 2 is greater than the result of Step 1 for the final month of 
a providers cost report period, do nothing more.  When the result of Step 2 is greater 
than the result of Step 1 for any other month, store all Step 1 and Step 2 totals and include 
these totals with the totals for the next months additional payment calculation. 
 
10.6.3.1 - Payment Adjustment for Certain Cancer Hospitals for CY 
2012 and CY 2013 
(Rev. 2611, Issued: 12-14-12, Effective: 01-01-13, Implementation, 01-07-13) 
 
The target PCR that should be used in the calculation of the interim monthly payments 
associated with the cancer hospital adjustment, as described above in section 10.6.3, and 
at final cost report settlement is 0.91 for hospital outpatient services furnished on or after 
January 1, 2012 through December 31, 2013. 
 
10.6.3.2 - Payment Adjustment for Certain Cancer Hospitals for CY 
2014 
(Rev. 2845, Issued: 12-27-13, Effective: 01-01-14, Implementation: 01-06-14) 
 
The target PCR that should be used in the calculation of the interim monthly payments 
associated with the cancer hospital adjustment, as described above in section 10.6.3, and 
at final cost report settlement is 0.89 for hospital outpatient services furnished on or after 
January 1, 2014 through December 31, 2014. 
 
10.6.3.3 - Payment Adjustment for Certain Cancer Hospitals Beginning 
CY 2015 
(Rev. 3941; Issued: 12-22-17; Effective: 01- 01-18; Implementation: 01-02-18) 
 
The target PCR that should be used in the calculation of the interim monthly payments 
associated with the cancer hospital adjustment, as described above in section 10.6.3, and 
at final cost report settlement is 0.90 for hospital outpatient services furnished on or after 
January 1, 2015 through December 31, 2015. 
 
10.6.3.4 - Payment Adjustment for Certain Cancer Hospitals Beginning 
CY 2016 
(Rev. 3941; Issued: 12-22-17; Effective: 01- 01-18; Implementation: 01-02-18) 
  The target PCR that should be used in the calculation of the interim monthly payments 
associated with the cancer hospital adjustment, as described above in section 10.6.3, and 
at final cost report settlement is 0.92 for hospital outpatient services furnished on or after 
January 1, 2016 through December 31, 2016. 
 
10.6.3.5 - Payment Adjustment for Certain Cancer Hospitals Beginning 
CY 2017 
(Rev. 3941; Issued: 12-22-17; Effective: 01- 01-18; Implementation: 01-02-18) 
 
The target PCR that should be used in the calculation of the interim monthly payments 
associated with the cancer hospital adjustment, as described above in section 10.6.3, and 
at final cost report settlement is 0.91 for hospital outpatient services furnished on or after 
January 1, 2017 through December 31, 2017. 
 
10.6.3.6 - Payment Adjustment for Certain Cancer Hospitals Beginning 
CY 2018 
(Rev. 3941; Issued: 12-22-17; Effective: 01- 01-18; Implementation: 01-02-18) 
 
Section 16002(b) of the 21st Century Cures Act requires that, for CY 2018 and 
subsequent calendar years, the target PCR that should be used in the calculation of the 
interim monthly payments associated with the cancer hospital adjustment, as described 
above in section 10.6.3, and at final cost report settlement is reduced by 0.01. After 
including this reduction, for hospital outpatient services furnished on or after January 1, 
2018 through December 31, 2018, the target PCR is 0.88. 
10.6.3.7 - Payment Adjustment for Certain Cancer Hospitals Beginning 
CY 2019                                                                                                       
(Rev. 4513, Issued: 02-04-2020, Effective: 01-01- 2020, Implementation: 01-06-2020) 
 
Section 16002(b) of the 21st Century Cures Act requires that, for CY 2018 and 
subsequent calendar years, the target PCR that should be used in the calculation of the 
interim monthly payments associated with the cancer hospital adjustment, as described 
above in section 10.6.3, and at final cost report settlement is reduced by 0.01. After 
including this reduction, for hospital outpatient services furnished on or after January 1, 
2019 through December 31, 2019, the target PCR is 0.88. 
 
10.6.3.8 - Payment Adjustment for Certain Cancer Hospitals Beginning 
CY 2020                                                                                                      
(Rev. 4513, Issued: 02-04-2020, Effective: 01-01- 2020, Implementation: 01-06-2020) 
  Section 16002(b) of the 21st Century Cures Act requires that, for CY 2018 and 
subsequent calendar years, the target PCR that should be used in the calculation of the 
interim monthly payments associated with the cancer hospital adjustment, as described 
above in section 10.6.3, and at final cost report settlement is reduced by 0.01. After 
including this reduction, for hospital outpatient services furnished on or after January 1, 
2020 through December 31, 2020, the target PCR is 0.89. 
10.6.4 - Payment Adjustment for Rural Emergency Hospitals1 
(Rev. 12369, Issued: 11-17-23; Effective: 01-01-2023; Implementation: 01-03-2023) 
 
A rural emergency hospital (REH), as defined in  419.91, is an entity that operates for 
the purpose of providing emergency department services, observation care, and other 
outpatient medical and health services specified by the Secretary in which the annual per 
patient average length of stay does not exceed 24 hours. The time calculation for 
determining the length of stay of a patient receiving REH services begins with the 
registration, check-in or triage of the patient (whichever occurs first) and ends with the 
discharge of the patient from the REH. The discharge occurs when the physician or other 
appropriate clinician has signed the discharge order, or at the time the outpatient service 
is completed and documented in the medical record. The entity must not provide inpatient 
services, except those furnished in a unit that is a distinct part licensed as a skilled 
nursing facility to furnish post-hospital extended care services.  
  
Rural emergency hospital services, as defined in  419.91, are all covered outpatient 
department (OPD) services, as defined in section 1833(t)(1)(B) of the Act, excluding 
services described in section 1833(t)(1)(B)(ii), furnished by an REH that would be paid 
under the OPPS when provided in a hospital paid under the OPPS for outpatient 
services, provided that such services are furnished consistent with the conditions of 
participation at 42 C.F.R.  485.510 - 485.544. 
 
A.  Payment for REH Services  
Beginning January 1, 2023, a REH that provides a REH service will receive a Medicare 
payment for the service that is equal to the amount of payment that would otherwise 
apply under section 1833(t) of the Act for the equivalent covered OPD service, increased 
by 5 percent to reflect the higher costs incurred by such hospitals. The beneficiary co-
payment for the service is calculated the same way as it is calculated under section 
1833(t)(8) of the Act for the equivalent covered OPD service, excluding the 5 percent 
payment increase. 
 
EXAMPLE:  
 
1 The information described in Section 10.6.4 of this Manual is based on proposed policies to implement 
payment for REHs, published as a rider to the CY2023 OPPS proposed rule. All policies are subject to 
change pending the publication of the final policies concerning this new provider type, including 
associated REH payment policies, in the CY2023 OPPS Final Rule, CMS-1772-FC. If there are changes to 
these proposed policies made in response to public comments in the final rule, CMS will update this section 
accordingly.  1. Service/Rate x 0.05 = Increase Amount for REH Services  
$100.00/Rate x 0.05 = $5.00  Increase Amount for REH Services 
  
2. Service/Rate + Increase Amount for REH Services = Allowed Amount   
$100.00 + $5.00 = $105.00 Allowed Amount  
  
3. Service/Rate x 0.20 = Coinsurance   
$100.00 * 0.20 = $20.00 Coinsurance  
  
Claims for REH services are paid based on OPPS prospective rates and are adjudicated 
based on OPPS payment policies and rules.  Services performed by an REH that do not 
meet the definition of an REH service (i.e. certain outpatient services that may be 
provided on an outpatient basis by OPPS hospitals but are not paid under the OPPS) are 
paid at the same rate as the service would be paid if performed at an OPPS hospital and 
paid based on the applicable fee schedule outside of the OPPS.  Such services are not 
considered REH services and do not receive the additional 5 percent payment that REH 
services receive. Ambulance services furnished by an entity owned and operated by a 
rural emergency hospital are paid under the ambulance fee schedule as described at 
section 1834(l) of the Act. Post-hospital extended care services furnished by a rural 
emergency hospital that has a unit that is a distinct part licensed as a skilled nursing 
facility are paid under the skilled nursing facility prospective payment system described 
at section 1888(e) of the Act. 
B. Monthly REH Facility Payment  
In addition to payment for individual claims, section 1834(x)(2) of the Act requires REHs 
to be paid a monthly facility payment.  The monthly facility payment for every REH is the 
same. There is no adjustment to the facility payment because of the size of the REH or 
amount of revenue generated by the REH.  For 2024 and subsequent years, this payment 
will be updated annually by the hospital market basket percentage increase.  
 
10.7 - Outliers 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
 
 
10.7.1 - Outlier Adjustments 
(Rev. 3685, Issued: 12-22-16, Effective: 01-01-17, Implementation: 01-03-17) 
 
The OPPS incorporates an outlier adjustment to ensure that outpatient services with 
variable and potentially significant costs do not pose excessive financial risk to providers.  
Section 419.43(f) of the Code of Federal Regulations excludes drugs, biologicals and 
items and services paid at charges adjusted to cost from outlier payments.  The OPPS 
determines eligibility for outliers using either a multiple threshold, which is the product 
of a multiplier and the APC payment rate, or a combination of a multiple and fixed-dollar 
threshold.  A service or group of services becomes eligible for outlier payments when the  cost of the service or group of services estimated using the hospitals most recent overall 
cost-to-charge ratio (CCR) separately exceeds each relevant threshold.  For community 
mental health centers (CMHCs), CMS determines whether billed partial hospitalization 
services are eligible for outlier payments using a multiple threshold specific to CMHCs.  
The outlier payment is a percentage of the difference between the cost estimate and the 
multiple threshold.  The CMS OPPS Web site at 
www.cms.hhs.gov/HospitalOutpatientPPS/ under Annual Policy Files includes a table 
depicting the specific hospital and CMHC outlier thresholds and the payment percentages 
in place for each year of the OPPS. 
 
Beginning in CY 2000, CMS determined outlier payments on a claim basis.  CMS 
determined a claims eligibility to receive outlier payments using a multiple threshold.  A 
claim was eligible for outlier payments when the total estimate of charges reduced to cost 
for the entire claim exceeded a multiple of the total claim APC payment amount.  As 
provided in Section 1833(t)(5)(D), CMS used each hospitals overall CCR rather than a 
CCR for each department within the hospital.  CMS continues to use an overall hospital 
CCR specific to ancillary cost centers to estimate costs from charges for outlier 
payments. 
 
In CY 2002, CMS adopted a policy of calculating outlier payments based on each 
individual OPPS (line-item) service.  CMS continued using a multiple threshold, 
modified to be a multiple of each services APC payment rather than the total claim APC 
payment amount, and an overall hospital CCR to estimate costs from charges.  For CY 
2004, CMS established separate multiple outlier thresholds for hospitals and CMHCs. 
 
Beginning in CY 2005, for hospitals only, CMS implemented the use of a fixed-dollar 
threshold to better target outlier payments to complex and costly services that pose 
hospitals with significant financial risk.  The current hospital outlier policy is calculated 
on a service basis using both fixed-dollar and multiple thresholds to determine outlier 
eligibility. 
 
The current outlier payment is determined by: 
 
  Calculating the cost related to an OPPS line-item service, including a pro rata portion 
of the total cost of packaged services on the claim and adding payment for any device 
with pass- through status to payment for the associated procedure, by multiplying the 
total charges for OPPS services by each hospitals overall CCR (see 10.11.8 of this 
chapter); and 
 
  Determining whether the total cost for a service exceeds 1.75 times the OPPS 
payment and separately exceeds the fixed-dollar threshold determined each year; and  
 
  If total cost for the service exceeds both thresholds, the outlier payment is 50 percent 
of the amount by which the cost exceeds 1.75 times the OPPS payment. 
 
The total cost of all packaged items and services, including the cost of uncoded revenue  code lines with a revenue code status indicator of N, that appear on a claim is allocated 
across all separately paid OPPS services that appear on the same claim.  The proportional 
amount of total packaged cost allocated to each separately paid OPPS service is based on 
the percent of the APC payment rate for that service out of the total APC payment for all 
separately paid OPPS services on the claim. 
 
To illustrate, assume the total cost of all packaged services and revenue codes on the 
claim is $100, and the three APC payment amounts paid for OPPS services on the claim 
are $200, $300, and $500 (total APC payments of $1000).  The first OPPS service or 
line-item is allocated $20 or 20 percent of the total cost of packaged services, because the 
APC payment for that service/line-item represents 20 percent ($200/$1000) of total APC 
payments on the claim.  The second OPPS service is allocated $30 or 30 percent of the 
total cost of packaged services, and the third OPPS service is allocated $50 or 50 percent 
of the total cost of packaged services. 
 
If a claim has more than one surgical service line with a status indicator (SI) of S or T 
and any lines with an SI of S or T have less than $1.01 as charges, charges for all S 
and/or T lines are summed and the charges are then divided across S and/or T lines in 
proportion to their APC payment rate. The new charge amount is used in place of the 
submitted charge amount in the line-item outlier calculation. 
 
If a claim includes a composite payment that pays for more than one otherwise separately 
paid service, the charges for all services included in the composite are summed up to one 
line. To determine outlier payments, CMS estimates a single cost for the composite APC 
from the summarized charges.  Total packaged cost is allocated to the composite line-
item in proportion to other separately paid services on the claim. 
 
In accordance with Section 1833(t)(5)(A)(i) of the Act, if a claim includes a device 
receiving pass-through payment, the payment for the pass-through device is added to the 
payment for the associated procedure, less any offset, in determining the associated 
procedures eligibility for outlier payment, and the outlier payment amount.  The 
estimated cost of the device, which is equal to payment, also is added to the estimated 
cost of the procedure to ensure that cost and payment both contain the procedure and 
device costs when determining the procedures eligibility for an outlier payment. 
 
CMHC Outlier Payment Cap 
 
Beginning for services provided on or after January 1, 2017, outlier payments made to 
CMHCs are subject to a cap, applied at the individual CMHC level, so that each CMHCs 
total outlier payments for the calendar year do not exceed 8 percent of that CMHCs total 
per diem payments for the calendar year.  Total per diem payments are total Medicare per 
diem payments plus the total beneficiary share of those per diem payments. 
 
Future updates will be issued in a Recurring Update Notification. 
 
10.7.2 - Outlier Reconciliation  (Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
10.7.2.1 - Identifying Hospitals and CMHCs Subject to Outlier 
Reconciliation 
(Rev. 2111, Issued: 12-03-10, Effective: 04-01-11, Implementation: 04-04-11) 
 
A. General 
 
Under 419.43(d)(6)(i), for hospital outpatient services furnished during cost reporting 
periods beginning on or after January 1, 2009, OPPS high cost outlier payments may be 
reconciled upon cost report settlement to account for differences between the overall 
ancillary CCR used to pay the claim at its original submission by the provider, and the 
CCR determined at final settlement of the cost reporting period during which the service 
was furnished.  Hospitals and CMHCs that Medicare contractors identify using the 
criteria listed below are subject to the OPPS outlier reconciliation policies described in 
this section.  OPPS outlier payments are reconciled if the CMS Central Office and 
Regional Office confirm that reconciliation is appropriate.  Services with an APC 
payment paid at charges adjusted to cost are not subject to reconciliation policies. 
 
Subject to the approval of the CMS Central Office and Regional Office, a hospitals 
outpatient outlier claims are reconciled at the time of cost report final settlement if they 
meet the following criteria: 
 
1.  The actual overall ancillary CCR is found to be plus or minus 10 percentage 
points or more from the CCR used during that time period to make OPPS outlier 
payments, and 
 
  2.  Total OPPS outlier payments in that cost reporting period exceed $500,000. 
 
Subject to the approval of the CMS Central Office and Regional Office, a CMHCs 
outlier claims are reconciled at the time of cost report final settlement if they meet the 
following criteria: 
 
1.  The actual overall CCR is found to be plus or minus 10 percentage points or more 
from the CCR used during that time period to make OPPS outlier payments, and 
 
2.  Any CMHC OPPS outlier payments are made in that cost reporting period. 
 
To determine if a hospital or CMHC meets the criteria above, the Medicare contractor 
shall incorporate all the adjustments from the cost report, run the cost report, calculate the 
revised CCR, and compute the actual overall ancillary CCR prior to issuing a Notice of 
Program Reimbursement (NPR).  If the criteria for OPPS outlier reconciliation are not 
met, the cost report shall be finalized.  If the criteria for reconciliation are met, Medicare 
contractors shall follow the instructions below in 10.7.2.4 of this chapter.  The NPR 
cannot be issued nor can the cost report be finalized until OPPS outlier reconciliation is  complete.  These hospital and CMHC cost reports will remain open until their claims 
have been processed for OPPS outlier reconciliation. 
 
As stated above, if a cost report is reopened after final settlement and as a result of this 
reopening there is a change to the CCR (which could trigger or affect OPPS outlier 
reconciliation and outlier payments), Medicare contractors shall notify the CMS Central 
and Regional Offices for further instructions.  Notification to the CMS Central Office 
shall be sent to the address and email address provided in 10.11.3.1. 
 
Any cost report that has been final settled that meets the qualifications for OPPS outlier 
reconciliation shall be reopened. Medicare contractors shall notify the CMS Central 
Office and Regional Office that the OPPS outlier payments need to be reconciled, using 
the procedures included in 10.7.2.4.  After CMS approval of the reconciliation, the 
Medicare contractor shall issue a reporting notice to the provider. 
 
B. Hospitals and CMHCs Already Flagged for Outlier Reconciliation 
 
Medicare contractors shall have until April 25, 2011 to submit via email to 
outliersopps@cms.hhs.gov a list of providers that were flagged for outlier reconciliation 
prior to April 1, 2011  (NOTE: Do not send this list prior to April 1, 2011 as this list shall 
include all providers flagged for outlier reconciliation prior to April 1, 2011). In this list, 
Medicare contractors shall include the provider number, provider name, cost reporting 
begin date, cost reporting end date, status of cost report (was the Notice of Program 
Reimbursement (NPR) issued), date of NPR, total outlier payments in the cost reporting 
period, the CCR or weighted CCR from the time the claims were paid during the cost 
reporting period being reconciled and the final settled CCR. The CMS Central Office will 
then review this list and grant formal approval via email for Medicare contractors to 
reprice and reconcile the claims of those hospitals with open cost reports. Upon receiving 
approval for reconciliation from the CMS Central Office, Medicare contractors shall 
follow the procedures in 10.7.2.4 and complete the reconciliation process by October 1, 
2011.  If a Medicare contractor cannot complete the reconciliation process by October 1, 
2011, the Medicare contractor shall contact the CMS Central Office for further guidance. 
NOTE: Those Medicare contractors that do not have any providers flagged for outlier 
reconciliation prior to April 1, 2011 shall also send an email to the address above 
indicating that they have no providers flagged for outlier reconciliation prior to April 1, 
2011. 
 
10.7.2.2 - Reconciling Outlier Payments for Hospitals and CMHCs 
(Rev. 1760, Issued:  06-23-09; Effective Date:  07-01-09; Implementation Date:  07-
06-09) 
 
For hospital outpatient services furnished during cost reporting periods beginning on or 
after January 1, 2009, all hospitals and CMHCs are subject to the OPPS outlier 
reconciliation policies set forth in this section.  If a hospital or CMHC meets the criteria 
in 10.7.2.1, the Medicare contractors shall notify the central office and regional office at 
the address and email address provided in 10.11.3.1.  Further instructions for Medicare  contractors on reconciliation and the time value of money are provided below in 
10.7.2.3 and 10.7.2.4 of this chapter.  The following examples demonstrate how to 
apply the criteria for reconciliation: 
 
EXAMPLE A: 
 
Cost reporting period:  01/01/2009-12/31/2009 
 
Overall ancillary CCR used to pay original claims submitted during cost reporting 
period:  0.40 
 
(In this example, this CCR is from the tentatively settled 2007 cost report.) 
 
Final settled overall ancillary CCR from 01/01/2009 - 12/31/2009 cost report:  0.50 
 
Total OPPS outlier payout in 01/01/2009-12/31/2009 cost reporting period:  $600,000 
 
Because the CCR of 0.40 used at the time the claim was originally paid changed to 
0.50 at the time of final settlement, and the provider received greater than $500,000 in 
OPPS outlier payments during that cost reporting period, the criteria are met for 
reconciliation, and therefore, the Medicare contractor notifies the central office and 
the regional office.  The providers OPPS outlier payments for this cost reporting 
period are reconciled using the correct CCR of 0.50. 
 
In the event that multiple overall ancillary CCRs are used in a given cost reporting period 
to calculate outlier payments, Medicare contractors should calculate a weighted average 
of the CCRs in that cost reporting period.  Example B below shows how to weight the 
CCRs.  The Medicare contractor shall then compare the weighted CCR to the CCR 
determined at the time of final settlement of the cost reporting period to determine if 
OPPS outlier reconciliation is required.  Total OPPS outlier payments for the entire cost 
reporting period must exceed $500,000 in order to trigger reconciliation. 
 
  EXAMPLE B: 
 
Cost reporting period:  01/01/2009-12/31/2009 
 
Overall ancillary CCR used to pay original claims submitted during cost reporting 
period: 
 
- 0.40 from 01/01/2009 to 03/31/2009 (This CCR could be from the tentatively 
settled 2006 cost report.) 
 
- 0.50 from 04/01/2009 to 12/31/2009 (This CCR could be from the tentatively 
settled 2007 cost report.) 
 
Final settled operating CCR from 01/01/2009 - 12/31/2009 cost report:  0.35   
Total OPPS outlier payout in 01/01/2009 -12/31/2009 cost reporting period:  
$600,000 
 
Weighted average CCR:  0.476 
 
CCR  Days  Weight  Weighted CCR 
0.40  90  0.247 (90 Days / 365 Days)  (a) 0.099 = (0.40 * 
0.247)  
0.50  275  0.753 (275 Days / 365 Days)  (b) 0.377 = (0.50 * 
0.753) 
TOTAL  365    (a)+(b) = 0.476 
 
The hospital meets the criteria for OPPS outlier reconciliation in this cost reporting 
period because the weighted average CCR at the time the claim was originally paid 
changes from 0.476 to 0.35 (which is greater than 10 percentage points) at the time of 
final settlement, and the provider received an OPPS outlier payment greater than 
$500,000 for the entire cost reporting period. 
 
Even if a hospital or CMHC does not meet the criteria for reconciliation in 10.7.2.1, 
subject to approval of the central and regional offices, the Medicare contractor has the 
discretion to request that a hospital or CMHCs OPPS outlier payments in a cost 
reporting period be reconciled if the hospitals most recent cost and charge data indicate 
that the OPPS outlier payments to the hospital were significantly inaccurate.  The 
Medicare contractor sends notification to the regional office and central office via the 
address and email address provided in 10.11.3.1.  Upon approval of the central and 
regional office that a hospital or CMHCs outpatient outlier claims need to be reconciled, 
Medicare contractors should follow the instructions in 10.7.2.4. 
 
10.7.2.3 - Time Value of Money 
(Rev. 2242, Issued: 06-17-11, Effective: 07-01-11, Implementation: 07-01-11) 
 
Effective for hospital outpatient services furnished in the first cost reporting period on or 
after January 1, 2009, at the time of any reconciliation under 10.7.2.2, OPPS outlier 
payment may be adjusted to account for the time value of money of any adjustments to 
OPPS outlier payments as a result of reconciliation.  As described in 42 CFR 
419.43(d)(6)(ii), the time value of money is applied from the midpoint of the hospital or 
CMHCs cost reporting period being settled to the date on which the CMS Central Office 
receives notification from the Medicare contractor that reconciliation should be 
performed. 
 
If a hospital or CMHCs OPPS outlier payments have met the criteria for reconciliation, 
CMS will calculate the aggregate adjustment using the instructions below concerning  reprocessing claims and determine the additional amount attributable to the time value of 
money of that adjustment.  The index that is used to calculate the time value of money is 
the monthly rate of return that the Medicare trust fund earns.  This index can be found at 
http://www.ssa.gov/OACT/ProgData/newIssueRates.html. 
 
The following formula is used to calculate the rate of the time value of money: 
 
(Rate from Web site as of the midpoint of the cost report being settled / 365) * # of 
days from that midpoint until date of reconciliation.  NOTE: The time value of 
money can be a positive or negative amount depending if the provider is owed money 
by CMS or if the provider owes money to CMS. 
 
For purposes of calculating the time value of money, the date of reconciliation is the 
day on which the CMS Central Office receives notification.  This "date of reconciliation" 
is based solely on the date CMS Central Office receives notification and not on the date 
that reconciliation is approved by the CMS Central and Regional Offices.  This date is 
either the postmark from the written notification sent to the CMS Central Office via mail 
by the Medicare contractor, or the date an email was received from the Medicare 
contractor by the CMS Central Office, whichever is first. 
 
The following is an example of the procedures for reconciliation and computation of the 
adjustment to account for the time value of money: 
 
  EXAMPLE: 
 
Cost reporting period:  01/01/2009 - 12/31/2009 
 
Midpoint of cost reporting period:  07/01/2009 
 
  Date of reconciliation:  12/31/2010 
 
Number of days from midpoint until date of reconciliation:  548 
 
Rate from Social Security Web site:  4.625% 
 
Overall ancillary CCR used to pay actual original claims in cost reporting period:  
0.40 (This CCR could be from the tentatively settled 2006 or 2007 cost report.) 
 
Final settled operating CCR from 01/01/2009 - 12/31/2009 cost report:  0.50 
Total OPPS outlier payout in 01/01/2009 - 12/31/2009 cost reporting period:  
$600,000 
 
Because the CCR fluctuated from 0.40 at the time the claims were originally paid to 0.50 
at the time of final settlement and the provider has an OPPS outlier payout greater than 
$500,000, the criteria have been met to trigger reconciliation.  The Medicare contractor 
notifies the CMS Central and Regional Offices.   
The Medicare contractor reprices the claims in accordance with the process in 10.7.2.4 
below.  The repricing indicates the revised outlier payments are $700,000.  
 
Using the values above, the rate that is used for the time value of money is determined: 
 
  (4.625 / 365) * 548 = 6.9438% 
 
Based on the claims reconciled, the provider is owed $100,000 ($700,000 - $600,000) for 
the reconciled amount and $6,943.80 for the time value of money. 
 
10.7.2.4 - Procedures for Medicare Contractors to Perform and Record 
Outlier Reconciliation Adjustments 
(Rev. 4233, Issued: 02-08-19, Effective: 03-12-19, Implementation: 03-12-19) 
 
The term Medicare beneficiary identifier (Mbi) is a general term describing a 
beneficiary's Medicare identification number. For purposes of this manual, Medicare 
beneficiary identifier references both the Health Insurance Claim Number (HICN) and 
the Medicare Beneficiary Identifier (MBI) during the new Medicare card transition 
period and after for certain business areas that will continue to use the HICN as part of 
their processes. 
 
The following is a step-by-step explanation of the procedures that Medicare contractors 
are to follow if a hospital (or CMHC) is eligible for outlier reconciliation:  
 
1)  The Medicare contractor sends notification to the CMS Central Office (not the 
hospital or CMHC), via the street address and email address provided in 
10.11.3.1 and to the CMS Regional Office that a hospital or CMHC has met the 
criteria for OPPS outlier reconciliation.  Medicare contractors shall include in 
their notification the provider number, provider name, cost reporting begin date, 
cost reporting end date, total outlier payments in the cost reporting period, the 
CCR or weighted average CCR from the time the claims were paid during the cost 
reporting period eligible for reconciliation and the final settled CCR. 
 
2)  If the Medicare contractor receives approval from the CMS Central Office and 
Regional Office that OPPS outlier reconciliation is appropriate, the Medicare 
contractor follows steps 3-14 below.  NOTE: Hospital and CMHC cost reports 
will remain open until their claims have been processed for OPPS outlier 
reconciliation. 
 
3)  The Medicare contractor shall notify the hospital or CMHC and copy the CMS 
Regional Office and Central Office in writing and via email (through the address 
provided in 10.11.3.1) that the hospital or CMHCs OPPS outlier claims are to 
be reconciled.  
  4)  Prior  to running claims in the FISS Lump Sum Utility*, Medicare contractors 
shall update the applicable provider record in the Outpatient Provider Specific 
File (OPSF) by entering the final settled CCR from the cost report in Outpatient 
Cost to Charge Ratio field.  No other elements in the OPSF shall be updated for 
the applicable provider records in the PSF that span the cost reporting period 
being reconciled aside from the CCR. 
 
*NOTE: The FISS Lump Sum Utility is a Medicare contractor tool that, depending on 
the elements that are input, will produce an extract that will calculate the difference 
between the original PPS payment amounts and revised PPS payment amounts into a 
Microsoft Access generated report.  The Lump Sum Utility calculates the original and 
revised payments offline and will not affect the original claim payment amounts as 
displayed in various CMS systems (such as NCH).   
 
5)  Medicare contractors shall ensure that, prior to running claims through the FISS 
Lump Sum Utility, all pending claims (e.g., appeal adjustments) are finalized for 
the applicable provider. 
 
6)  Medicare contractors shall only run claims in the Lump Sum Utility that meet the 
following criteria: 
 
  TOB 12X, 13X, 34X, 75X, 76X or any TOB with a condition code 07 
  Claim has a line item date of service of January 1, 2009 or later that also contains 
a Pay Method Flag of 0 
  Previous claim is in a paid status (P location) within FISS 
  Cancel date is blank 
 
7)  The Medicare contractor reconciles the claims through the OPPS Pricer software 
and not through any editing or grouping software.  
 
8)  Upon completing steps 3 through 7 above, the Medicare contractor shall run the 
claims through the Lump Sum Utility.  The Lump Sum Utility will produce an 
extract, according to the elements in Table 1 below.  NOTE:  The extract must be 
importable by Microsoft Access or a similar software program (Microsoft Excel).   
 
9)  Medicare contractors shall upload the extract into Microsoft Access or a similar 
software program to generate a report that contains elements in Table 1.  
Medicare contractors shall ensure this report is retained with the cost report 
settlement work papers. 
 
10) For hospitals paid under the OPPS, the Lump Sum Utility will calculate the 
difference between the original outlier amount (value code 17) and the revised 
outlier amount (value code 17).  If the difference between the original and revised 
outlier amount is positive, then a credit amount (addition) shall be issued to the 
provider. If the difference between the original and revised outlier amount is 
negative, then a debit amount (deduction) shall be issued to the provider.  
  11) Medicare contractors shall determine the applicable time value of money amount 
by using the calculation methodology in 10.7.2.3.  If the difference between the 
original and revised outlier amount (calculated by the Lump Sum Utility) is a 
negative amount then the time value of money is also a negative amount. If the 
difference between the original and revised outlier amount (calculated by the Lump 
Sum Utility) is a positive amount then the time value of money is also a positive 
amount.  Similar to step 10, if the time value of money is positive, then a credit 
amount (addition) shall be issued to the provider.  If the time value of money is 
negative, then a debit amount (deduction) shall be issued to the provider.  NOTE: 
The time value of money is applied to the difference between the original outlier 
amount (value code 17) and the revised outlier amount (value code 17).  
 
12) For cost reporting periods beginning before May 1, 2010, under cost report 2552-
96, the Medicare contractor shall record the original outlier amount from 
Worksheet E, Part B, line 1.02 (prior to the inclusion of line 54 of Worksheet E, 
Part B), the outlier reconciliation adjustment amount (the difference between the 
original and revised outlier amount (calculated by the Lump Sum Utility), the total 
time value of money, the rate used to calculate the time value of money and the 
sum of lines 51 and 53 on lines 50-54, of Worksheet E, Part B of the cost report 
(NOTE:  the amounts recorded on lines 50, 51, 53 and 54 can be positive or 
negative amounts per the instructions above).  The total outlier reconciliation 
amount (Worksheet E, Part B, line 54) shall be included on Worksheet E, Part B, 
line 1.02.  For complete instructions on how to fill out these lines see 3630.2 of 
the Provider Reimbursement Manual, Part II. 
 
For cost reporting periods beginning on or after May 1, 2010, under cost report 
2552-10, the Medicare contractor shall record the original outlier amount from 
Worksheet E, Part B, line 4 (prior to the inclusion of line 94 of Worksheet E, Part 
B), the outlier reconciliation adjustment amount (the difference between the 
original and revised outlier amount (calculated by the Lump Sum Utility), the total 
time value of money, the rate used to calculate the time value of money and the 
sum of lines 91 and 93 on lines 90-94, of Worksheet E, Part B of the cost report 
(NOTE: the amounts recorded on lines 90, 91, 93 and 94 can be positive or 
negative amounts per the instructions above).  The total outlier reconciliation 
amount (Worksheet E, Part B, line 94) shall be included on Worksheet E, Part B, 
line 1.02.  
 
13) The Medicare contractor shall finalize the cost report, issue a NPR and make the 
necessary adjustment from or to the provider. 
 
14) After determining the total outlier reconciliation amount and issuing a NPR, 
Medicare contractors shall restore the CCR(s) elements to their original values 
(that is, the CCRs used to pay the claims) in the applicable provider records in the 
PSF to ensure an accurate history is maintained. Specifically, for hospitals paid 
under the OPPS, Medicare contractors shall enter the original CCR in PSF field 
25 -Operating Cost to Charge Ratio. 
  Medicare contractors shall contact the CMS Central Office via the address and email 
address provided in 10.11.3.1 with any questions regarding this process. 
 
Table 1: Data Elements for FISS Extract 
 
List of Data Elements for FISS Extract 
Provider # 
Medicare beneficiary identifier 
Document Control Number (DCN)  
Type of Bill  
Original Paid Date 
Statement From Date 
Statement To Date  
Original Reimbursement Amount (claims page 10)  
Revised Reimbursement Amount (claim page 10)  
Difference between these amounts  
Original Deductible Amount, Payer A, B, C (Value Code A1, B1, C1) 
Revised Deductible Amount, Payer A, B, C (Value Code A1, B1, C1) 
Difference between these amounts 
Original Coinsurance Amount, Payer A, B, C (Value Code A2, B2, C2) 
Revised Coinsurance Amount, Payer A, B, C (Value Code A2, B2, C2) 
Difference between these amounts 
Original Outlier Amount (Value Code 17) 
Revised Outlier Amount (Value Code 17) 
Difference between these amounts 
Original DSH Amount (Value Code 18) 
Revised DSH Amount (Value Code 18) 
Difference between these amounts 
Original IME Amount (Value Code 19) 
Revised IME Amount (Value Code 19) 
Difference between these amounts 
Original New Tech Add-on (Value Code 77) 
Revised New Tech Add-on (Value Code 77) 
Difference between these amounts 
Original Device Reductions (Value Code D4) 
Revised Device Reductions (Value Code D4) 
Difference between these amounts 
Original Hospital Portion (claim page 14) 
Revised Hospital Portion (claim page 14) 
Difference between these amounts 
Original Federal Portion  (claim page 14) 
Revised Federal Portion  (claim page 14) 
Difference between these amounts 
Original C TOT PAY (claim page 14) 
Revised C TOT PAY (claim page 14) 
Difference between these amounts 
Original C FSP (claim page 14)  List of Data Elements for FISS Extract 
Revised C FSP (claim page 14) 
Difference between these amounts 
Original C OUTLIER (claim page 14) 
Revised C OUTLIER (claim page 14) 
Difference between these amounts 
Original C DSH ADJ (claim page 14) 
Revised C DSH ADJ (claim page 14) 
Difference between these amounts 
Original C IME ADJ (claim page 14) 
Revised C IME ADJ (claim page 14) 
Difference between these amounts 
Original Pricer Amount  
Revised Pricer Amount 
Difference between these amounts 
Original PPS Payment (claim page 14) 
Revised PPS Payment (claim page 14) 
Difference between these amounts 
Original PPS Return Code (claim page 14) 
Revised PPS Return Code (claim page 14) 
DRG 
MSP Indicator (Value Codes 12-16 & 41-43 - indicator indicating the claim is MSP; Y = 
MSP, blank = no MSP 
Reason Code 
HMO-IME Indicator 
Filler 
 
 
10.8 - Geographic Adjustments 
(Rev. 1, 10-03-03) 
A-01-93 
 
Adjustments for differences in wages across geographical areas are made using inpatient 
hospital PPS wage index (post-reclassification, post-floor). 
 
It is estimated that 60 percent of the group payment represents labor-related costs and are 
subject to the geographic adjustment. 
 
10.8.1 - Wage Index Changes 
(Rev. 1, 10-03-03) 
A-02-026 XIII, A-01-144 
 
Refer to the CMS Web site http://www.cms.gov/medicare/hopsmain.htm for wage index 
change information. 
  10.9 - Updates 
(Rev. 132, 03-30-04) 
 
Section 1833(t) of the Social Security Act (the Act) as amended by 4533 of the 
Balanced Budget Act (BBA) of 1997, authorizes CMS to implement a Medicare 
prospective payment system for hospital outpatient services, including partial 
hospitalization services; Certain Part B services furnished to hospital inpatients who have 
no Part A coverage; Partial hospitalization services furnished by CMHCs; Hepatitis B 
vaccines and their administration, splints, cast, and antigens provided by HHAs that 
provide medical and other health services; Hepatitis B vaccines and their administration 
provided by CORFs; and Splints, casts, and antigens provided to hospice patients for 
treatment of non-terminal illness. 
 
By statute, CMS is required to review and revise the APC groups, relative payment rates, 
wage adjustments, outlier payments and other adjustments required under the OPPS on 
an annual basis.  These annual updates are made final through the publication of 
proposed and final rules in the Federal Register.  The annual update Federal Register 
rules can be accessed on the OPPS Web site at:  
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/HospitalOutpatientPPS/ 
 
In addition to the annual update at the beginning of each calendar year, we also update 
the OPPS on a quarterly basis to account for mid-year changes such as adding new pass-
through drugs and/or devices, adding new treatments and procedures to the new 
technology APCs, removing procedures from the inpatient list, and recognizing new 
HCPCS codes that may be added during the year.  The quarterly updates are issued as 
Recurring Update Notifications.  The quarterly Recurring Update Notifications can be 
found in Pub. 100-21, Recurring Update Notification, which can be accessed at the 
following Web site:  http://www.cms.gov/Regulations-and-
Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs.html 
 
10.10 - Biweekly Interim Payments for Certain Hospital Outpatient 
Items and Services That Are Paid on a Cost Basis, and Direct Medical 
Education Payments, Not Included in the Hospital Outpatient 
Prospective Payment System (OPPS) 
(Rev. 1, 10-03-03) 
A-01-32 
 
For hospitals subject to the OPPS, payment for certain items that are not paid under the 
OPPS, but which are reimbursable in addition to OPPS, are made through biweekly 
interim payments subject to retrospective adjustment based on a settled cost report.  
These payments include: 
 
  Direct medical education payments; 
 
  Costs of nursing and allied health programs;   
  Costs associated with interns and residents not in an approved teaching program 
as described in 42 CFR 415.202; 
 
  Teaching physicians costs attributable to Part B services for hospitals that elect 
cost-based reimbursement for teaching physicians under 42 CFR 415.160; 
 
  CRNA services; 
 
  For hospitals that meet the requirements under 42 CFR 412.113(c), the reasonable 
costs of anesthesia services furnished to hospital outpatients by qualified 
nonphysician anesthetists (i.e., certified registered nurse anesthetists and 
anesthesiologists assistants) employed by the hospital or obtained under 
arrangements; 
 
  Bad debts for uncollectible deductibles and coinsurance; 
 
  Organ acquisition costs paid under Part B. 
 
For hospitals that are paid under the OPPS, interim payments for these items attributable 
to both hospital outpatients, as well as inpatients whose services are paid under Part B of 
the Medicare program are made on a biweekly basis.  The A/B MAC (A) determines the 
amount of the biweekly payment by estimating a hospitals reimbursement amount for 
these items for the cost reporting period by using: 
 
  Medicare principles of cost reimbursement for cost-based items; and  
 
  Medicare rules for determining payment for graduate medical education for direct 
medical education, and dividing the total annual estimated amount for these items 
into 26 equal biweekly payments. 
 
The estimated annual amount is based on the most current data available.  Biweekly 
interim payments are reviewed and, if necessary, adjusted at least twice during the 
reporting period, with final settlement based on a submitted cost report. 
 
Because hospitals subject to the OPPS have not received payment for these items 
attributable to services furnished on or after August 1, 2000, the date the OPPS was 
implemented, the first payment to each hospital included all the payments due to the 
hospital retroactive to August 1, 2000.  Thereafter, A/B MACs (A) continue to make 
payment on a biweekly basis.  Each payment is made two weeks after the end of a 
biweekly period of services.  The A/B MAC (A) was required to make retroactive 
payments and begin making biweekly interim payments to all hospitals that are due these 
payments no later than 60 days after March 8, 2001. 
 
These biweekly payments may be combined with the inpatient biweekly payments that 
the A/B MAC (A) makes under 2405.2 of the Medicare Provider Reimbursement  Manual (CMS Pub.15-I).  However, if a single payment is made, for purposes of final 
cost report settlement, they must maintain records to separately identify the amount of the 
hospitals combined payment that is paid out of the Part A or Part B trust fund. 
 
10.11 - Calculation of Overall Cost-to-Charge Ratios (CCRs) for 
Hospitals Paid Under the Outpatient Prospective Payment System 
(OPPS) and Community Mental Health Centers (CMHCs) Paid Under 
the Hospital OPPS 
(Rev. 1445, Issued:  02-08-08; Effective:  01-01-08; Implementation:  03-10-08) 
 
10.11.1 - Requirement to Calculate CCRs for Hospitals Paid under 
OPPS and for CMHCs 
(Rev. 2296, Issued: 09-02-11, Effective: 10-01-11, Implementation: 10-03-11) 
 
Medicare contractors must calculate overall cost-to-charge ratios for hospitals paid under 
OPPS and for CMHCs using the providers most recent full year cost reporting period, 
whether tentatively settled or final settled, in accordance with the instructions in 
10.11.7, 10.11.7.1, 10.11.8, 10.11.8.1 or 10.11.9 as applicable. The contractor must 
calculate a provider overall CCR whenever a more recent full year cost report becomes 
available. If a CCR is calculated based on the tentatively settled cost report, the 
contractor must calculate another overall CCR when the cost report is final or when a 
cost report for a subsequent cost reporting period is tentatively settled, whichever occurs 
first. If a CCR is based on a final settled cost report, the contractor must calculate the 
CCR when a cost report for a subsequent cost reporting period is tentatively settled. 
 
10.11.2 - Circumstances in Which CCRs are Used 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
The contractors must apply CCRs prospectively to calculate outlier payments (for 
hospitals paid under OPPS and CMHCs), Transitional Outpatient Payment System 
(TOPS) payments (for hospitals paid under OPPS), device pass-through payments (for 
hospitals paid under OPPS), and items and services paid at charges adjusted to cost (for 
hospitals paid under OPPS). 
 
10.11.3 - Selection of the CCR to be Used 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
Contractors will use the CCR calculated for the most recent period of time, whether 
based on a tentatively settled cost report or a final settled cost report.  For example, if the 
CCR being used is the tentatively settled CCR for FY 2008, and a tentatively settled CCR 
for FY 2009 is determined before the final settled CCR for FY 2008, then the contractor 
uses the CCR based on the tentatively settled 2009 cost report. 
 
10.11.3.1 - CMS Specification of Alternative CCR 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09)   
Effective January 1, 2009, the central office may direct Medicare contractors to use an 
alternative CCR if CMS believes this will result in a more accurate CCR.  Also, if the 
Medicare contractor finds evidence that indicates that using data from the latest settled or 
tentatively settled cost report would not result in the most accurate CCR, then the 
Medicare contractor shall notify the CMS central office and CMS regional office to seek 
approval to use a CCR-based on alternative data.  For example, CCRs may be revised 
more often if a change in a hospital or CMHCs operations occurs which materially 
affects a hospital or CMHCs costs and charges.  The central and regional offices must 
approve the Medicare contractors request before the Medicare contractor may use a 
CCR-based on alternative data.  Revised CCRs are applied prospectively to all OPPS 
claims processed after the update.  Medicare contractors shall send notification to the 
central office via the following address and e-mail address: 
 
CMS 
C/O Division of Outpatient Care - OPPS Outlier Team 
7500 Security Blvd.  
Mail Stop C4-05-17 
Baltimore, MD 21244 
outliersopps@cms.hhs.gov 
 
10.11.3.2 - Hospital or CMHC Request for Use of a Different CCR 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
Effective January 1, 2009, CMS (or the Medicare contractor) may specify an alternative 
CCR if it believes that the CCR being applied is inaccurate.  In addition, a hospital or 
CMHC has the opportunity to request that a different CCR be applied for outlier payment 
calculation in the event it believes the CCR being applied is inaccurate.  The hospital or 
CMHC is required to present substantial evidence supporting its request.  Such evidence 
should include documentation regarding its costs and charges that demonstrate its claim 
that an alternative ratio is more accurate.  After the Medicare contractor has evaluated the 
evidence presented by the hospital or CMHC, the Medicare contractor notifies the CMS 
central office and CMS regional office of any such request.  The CMS central and 
regional offices approve or deny any request by the hospital (or CMHC) or Medicare 
contractor for use of a different CCR.  Medicare contractors shall send requests to the 
CMS central office using the address and e-mail address provided above. 
 
10.11.3.3 - Notification to Hospitals Paid Under the OPPS of a Change 
in the CCR 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
The Medicare contractor shall notify a hospital or CMHC whenever it makes a change to 
its CCR.  When a CCR is changed as a result of a tentative settlement or a final 
settlement of the cost report, the change to the CCR can be included in the notice that is 
issued to each provider after a tentative or final settlement is completed.  Medicare 
contractors can also issue separate notification to a hospital about a change to its CCR(s).   
10.11.4 - Use of CCRs in Mergers, Acquisitions, Other Ownership 
Changes, or Errors Related to CCRs 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
The contractors use the CCR for the surviving provider in cases of provider merger, 
acquisition or other such changes. 
 
Effective for hospitals experiencing a change of ownership after January 1, 2007, that 
have not accepted assignment of an existing hospital's provider agreement in accordance 
with 42 CFR 489.18, and do not yet have a Medicare cost report, the contractor may use 
the default Statewide CCR to determine cost-based payments until the hospital has 
submitted its first Medicare cost report.  See 10.11.10 for the location of the Statewide 
CCRs and the upper limit above which the contractor must use the Statewide CCR.  For 
purposes of identifying a CCR for payment, Medicare contractors may apply a Statewide 
average to hospitals receiving a new provider number, such as hospitals converting from 
non-IPPS to IPPS status.  Also, for purposes of identifying a CCR for payment, hospitals 
receiving a new provider number may request use of a different CCR based on substantial 
evidence.  Use of an alternative CCR is subject to the approval of the CMS central and 
regional offices as discussed in 10.11.3.2.  For hospitals experiencing a change of 
ownership prior to January 1, 2007, the contractor should use the prior hospital's CCR. 
 
In instances where errors related to CCRs and/or outlier payments are discovered, the 
Medicare contractor shall contact the CMS central office to seek further guidance.  
Medicare contractors may contact the CMS central office via the address and e-mail 
address listed in 10.11.3.1 of this chapter. 
 
If a cost report is reopened after final settlement and as a result of this reopening, there is 
a change to the CCR, Medicare contractors should contact the CMS regional and central 
office for further instructions.  Medicare contractors may contact the CMS central office 
via the address and email address listed in 10.11.3.1. 
 
10.11.5 - New Providers and Providers with Cost Report Periods Less 
Than a Full Year 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
The contractors must calculate a hospital CCR using the most recent full-year cost report 
if a hospital or CMHC has a short period cost report. 
 
The contractors must use the Statewide CCR for all inclusive rate hospitals paid under 
OPPS, or when a new provider does not have a full years cost report and has no cost 
report history. 
 
See 10.11.10 for the location of the Statewide CCRs. 
  10.11.6 - Substitution of Statewide CCRs for Extreme OPPS Hospital 
Specific CCRs 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
The contractors must use the applicable Statewide average urban or rural hospital default 
ratio if the CCR calculated for a hospital paid under OPPS is greater than the upper limit 
CCR in the file of overall OPPS hospital CCR limits on the CMS Web site. 
 
In addition to the circumstances listed in 10.11.6, 10.11.5, and 10.11.4 of this chapter, a 
Medicare contractor also should use a Statewide average CCR if it is unable to determine an 
accurate overall ancillary CCR for a hospital for whom accurate data with which to calculate 
an operating CCR is not available.  Further, the policies of 10.11.3.1 and 10.11.3.2 can be 
applied as an alternative to the Statewide average. 
 
See 10.11.10 for the location of the Statewide CCRs and the upper limit above which 
the contractor must use the Statewide CCR. 
 
10.11.7 - Methodology for Calculation of Hospital Overall CCR for 
Hospitals That Do Not Have Nursing and Paramedical Education 
Programs for Cost Reporting Periods Beginning Before  May 1, 2010, 
Under Cost Report Form 2552-96 
(Rev. 2296, Issued: 09-02-11, Effective: 10-01-11, Implementation: 10-03-11) 
 
10.11.7.1 - Methodology for Calculation of Hospital Overall CCR for 
Hospitals That Do Not Have Nursing and Paramedical Education 
Programs for Cost Reporting Periods Beginning On or After May 1, 
2010, Under Cost Report 2552-10 
(Rev. 2296, Issued: 09-02-11, Effective: 10-01-11, Implementation: 10-03-11) 
 
In calculating the hospitals costs or charges, do not include departmental CCRs and 
charges for services that are not paid under the OPPS such as physical, occupational and 
speech language therapies, clinical diagnostic laboratory services, ambulance, rural health 
clinic services, non-implantable DME, etc. See 10.11.10 for the location of the list of 
exact cost centers that shall be included in the calculation of the overall CCR.  
 
Step 1 - Determining Overall Costs:  
 
Calculate costs for each cost center by multiplying the departmental CCR for each cost 
center (and subscripts thereof) that reflect services subject to the OPPS from Form CMS 
2552-10, Worksheet C, Part I, Column 9 by the Medicare outpatient charges for that cost 
center (and subscripts thereof) from Worksheet D, Part V, Columns 2, 3, and 4,. Sum the 
costs calculated for each cost center to arrive at Medicare outpatient cost of services 
subject to OPPS.  
  Step 2 - Determining Overall Charges: Calculate charges by summing the Medicare 
outpatient charges from Form CMS 2552-10, Worksheet D, Part V, Columns 2, 3, and 4, 
(and for each cost center (and subscripts thereof) that reflect services subject to the 
OPPS.  
 
Step 3 - Calculating the Overall CCR: Divide the costs from Step 1 by the charges from 
Step 2 to calculate the hospitals Medicare outpatient CCR. 
 
10.11.8 - Methodology for Calculation of Hospital Overall CCR for 
Hospitals That Have Nursing and Paramedical Education Programs for 
Cost Reporting Periods Beginning Before May 1, 2010, Under Cost 
Report Form 2552-96 
(Rev. 2296, Issued: 09-02-11, Effective: 10-01-11, Implementation: 10-03-11) 
 
10.11.8.1 - Methodology for Calculation of Hospital Overall CCR for 
Hospitals That Have Nursing and Paramedical Education Programs for 
Cost Reporting Periods Beginning On or After May 1, 2010, Under Cost 
Report 2552-10 
(Rev. 2296, Issued: 09-02-11, Effective: 10-01-11, Implementation: 10-03-11) 
 
Do not include departmental CCRs and charges for services not subject to the OPPS 
(such as physical, occupational and speech language therapies, clinical diagnostic 
laboratory services, ambulance, rural health clinic services, non-implantable DME, etc.) 
in calculating the hospitals costs or charges.  See 10.11.10 for the location of the list of 
the exact cost centers that should be included in the overall CCR.  
 
Step 1 -- Determining costs for each department: 
 
From Worksheet B, Part 1 - Column 26, deduct the nursing and paramedical education 
costs found on the applicable line in Columns -20, and 23 of Worksheet B, Part I to 
calculate a cost for each cost center. 
 
Exception: The costs for 9200 are not calculated on this worksheet. For cost center 9200,  
Observation Beds (Non-Distinct Part), use the cost reported on Worksheet D-1, Part IV, 
line 89, and deduct the nursing and paramedical education costs found on Worksheet D-
1, Part IV, line 93 and subscripts, column 5. See Step 3 below.  
 
Step 2 - Determining charges for each department: From worksheet C, Part 1 - Column 8 
(sum of columns 6 and 7), identify total charges. 
 
Step 3 - Determining the CCRs for each department without nursing and paramedical 
education costs: For each line, divide the costs from Step1 by the charges from Step 2 to 
acquire CCRs for each line, without inclusion of nursing and paramedical education 
costs. Exception: For cost center 9200,  Observation Beds (Non-Distinct Part), use the  cost reported on Worksheet D-1, Part IV, line 89, and deduct the nursing and paramedical 
education costs found on Worksheet D-1, Part IV, line 93 and subscripts, column 5.  
 
Step 4 - Determining Overall Costs: Multiply the CCR in step 3 by the Medicare 
outpatient charges for that cost center (and subscripts thereof) from Worksheet D Part V, 
Columns 2, 3, and 4,. Sum the costs calculated for each cost center to arrive at Medicare 
outpatient cost of services subject to OPPS.  
 
Step 5 - Determining Overall Charges: Calculate charges by summing the Medicare 
outpatient charges from Form CMS 2552-10, Worksheet D, Part V, Columns 2, 3, and 4, 
for each cost center (and subscripts thereof) that reflect service subject to the OPPS.  
 
Step 6 - Calculating the Overall CCR: Divide the costs from Step 4 by the charges from 
step 5 to calculate the hospitals Medicare outpatient CCR. 
 
10.11.9 - Methodology for Calculation of CCR for CMHCs 
(Rev. 10869; Issued: 07-14-21; Effective: 08-13-21; Implementation: 08-13-21) 
 
Calculate the CMHCs CCR using the providers most recent full year cost report, Form 
CMS 2088-92, and Medicare cost and charges from Worksheet C, Page 2. Divide costs 
from line 39.01, Column 3 by charges from line 39.02, Column 3 to calculate the CCR. 
 
Calculate the CMHCs CCR using the providers most recent full year cost report, Form CMS 
2088-17, and Medicare cost and charges from Worksheet C.  Divide costs from line 50, Column 
5, by charges from line 50, Column 4, to calculate the CCR. 
 
If the CCR is above 1.0 enter the appropriate Statewide average urban or rural hospital 
default ratio that is in the OPSF for the CMHC.  There is no lower limit for CMHC 
CCRs.  Use the CCR you calculate and do not substitute the Statewide average urban or 
rural hospital default ratio in cases where the CCR is below 1.0. 
 
Note that CCR reporting requirements in 10.11 apply to both hospitals paid under OPPS 
and to CMHCs. 
 
10.11.10 - Location of Statewide CCRs, Tolerances for Use of Statewide 
CCRs in Lieu of Calculated CCRs and Cost Centers to be Used in the 
Calculation of CCRs 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
The file of OPPS hospital upper limit CCRs and the file of Statewide CCRs are located 
on the CMS Web site at www.cms.hhs.gov/HospitalOutpatientPPS/ under Annual 
Policy Files.  A spreadsheet listing the Statewide CCRs also can be found in the file 
containing the preamble tables that appears in the most recent OPPS/ASC final rule.  The 
contractors must always use the most recent Statewide CCR. 
  The file of standard and nonstandard cost centers to be used in the calculation of hospital 
outpatient CCRs is also found on the CMS Web site at 
www.cms.hhs.gov/HospitalOutpatientPPS/ under Revenue Code to Cost Center 
Crosswalk. 
 
10.11.11 - Reporting of CCRs for Hospitals Paid Under OPPS and for 
CMHCs 
(Rev. 2111, Issued: 12-03-10, Effective: 04-01-11, Implementation: 04-04-11 ) 
 
The contractors shall report the OPPS hospital overall or CMHC CCR they calculate, or 
the Statewide CCR they select, for each provider to the Outpatient Provider Specific File 
(OPSF; see 50.1 of this chapter) within 30 days after the date of the calculation or 
selection of the Statewide CCR for the provider.  If a cost report reopening results in 
adjustments that would change the CCR that is currently in effect, the contractor shall 
calculate and enter the CCR in the OPSF within 30 days of the date that the reopening is 
finalized.  In such an instance, contractors must create an additional record in the OPSF 
for the provider.  The contractor entries in the OPSF shall include the effective date of the 
CCR being entered.  Entries in the OPSF shall not replace a pre-existing entry for the 
provider. The only instances a Medicare contractor retroactively changes a field in the 
PSF is to update the CCR when using the FISS Lump Sum Utility for outlier 
reconciliation or otherwise specified by the CMS Regional Office or Central Office. 
 
10.12 - Payment Window for Outpatient Services Treated as Inpatient 
Services 
(Rev. 3238, Issued: 04-22-15, Effective: 04-01-15 Implementation: 04-06-15) 
 
The policy for the payment window for outpatient services treated as inpatient services is 
discussed in chapter 3  40.3 of this manual.  The policy requires payment for certain 
outpatient services provided to a beneficiary on the date of an inpatient admission or 
during the 3 calendar days (or 1 calendar day for a non-IPPS hospital) prior to the date of 
an inpatient admission to be bundled (i.e., included) with the Medicare Part A payment 
for the beneficiarys inpatient admission if those outpatient services are provided by the 
admitting hospital or an entity that is wholly owned or wholly operated by the admitting 
hospital.  The policy applies to all diagnostic outpatient services (including non-patient 
laboratory tests) and non-diagnostic services (i.e., therapeutic) that are related to the 
inpatient stay.  Ambulance and maintenance renal dialysis services are not subject to the 
payment window. 
 
All diagnostic services (including non-patient laboratory tests) provided to a Medicare 
beneficiary by a hospital (or an entity wholly owned or wholly operated by the hospital) 
on the date of the beneficiarys inpatient admission or during the 3 calendar days (or, in 
the case of a non-subsection (d) hospital, 1 calendar day) immediately preceding the date 
of admission are required to be included on the Part A bill for the inpatient stay. 
 
Outpatient non-diagnostic services that are related to an inpatient admission must be 
bundled with the Part A billing for the inpatient stay.  An outpatient service is related to  the admission if it is clinically associated with the reason for a patients inpatient 
admission.  In accordance with section 102 of Pub. L. 111-192, for services furnished on 
or after June 25, 2010, all outpatient non-diagnostic services, other than ambulance and 
maintenance renal dialysis services, provided by the hospital (or an entity wholly owned 
or wholly operated by the hospital) on the date of a beneficiarys inpatient admission are 
deemed related to the admission, and thus, must be billed to Part A with the inpatient 
stay.  Also, outpatient non-diagnostic services, other than ambulance and maintenance 
renal dialysis services, provided by the hospital (or an entity wholly owned or wholly 
operated by the hospital) on the first, second, and third calendar days for a subsection (d) 
hospital paid under the IPPS (first calendar day for non-subsection (d) hospitals) 
preceding the date of a beneficiarys inpatient admission are deemed related to the 
admission, and thus, must be billed to Part A with the inpatient stay, unless the hospital 
attests to specific non-diagnostic services as being unrelated to the hospital claim (that is, 
the preadmission non-diagnostic services are clinically distinct or independent from the 
reason for the beneficiarys admission).  Outpatient non-diagnostic services provided 
during the payment window that are unrelated to the admission, and are covered by Part 
B, may be separately billed to Part B.  The June 25, 2010 effective date of section 102 of 
Pub. L. 111-192 applies to outpatient services provided on or after June 25, 2010. 
 
In the event that there is no Part A coverage for the inpatient stay, the hospital may bill 
Part B for the services provided to the beneficiary prior to the point of inpatient 
admission (i.e., the time of formal admission pursuant to the inpatient admission order) 
that would otherwise be included in the payment window for Part A payment, including 
services requiring an outpatient status.  Certain Part B inpatient services provided to the 
beneficiary after the point of inpatient admission (i.e., the time of formal admission 
pursuant to the inpatient admission order) may also be billed to Part B when Part A 
payment cannot be made.  See Pub. 100-02, Medicare Benefit Policy Manual, Chapter 6, 
10 Medical and Other Health Services Furnished to Inpatients of Participating 
Hospital" for a full description of this policy. 
 
A hospital may attest to specific non-diagnostic services as being unrelated to the hospital 
Part A claim (that is, the preadmission non-diagnostic services are clinically distinct or 
independent from the reason for the beneficiarys admission) by adding a condition code 
51 (definition 51 - Attestation of Unrelated Outpatient Non-diagnostic Services) to the 
separately billed outpatient non-diagnostic services claim.  Providers may submit 
outpatient claims with condition code 51 starting April 1, 2011, for outpatient claims that 
have a date of service on or after June 25, 2010.  Outpatient claims with a date of service 
on or after June 25, 2010, that did not contain condition code 51 received prior to April 1, 
2011, will need to be adjusted by the provider if they were rejected by FISS or CWF. 
 
20 - Reporting Hospital Outpatient Services Using Healthcare Common 
Procedure Coding System (HCPCS) 
(Rev. 1, 10-03-03) 
A3-3626.4, HO-442.6 
 
20.1 - General  (Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
Reporting of HCPCS codes is required of acute care hospitals including those paid under 
alternate payment systems, e.g., Maryland, long-term care hospitals.  HCPCS codes are 
also required of rehabilitation hospitals, psychiatric hospitals, hospital-based RHCs, 
hospital-based FQHCs, and CAHs reimbursed under Method II (HCPCS required to be 
billed for fee reimbursed services).  This also includes all-inclusive rate hospitals. 
 
HCPCS includes the American Medical Associations Current Procedural 
Terminology, 4th Edition, (CPT-4) for physician services and CMS developed codes for 
certain nonphysician services.  All of the CPT-4 is contained within HCPCS, and is 
identified as Level I CPT codes consist of five numeric characters.  The CMS developed 
codes are known as Level II.  Level II codes are five-character codes that begin with an 
alpha character that is followed by either numeric or alpha characters. 
 
Hospital-based and independent ESRD facilities must use HCPCS to bill for blood and 
blood products, and to bill for drugs and clinical laboratory services paid outside the 
composite rate.  In addition, the hospital is required to report modifiers as applicable and 
as described in 20.6. 
 
The CAHs are required to report HCPCS only for Part B services not paid to them on a 
reasonable cost basis, e.g., screening mammographies and bone mass measurements. 
 
The HCPCS codes are required for all outpatient hospital services unless specifically 
excepted in manual instructions.  This means that codes are required on surgery, 
radiology, other diagnostic procedures, clinical diagnostic laboratory, durable medical 
equipment, orthotic-prosthetic devices, take-home surgical dressings, therapies, 
preventative services, immunosuppressive drugs, other covered drugs, and most other 
services. 
 
When medical and surgical supplies (other than prosthetic and orthotic devices as 
described in the Medicare Claims Processing Manual, Chapter 20, 10.1) described by 
HCPCS codes with status indicators other than H or N are provided incident to a 
physician's service by a hospital outpatient department, the HCPCS codes for these items 
should not be reported because these items represent supplies.  Claims containing charges 
for medical and surgical supplies used in providing hospital outpatient services are 
submitted to the Medicare contractor providing OPPS payment for the services in which 
they are used.  The hospital should include charges associated with these medical and 
surgical supplies on claims so their costs are incorporated in ratesetting, and payment for 
the supplies is packaged into payment for the associated procedures under the OPPS in 
accordance with 42 CFR 419.2(b)(4). 
 
For example, if the hospital staff in the emergency department initiate the intravenous 
administration of a drug through an infusion pump described by HCPCS code E0781 
(Ambulatory infusion pump, single or multiple channels, electric or battery operated, 
with administrative equipment, worn by patient), complete the drug infusion, and  discontinue use of the infusion pump before the patient leaves the hospital outpatient 
department, HCPCS code E0781 should not be reported because the infusion pump was 
used as a supply and would be paid through OPPS payment for the drug administration 
service.  The hospital should include the charge associated with the infusion pump on the 
claim. 
 
In another example, if hospital outpatient staff perform a surgical procedure on a patient 
in which temporary bladder catheterization is necessary and use a catheter described by 
HCPCS code A4338 (Indwelling catheter; Foley type, two-way latex with coating 
(Teflon, silicone, silicone elastomer, or hydrophilic, etc.), each), the hospital should not 
report A4338 because the catheter was used as a supply and would be paid through OPPS 
payment for the surgical procedure.  The hospital should include the charge associated 
with the urinary catheter on the claim. 
 
When hospital outpatient staff provide a prosthetic or orthotic device, and the HCPCS 
code that describes that device includes the fitting, adjustment, or other services 
necessary for the patients use of the item, the hospital should not bill a visit or procedure 
HCPCS code to report the charges associated with the fitting, adjustment, or other related 
services.  Instead, the HCPCS code for the device already includes the fitting, adjustment 
or other similar services.  For example, if the hospital outpatient staff provides the 
orthotic device described by HCPCS code L1830 (KO, immobilizer, canvas longitudinal, 
prefabricated, includes fitting and adjustment), the hospital should only bill HCPCS code 
L1830 and should not bill a visit or procedure HCPCS code to describe the fitting and 
adjustment. 
 
Claims with required HCPCS coding missing will be returned to the hospital for 
correction. 
 
Future updates will be issued in a Recurring Update Notification. 
 
20.2 - Applicability of OPPS to Specific HCPCS Codes 
(Rev. 1536, Issued:  06-19-08; Effective:  07-01-08; Implementation: 07-07-08) 
 
The CPT codes generally are created to describe and report physician services, but are 
also used by other providers/suppliers to describe and report services that they provide.  
Therefore, the CPT code descriptors do not necessarily reflect the facility component of a 
service furnished by the hospital.  Some CPT code descriptors include reference to a 
physician performing a service.  For OPPS purposes, unless indicated otherwise, the 
usage of the term "physician" does not restrict the reporting of the code or application of 
related policies to physicians only, but applies to all practitioners, hospitals, providers, or 
suppliers eligible to bill the relevant CPT codes pursuant to applicable portions of the 
Social Security Act (SSA) of 1965, the Code of Federal Regulations (CFR), and 
Medicare rules.  In cases where there are separate codes for the technical component, 
professional component, and/or complete procedure, hospitals should report the code that 
represents the technical component for their facility services.  If there is no separate 
technical component code for the service, hospitals should report the code that represents  the complete procedure.  Tables describing the treatment of HCPCS codes for OPPS are 
published in the Federal Register annually. 
 
20.3 - Line Item Dates of Service 
(Rev. 1, 10-03-03) 
 
Where HCPCS is required a line item date of service is also required.  (FL 45 on Form 
CMS-1450). 
 
The A/B MAC (A) will return claims to hospitals where a line item date of service is not 
entered for each HCPCS code reported or if the line item dates of service reported are 
outside of the statement-covers period. 
 
20.4 - Reporting of Service Units 
(Rev. 1, 10-03-03) 
 
The definition of service units (FL 46 on the Form CMS-1450) where HCPCS code 
reporting is required is the number of times the service or procedure being reported was 
performed. 
 
EXAMPLES: 
 
If the following codes are performed once on a specific date of service, the entry in the 
service units field is as follows: 
 
HCPCS Code  Service Units 
90849 - Multiple-family group psychotherapy  Units > 1 
92265 - Needle oculoelectromyography, one or more  Units > 1 
extraocular muscles, one or both eyes, with 
interpretation and report 
95004 - Percutaneous tests (scratch, puncture, prick)  Units = no.  of tests performed 
with allergenic extracts, immediate type reaction, 
specify number of tests. 
95861 - Needle electromyography two extremities  Units > 1 
with or without related paraspinal areas 
  6 Units > 83 min.  to < 98 min. 
7 Units > 98 min.  to < 113 
min. 
8 Units > 113 min.  to < 128 
min.   
The pattern remains the same for treatment times in excess of two hours.  Hospitals 
should not bill for services performed for less than eight minutes.  The expectation (based 
on the work values for these codes) is that a providers time for each unit will average 15 
minutes in length.  If hospitals have a practice of billing less than 15 minutes for a unit, 
their A/B MAC (A) will highlight these situations for review. 
 
The above schedule of times is intended to provide assistance in rounding time into 15-
minute increments.  It does not imply that any minute until the eighth should be excluded 
from the total count as the timing of active treatment counted includes time. 
 
The beginning and ending time of the treatment should be recorded in the patients 
medical record along with the note describing the treatment.  (The total length of the 
treatment to the minute could be recorded instead.)  If more than one CPT code is billed 
during a calendar day, then the total number of units that can be billed is constrained by 
the total treatment time.  For example, if 24 minutes of code 97112 and 23 minutes of 
code 97110 were furnished, then the total treatment time was 47 minutes; so only 3 units 
can be billed for the treatment.  The correct coding is two units of code 97112 and one 
unit of code 97110, assigning more units to the service that took more time. 
 
20.5 - Clarification of HCPCS Code to Revenue Code Reporting 
(Rev. 1487, Issued: 04-08-08, Effective: 04-01-08, Implementation: 04-07-08) 
 
Generally, CMS does not instruct hospitals on the assignment of HCPCS codes to 
revenue codes for services provided under OPPS since hospitals assignment of cost vary. 
Where explicit instructions are not provided, providers should report their charges under 
the revenue code that will result in the charges being assigned to the same cost center to 
which the cost of those services are assigned in the cost report. 
 
20.6 - Use of Modifiers 
(Rev. 11937; Issued: 03-31-23; Effective: 04-01-23; Implementation: 04-03-23) 
 
Modifiers are two-digit identifiers that are reported with CPT and HCPCS Level II codes 
to provide additional information about how an item, procedure, or service is provided, 
and improve the accuracy of coding. These two-digit modifiers can be alphabetic, 
numeric, or a combination of both. The use of modifiers is not limited to certain code 
sets. Specifically, CPT modifiers may be used with HCPCS Level II codes when 
appropriate. Similarly, HCPCS Level II modifiers may be used with CPT codes to 
appropriately describe how an item, procedure, or service is provided. Providers may use 
any applicable modifier where appropriate. For Medicare purposes, modifiers are used 
either as pricing or informational/tracking indicators. 
 
The Integrated Outpatient Code Editor (I/OCE) accepts all valid CPT and HCPCS Level 
II modifiers on OPPS claims. As of April 1, 2023, there are approximately 410 active and 
valid modifiers. Definitions for all valid modifiers may be found in the latest CPT and 
HCPCS Level II code references. The complete descriptions for all CPT modifiers can be  found in the latest CPT code book. Alternatively, the complete descriptions for the 
HCPCS Level II modifiers can be found in the latest HCPCS Level II code book, as well 
as in the latest HCPCS Level II code file that is available on the CMS HCPCS website, 
specifically, at https://www.cms.gov/medicare/coding/hcpcsreleasecodesets/hcpcs-
quarterly-update. Additional guidance on the use of modifiers can also be found on the 
Medicare Administrative Contractors (MAC) websites. Note that, under the OPPS, the 
use of modifiers applies to services/procedures performed on the same calendar day. 
 
The following subsections provide information on the use of certain modifiers under the 
hospital OPPS. For information on additional modifiers not described below, refer to 
your MAC website(s) for guidance. 
 
20.6.1 - Where to Report Modifiers on the Hospital Part B Claim 
(Rev. 11937; Issued: 03-31-23; Effective: 04-01-23; Implementation: 04-03-23) 
 
Modifiers are reported on the hardcopy Form CMS-1450 with the HCPCS code. See 
Chapter 25 of this manual for related instructions. For electronic submissions, see 
the ASC X12 837 Institutional Claim implementation guide for instructions related to 
HCPCS modifiers when using the ASC X12 837 institutional claim format. Note there is 
space for four modifiers on the hardcopy and electronic forms. 
 
HOPDs are reminded that the most specific modifier should be used first. That is, when 
modifiers E1 through E4, FA through F9, LC, LD, RC, and TA through T9 apply, they 
should be used before modifiers LT, RT, or 59. 
 
20.6.2 - Use of Modifiers -50, -LT, and -RT 
(Rev. 11937; Issued: 03-31-23; Effective: 04-01-23; Implementation: 04-03-23) 
 
50: Bilateral Procedure 
 
Modifier 50 is used to report bilateral procedures that are performed on both sides of the 
body at the same operative session. Do not report modifiers RT and LT when modifier 50 
applies. Do not submit two line items to report a bilateral procedure using modifier 50. 
Report one line with modifier 50 using one unit of service. 
 
Modifier 50 applies to any bilateral procedure performed on both sides at the same 
operative session. The bilateral modifier 50 is restricted to operative sessions only. 
Modifier 50 may not be used: 
 
To report surgical procedures identified by their terminology as bilateral, or 
To report surgical procedures identified by their terminology as unilateral or bilateral. 
 
The unit entry to use when modifier 50 is reported is one unit. 
 
20.6.3 - Modifiers -LT and -RT 
(Rev. 11937; Issued: 03-31-23; Effective: 04-01-23; Implementation: 04-03-23)   
LT:  Left side (used to identify procedures performed on the left side of the body) 
RT:  Right side (used to identify procedures performed on the right side of the 
body) 
 
Modifiers LT and RT apply to codes that identify procedures that can be performed on 
paired organs, e.g., ears, eyes, nostrils, kidneys, lungs, and ovaries. 
 
These modifiers should be used whenever a procedure is performed on only one side. 
Hospitals should report the appropriate RT or LT modifier to identify which of the paired 
organs was operated upon. Do not report modifiers RT and LT when modifier 50 applies. 
 
20.6.4 - Modifiers 73 and 74 
(Rev. 11937; Issued: 03-31-23; Effective: 04-01-23; Implementation: 04-03-23) 
 
73: Discontinued outpatient hospital/ambulatory surgery center (ASC) procedure 
prior to the administration of anesthesia 
74: Discontinued outpatient hospital/ambulatory surgery center (ASC) procedure 
after administration of anesthesia 
 
A. General 
 
Modifiers 73 and 74 provide a way for hospitals to report and be paid for expenses 
incurred in preparing a patient for a procedure and scheduling a room for performing the 
procedure where the service is subsequently discontinued. This instruction applies to both 
hospital outpatient departments (HOPDs) and to ambulatory surgical centers (ASCs). 
 
Modifier 73 is used by the facility to indicate that a procedure requiring anesthesia was 
terminated due to extenuating circumstances or to circumstances that threatened the well-
being of the patient after the patient had been prepared for the procedure (including 
procedural pre-medication when provided), and been taken to the room where the 
procedure was to be performed, but prior to administration of anesthesia. For purposes of 
billing for services furnished in the hospital outpatient department, anesthesia is defined 
to include local, regional block(s), moderate sedation/analgesia (conscious sedation), 
deep sedation/analgesia, or general anesthesia. This modifier code was created so that the 
costs incurred by the hospital to prepare the patient for the procedure and the resources 
expended in the procedure room and recovery room (if needed) could be recognized for 
payment even though the procedure was discontinued. 
 
Modifier 74 is used by the facility to indicate that a procedure requiring anesthesia was 
terminated after the induction of anesthesia or after the procedure was started (e.g., 
incision made, intubation started, scope inserted) due to extenuating circumstances or 
circumstances that threatened the well-being of the patient. 
 
This modifier may also be used to indicate that a planned surgical or diagnostic procedure 
was discontinued, partially reduced or cancelled at the physician's discretion after the  administration of anesthesia. For purposes of billing for services furnished in the hospital 
outpatient department, anesthesia is defined to include local, regional block(s), moderate 
sedation/analgesia (conscious sedation), deep sedation/analgesia, and general 
anesthesia. This modifier code was created so that the costs incurred by the hospital to 
initiate the procedure (preparation of the patient, procedure room, recovery room) could 
be recognized for payment even though the procedure was discontinued prior to 
completion. 
 
Coinciding with the addition of the modifiers 73 and 74, modifiers 52 and 53 were 
revised. Modifier 52 is used to indicate partial reduction, cancellation, or discontinuation 
of services for which anesthesia is not planned. The modifier provides a means for 
reporting reduced services without disturbing the identification of the basic service. 
Modifier 53 is used to indicate discontinuation of physician services and is not approved 
for use for outpatient hospital services. 
 
Note that the elective cancellation of a procedure should not be reported. 
 
Modifiers 73 and 74 are only used to indicate discontinued procedures for which 
anesthesia is planned or provided. 
 
B. Effect on Payment 
 
Procedures that are discontinued after the patient has been prepared for the procedure and 
taken to the procedure room but before anesthesia is provided will be paid at 50 percent 
of the full OPPS payment amount. Modifier 73 is used for these procedures. As of 
January 1, 2016, for device-intensive procedures that append modifier 73, we will reduce 
the APC payment amount for the discontinued device-intensive procedure by 100 percent 
of the device offset amount prior to applying the additional payment adjustments that 
apply when the procedure is discontinued as modified in the CY 2016 OPPS/ASC final 
rule that was published in the November 13, 2015 Federal Register (80 FR 70424-
70426). Beginning January 1, 2017, device-intensive procedures are defined as those 
procedures requiring the insertion of an implantable device that also have a HCPCS-level 
device offset greater than 40 percent. From January 1, 2016, through December 31, 2016, 
device-intensive procedures were defined as those procedures that involve implantable 
devices that are assigned to a device-intensive APC (defined as those APCs with a device 
offset greater than 40 percent). Beginning January 1, 2019, device-intensive procedures 
are defined as procedures that involve the surgical implantation or insertion of an 
implantable device that is assigned a CPT or HCPCS code (including single-use devices) 
and has a device offset amount that exceeds 30 percent of the procedures mean cost. 
 
Procedures that are discontinued, partially reduced, or cancelled after the procedure has 
been initiated and/or the patient has received anesthesia will be paid at the full OPPS 
payment amount. Modifier 74 is used for these procedures. 
 
Procedures for which anesthesia is not planned that are discontinued, partially reduced, or 
cancelled after the patient is prepared and taken to the room where the procedure is to be  performed will be paid at 50 percent of the full OPPS payment amount. Modifier 52 is 
used for these procedures. 
     
20.6.5 - Modifiers 76 and 77 
(Rev. 11937; Issued: 03-31-23; Effective: 04-01-23; Implementation: 04-03-23) 
 
76: Repeat procedure or service by same physician or other qualified health care 
professional 
77: Repeat procedure by another physician or other qualified health care 
professional 
 
Two repeat procedure modifiers are applicable for hospital use: 
 
  Modifier 76 is used to indicate that the same physician or qualified health care 
professional repeated a procedure or service. 
 
  Modifier 77 is used to indicate that another physician or qualified health care 
professional repeated a procedure or service. 
 
Since OPPS claims generally span only one calendar day, modifier 76 and 77 should be 
used to report procedures or services that are performed in a separate operative session on 
the same day or separate encounter on the same day. 
 
If there is a question regarding whom the ordering physician/provider was and whether or 
not the same physician/provider ordered the second procedure, the code selected is based 
on whether or not the physician/provider performing the procedure is the same. The 
procedure must be the same procedure. It is listed once and then listed again with the 
appropriate modifier. 
 
20.6.6 - Modifiers for Radiology Services 
(Rev. 11937; Issued: 03-31-23; Effective: 04-01-23; Implementation: 04-03-23) 
 
52: Reduced services 
59: Distinct procedural service 
76: Repeat procedure or service by same physician or other qualified health care 
professional 
77: Repeat procedure by another physician or other qualified health care 
professional 
Level II modifiers: use as applicable 
 
Modifiers 52, 59, 76, and 77, and the Level II modifiers apply to radiology services. 
 
When a radiology procedure is reduced, the correct reporting is to code to the extent of 
the procedure performed. If no HCPCS code exists for the service that has been 
completed, report the intended HCPCS code with modifier 52 appended. 
 
 
20.6.7 - Modifier CA  (Rev. 11937; Issued: 03-31-23; Effective: 04-01-23; Implementation: 04-03-23) 
 
CA: Procedure payable only in the inpatient setting when performed emergently on 
an outpatient who expires prior to admission 
 
 
In the CY 2003 OPPS final rule (67 FR 66799), we discussed the creation of the new 
HCPCS modifier CA to address situations where a procedure on the OPPS inpatient-only 
list must be performed to resuscitate or stabilize a patient (whose status is that of an 
outpatient) with an emergent, life-threatening condition, and the patient dies before being 
admitted as an inpatient. HCPCS modifier CA is defined as a procedure payable only in 
the inpatient setting when performed emergently on an outpatient who expires prior to 
admission. In section VI of Transmittal A02129, issued on January 3, 2003, we 
instructed hospitals on the use of this modifier. Transmittal A-02-129 is available on the 
cms.gov website. For a complete description of the history of the policy and the 
development of the payment methodology for these services, refer to the CY 2004 OPPS 
final rule (68 FR 63467 through 63468), CY 2005 OPPS Final Rule (69 FR 65841), CY 
2007 OPPS final rule (71 FR 68157 through 68158), and CY 2012 OPPS/ASC final rule 
(76 FR 74153 through 74154). 
 
 
20.6.9 - Modifier FB 
(Rev. 11937; Issued: 03-31-23; Effective: 04-01-23; Implementation: 04-03-23) 
 
FB: Item provided without cost to provider, supplier, or practitioner, or full credit 
received for replaced device (examples, but not limited to, covered under warranty, 
replaced due to defect, free samples) 
 
From 2007 through 2013, HOPDs were required to report modifier FB when appropriate. 
As discussed in the CY 2007 OPPS final rule (71 FR 68076 through 68077), effective for 
services furnished on or after January 1, 2007, Medicare reduced the amount of payment 
for certain APCs when the hospital reported that it received a listed device without cost 
or where the hospital received a full credit for the cost of a replaced listed device. The 
reduction applied only when specific devices were replaced. To indicate that the hospital 
received the device without cost, modifier FB must have been reported. 
 
 
In addition, OPPS hospitals were required to report modifier FB on the same line as the 
surgical or procedure code (not the HCPCS Level II device code) for a service that 
required a device for which neither the hospital, nor the beneficiary, was liable to the 
manufacturer. Similarly, hospitals were required to report modifier FB on the same line 
as the surgical or procedure code (not the device code) for a service that required a device 
when the manufacturer gave credit for a device that was replaced with a more costly 
device.  Refer to section 61.3 of this manual for instructions regarding charges for items 
billed with the FB modifier. 
  As of January 1, 2014, modifier FB is no longer required on OPPS claims, and has been 
replaced with value code FD (credit received from the manufacturer for a replaced 
medical device) as discussed in the CY 2014 OPPS/ASC final rule (78 FR 75006 through 
75007), as well as in section 61.3.6 of this manual.  Specifically, effective January 1, 
2014, HOPDs are no longer required to report modifier FB, and instead, must report 
value code FD to indicate the amount of the credit in the amount portion for value code 
FD when the hospital receives a credit for a replaced device that is 50 percent or greater 
than the cost of the device. For more information on value code FD, refer to MLN 
Factsheet MLN909368 dated May 2022, which is available on the cms.gov website, 
specifically, at https://www.cms.gov/Outreach-and-Education/Medicare-Learning-
Network-MLN/MLNProducts/Downloads/cardiacdevicecredits-ICN909368.pdf 
 
Although no longer required for OPPS claims, modifier FB is still required on ASC 
claims. 
 
20.6.10 - Modifier FC 
(Rev. 11937; Issued: 03-31-23; Effective: 04-01-23; Implementation: 04-03-23) 
 
FC: Partial credit received for replaced device 
 
 
A. General 
 
From 2008 through 2013, HOPDs were required to report modifier FC when appropriate. 
As discussed in the CY 2008 OPPS/ASC final rule (72 FR 66744 through 66749), 
effective for services furnished on or after January 1, 2008, OPPS hospitals were required 
to report modifier FC for cases in which the hospital received a partial credit of 50 
percent or more of the cost of a new replacement device under warranty, recall, or field 
action. The hospital must have appended modifier FC to the surgical or procedure code 
(not the device code) that reported the services provided to replace the device. Refer to 
section 61.3 of this manual for instructions regarding charges for items billed with the FC 
modifier. 
 
As of January 1, 2014, modifier FC is no longer required on OPPS claims, and has been 
replaced with value code FD (credit received from the manufacturer for a replaced 
medical device) as discussed in the CY 2014 OPPS/ASC final rule (78 FR 75006 through 
75007), as well as in section 61.3.6 of this manual. Specifically, effective January 1, 
2014, HOPDs are no longer required to report modifier FC, and instead, must report 
value code FD to indicate the amount of the credit in the amount portion for value code 
FD when the hospital receives a credit for a replaced device that is 50 percent or greater 
than the cost of the device. For more information on value code FD, refer to MLN 
Factsheet MLN909368 dated May 2022, which is available on the cms.gov website, 
specifically, at https://www.cms.gov/Outreach-and-Education/Medicare-Learning-
Network-MLN/MLNProducts/Downloads/cardiacdevicecredits-ICN909368.pdf 
 
Although no longer required for OPPS claims, modifier FC is still required on ASC  claims. 
 
20.6.11 - Modifier PO 
(Rev. 11897; Issued:03-10-23; Effective:04-01-23; Implementation:04-03-23)  
 
PO: Excepted service provided at an off-campus, outpatient, provider-based 
department of a hospital 
 
As described in the CY 2015 OPPS/ASC final rule (79 FR 66910 through 66914), CMS 
established HCPCS modifier PO to describe excepted service provided at an off-campus, 
outpatient, provider-based department of a hospital. This modifier should be reported 
with every HCPCS code for all outpatient hospital items and services furnished in an 
excepted off-campus provider-based department of a hospital. See 42 CFR 413.65(a)(2) 
for a definition of campus. 
 
This modifier should not be reported for remote locations of a hospital (defined at 42 
CFR 413.65(a)(2)), satellite facilities of a hospital (defined at 42 CFR 412.22(h)), or for 
services furnished in an emergency department. 
 
Note that reporting of this modifier was voluntary for CY 2015, but is required beginning 
January 1, 2016. 
 
We note that, beginning in CY 2019, we finalized a policy to pay for clinic visits (G0463) 
billed at excepted off-campus provider-based departments (departments that bill modifier 
PO on their claim lines) at the PFS-equivalent amount. We phased-in this policy in 
over a two-year period. Specifically, half of the total 60-percent payment reduction, a 30-
percent reduction, was applied in CY 2019. Consequently, these departments were paid 
70 percent of the OPPS rate (100 percent of the OPPS rate minus the 30-percent payment 
reduction that applies in CY 2019) for the clinic visit. In CY 2020, the two-year phase-in 
was completed. The PFS-equivalent rate for CY 2020 and subsequent years is 40 percent 
of the proposed OPPS payment (that is, 60 percent less than the proposed OPPS rate).   
 
Off-campus provider-based departments should not report both the PO and PN modifiers 
on the same claim line. However, if services reported on a claim reflect items and 
services furnished from both an excepted and a nonexcepted off-campus PBD of the 
hospital, the PO modifier should be used on the excepted claim lines and the PN modifier 
should be used on the nonexcepted claim lines. 
 
Neither the PO nor the PN modifier is to be reported by the following hospital 
departments:  
 
 A dedicated emergency department as defined in existing regulations at 42 CFR 
489.24(b);  
 A PBD that is on the campus, or within 250 yards, of the hospital or a remote 
location of the hospital as defined under 42 CFR 413.65. 
   
20.6.12 - Modifier PN 
(Rev. 11937; Issued: 03-31-23; Effective: 04-01-23; Implementation: 04-03-23) 
 
PN: Non-excepted service provided at an off-campus, outpatient, provider-based 
department of a hospital 
 
A. General 
 
 
In accordance with Section 1833(t)(21) of the Act, as added by section 603 of the 
Bipartisan Budget Act of 2015 (Pub. L. 114-74), CMS established modifier PN to 
identify and pay nonexcepted items and services billed on an institutional claim. 
Effective January 1, 2017, non-excepted off-campus provider-based departments of a 
hospital are required to report this modifier on each claim line for non-excepted items and 
services. The use of modifier PN will trigger a payment rate under the Medicare 
Physician Fee Schedule (PFS). This modifier must be reported with each nonexcepted 
item and service including those for which payment will not be adjusted, such as 
separately payable drugs, clinical laboratory tests, and therapy services. Nonexcepted 
items and services are described in the regulations at 42 CFR 419.48. 
 
Off-campus provider-based departments should not report both the PO and PN modifiers 
on the same claim line. However, if services reported on a claim reflect items and 
services furnished from both an excepted and a nonexcepted off-campus PBD of the 
hospital, the PO modifier should be used on the excepted claim lines and the PN modifier 
should be used on the nonexcepted claim lines. 
 
Neither the PO nor the PN modifier is to be reported by the following hospital 
departments:  
 A dedicated emergency department as defined in existing regulations at 42 CFR 
489.24(b);  
 A PBD that is on the campus, or within 250 yards, of the hospital or a remote 
location of the hospital as defined under 42 CFR 413.65. 
 
B. Effect on Payment 
 
Payment for nonexcepted items and services furnished at nonexcepted off-campus 
provider-based departments reported with modifier PN will result in a payment rate under 
the PFS effective January 1, 2017. The PN modifier is required to be reported on each 
claim line with each nonexcepted item and service including those for which payment 
will not be adjusted, such as separately payable drugs, clinical laboratory tests, and 
therapy services.  
 
20.6.13 - Modifier CT 
(Rev. 11937; Issued: 03-31-23; Effective: 04-01-23; Implementation: 04-03-23) 
  CT: Computed tomography services furnished using equipment that does not meet 
each of the attributes of the National Electrical Manufacturers Association (NEMA) 
XR-29-2013 Standard 
 
A. General 
 
 
In accordance with section 1834(p) of the Act, CMS established modifier CT (Computed 
tomography services furnished using equipment that does not meet each of the attributes 
of the National Electrical Manufacturers Association (NEMA) XR-29-2013 standard) 
effective January 1, 2016, to identify computed tomography (CT) scans that are furnished 
on equipment that does not meet the National Electrical Manufacturers Association 
(NEMA) Standard XR-29-2013, titled Standard Attributes on CT Equipment Related to 
Dose Optimization and Management.  
 
Modifier CT is required to be reported on claims for computed tomography (CT) scans 
described by applicable HCPCS codes that are furnished on non-NEMA Standard XR-
29-2013-compliant equipment. The applicable CT services are identified by HCPCS 
codes 70450 through 70498; 71250 through 71275; 72125 through 72133; 72191 through 
72194; 73200 through 73206; 73700 through 73706; 74150 through 74178; 74261 
through 74263; and 75571 through 75574 (and any succeeding codes). 
 
HOPDs are reminded that this modifier should not be reported with codes that describe 
CT scans not listed above. 
 
B.  Effect on Payment 
 
Effective January 1, 2016, the use of this modifier resulted in a payment reduction of 5 
percent for the applicable computed tomography (CT) services when the service was paid 
separately. However, for CY 2017 and subsequent years, the use of this modifier results 
in a payment reduction of 15 percent for the applicable computed tomography (CT) 
services when the service is paid separately. The payment reduction is also applied to the 
APC payment for the HCPCS codes listed above that are subject to the multiple imaging 
composite policy. 
 
20.6.14 - Modifier FX 
(Rev. 11937; Issued: 03-31-23; Effective: 04-01-23; Implementation: 04-03-23) 
 
FX: X-ray taken using film 
 
A. General 
 
 
Consistent with the requirements set forth in section 1833(t)(16)(F)(i), and in accordance 
with provisions allowed under section 1833(t)(16)(F)(iv) of the Act, CMS established  modifier FX to identify imaging services that are x-rays taken using film. As stated in the 
CY 2017 OPPS/ASC final rule (81 FR 79729 through 79730), hospitals are required to 
use this modifier to report imaging services that are X-rays taken using film effective 
January 1, 2017. 
 
B. Effect on Payment 
 
Payment for x-ray services taken using film reported with modifier FX will be reduced by 
20 percent effective January 1, 2017. We note that when payment for an x-ray service 
taken using film is packaged into the payment for another item or service under the 
OPPS, no separate payment for the x-ray service taken using film is made. Accordingly, 
the payment reduction in this instance would be 0 percent (that is, 20 percent of $0). All 
imaging services that are x-rays are listed in the OPPS Addendum B, which is available 
via the Internet on the CMS Web site. 
 
20.6.15 Modifier FY 
(Rev. 11937; Issued: 03-31-23; Effective: 04-01-23; Implementation: 04-03-23) 
 
FY: X-ray taken using computed radiography technology/cassette-based imaging 
 
A. General 
 
 
Consistent with the requirements set forth in section 1833(t)(16)(F)(ii) and in accordance 
with provisions allowed under section 1833(t)(16)(F)(iv) of the Act, CMS established 
modifier FY to identify an imaging service that is an X-ray taken using computed 
radiography technology. Effective January 1, 2018, hospitals are required to use this 
modifier to report imaging services that are X-rays taken using computed radiography 
technology. 
 
B. Effect on Payment 
 
Payment for x-ray services taken using computed radiography technology will be reduced 
by 7 percent from January 1, 2018, through December 31, 2022, and thereafter to 10 
percent beginning January 1, 2023. We note that when payment for an x-ray service taken 
using computed radiography technology is packaged into the payment for another item or 
service under the OPPS, no separate payment for the x-ray service taken using computed 
radiography technology is made. Accordingly, the payment reduction in this instance 
would be 0 percent (that is, 20 percent of $0). All imaging services that are x-rays are 
listed in the OPPS Addendum B, which is available via the Internet on the CMS Web 
site. 
 
20.6.16- Modifier JG 
(Rev. 11937; Issued: 03-31-23; Effective: 04-01-23; Implementation: 04-03-23)   
JG: Drug or biological acquired with 340b drug pricing program discount, reported 
for informational purposes 
 
A. General 
 
On January 1, 2018, CMS established HCPCS Level II modifier JG to identify and pay 
340B-acquired drugs and biologicals. Specifically, beginning January 1, 2018, hospitals 
paid under the OPPS that are not excepted from the 340B drug payment adjustment, and 
beginning January 1, 2019, nonexcepted off-campus PBDs of a hospital (that is not 
otherwise excepted from the 340B drug payment adjustment) paid under the PFS are 
required to report modifier JG on the same claim line as the drug or biological HCPCS 
code to identify if a drug or biological was acquired under the 340B Program. The phrase 
acquired under the 340B Program is inclusive of all drugs and biologicals acquired 
under the 340B Program or PVP, regardless of the level of discount applied to the drug. 
 
Effective January 1, 2023, the JG modifier is required to be used by hospitals (except for 
rural sole community hospitals, childrens hospitals, and PPS-exempt cancer hospitals) to 
identify 340B drugs for informational purposes only, with no effect on payment. 
 
B. Effect on Payment 
 
Starting in CY 2018, payment for certain drugs and biologicals (reported with status 
indicator K) acquired through the 340B Program that are furnished by providers paid 
under the OPPS, and beginning January 1, 2019, payment for certain drugs and 
biologicals furnished by nonexcepted off-campus PBDs of a hospital paid under the PFS 
(departments that bill modifier PN on their claim lines), were required to report modifier 
JG on the same claim line as the drug or biological HCPCS code to identify if a drug or 
biological was acquired under the 340B Program, which triggered a payment adjustment 
such that the 340B-acquired drug is paid at the drugs average sales price minus 22.5 
percent (or equivalent payment rate derived from the ASP methodology). Starting 
September 28th, 2022, CMS revised the OPPS drug files that will apply the default rate 
(generally ASP plus 6 percent) to 340B-acquired drugs for the rest of that calendar 
year.  Effective January 1, 2023, the presence of modifier JG on a claim to indicate a drug 
is acquired under the 340B program will not trigger a payment reduction and will be used 
only for informational purposes. Claims for 340B drugs and biologicals identified with a 
JG modifier will be paid at the same statutory default rate as non-340B drugs and 
biologicals.  
 
A document explaining the use of this modifier is available via the Internet on the CMS 
Web site at https://www.cms.gov/files/document/part-b-inflation-rebate-guidance340b-
modifierfinal.pdf. 
 
20.6.17 - Modifier TB 
(Rev. 11937; Issued: 03-31-23; Effective: 04-01-23; Implementation: 04-03-23)   
TB: Drug or biological acquired with 340b drug pricing program discount, reported 
for informational purposes for select entities 
 
A. General 
 
On January 1, 2018, CMS established HCPCS Level II modifier TB to facilitate the 
collection and tracking of 340B claims data for OPPS providers that are excepted from 
the 340B payment adjustment in CY 2018. Beginning January 1, 2019, modifier TB shall 
be reported by both select hospitals paid under the OPPS and by nonexcepted off-campus 
PBDs of a hospital paid under the PFS if a drug or biological was acquired under the 
340B Program. The phrase acquired under the 340B Program is inclusive of all drugs 
and biologicals acquired under the 340B Program or PVP, regardless of the level of 
discount applied to the drug. 
 
Effective January 1, 2023, the TB modifier will be used by rural sole community 
hospitals, childrens hospitals, and PPS-exempt cancer hospitals to identify 340B drugs 
for informational purposes. Additionally, all pass-through drugs (reported with the status 
indicator G) purchased through the 340B drug discount program will report with the 
modifier TB by all OPPS providers.   
 
B. Effect on Payment 
 
From CY 2018 through CY 2022, rural SCHs, childrens hospitals, and PPS-exempt 
cancer hospitals providers that were exempt from the 340B drug payment adjustment 
reported the informational modifier TB to identify OPPS separately payable drugs 
(reported with status indicator K) purchased through the 340B discount program. The 
use of modifier TB did not trigger a payment adjustment, and these providers received 
and will continue to receive ASP plus 6 percent (or equivalent payment rate derived from 
the ASP methodology) for separately payable drugs furnished by these select providers. 
Furthermore, between CY 2019 and CY 2022, nonexcepted off-campus PBDs paid under 
the PFS (departments that bill the modifier PN on their claim lines) that furnished 340B-
acquired drugs and biologicals and were exempt from the 340B payment adjustment 
(because their hospital is a rural SCH or childrens hospital) were required to bill under 
the PFS using the institutional claim form and report the informational modifier TB for 
340B-acquired drugs and biologicals, which did not trigger a payment adjustment, and 
these providers received ASP+6 percent for separately payable drugs furnished in CY 
2019, even if such drugs were acquired under the 340B Program. 
 
For CY 2023, the presence of modifier TB on a claim to indicate a drug is acquired under 
the 340B program will continue to not trigger a payment reduction and be used only for 
informational purposes. Claims for 340B drugs and biologicals identified with a TB 
modifier will be paid at the same statutory default rate as non-340B drugs and 
biologicals. Additionally, the requirement of the TB modifier to identify drugs acquired 
through the 340B Program complies with certain requirements of the Inflation Reduction 
Act because these modifiers are an established mechanism that have been in use by  hospitals paid under the OPPS. The Inflation Reduction Act establishes a Part B inflation 
rebate by manufacturers for certain single source drugs and biologicals with prices 
increasing faster than the rate of inflation. However, it also specifically excludes units of 
drugs for which the manufacturer provides a discount under the 340B program from the 
units of drugs for which a manufacturer otherwise may have a Part B inflation rebate 
liability. 
 
A document explaining the use of this modifier is available via the Internet on the CMS 
Web site at https://www.cms.gov/files/document/part-b-inflation-rebate-guidance340b-
modifierfinal.pdf. 
 
20.6.18  Modifier ER  
(Rev. 11937; Issued: 03-31-23; Effective: 04-01-23; Implementation: 04-03-23) 
 
ER: Items and services furnished by a provider-based, off-campus emergency 
department 
 
 
Effective January 1, 2019, hospitals were required to report HCPCS modifier ER on 
every claim line that contains a CPT/HCPCS code for an outpatient hospital service 
furnished in an off-campus provider-based emergency department. This modifier is 
required to be reported in provider-based off-campus emergency departments that meet 
the definition of a dedicated emergency department as defined in 42 Code of Federal 
Regulations (CFR) 489.24 under the Emergency Medical Treatment and Labor Act 
(EMTALA) regulations. Per 42 CFR 489.24, a dedicated emergency department means 
any department or facility of the hospital, regardless of whether it is located on or off the 
main hospital campus, that meets at least one of the following requirements:  
 
(1) It is licensed by the State in which it is located under applicable State law as an 
emergency room or emergency department;  
 
(2) It is held out to the public (by name, posted signs, advertising, or other means) as a 
place that provides care for emergency medical conditions on an urgent basis without 
requiring a previously scheduled appointment; or  
 
(3) During the calendar year immediately preceding the calendar year in which a 
determination under 42 CFR 489.24 is being made, based on a representative sample of 
patient visits that occurred during that calendar year, it provides at least one-third of all of 
its outpatient visits for the treatment of emergency medical conditions on an urgent basis 
without requiring a previously scheduled appointment. 
 
This modifier would be reported on the UB04 form (CMS Form 1450) for hospital 
outpatient services. Reporting of this modifier is not required for Critical access hospitals 
(CAHs). While this modifier is required, it does not have an effect on payment. 
   
20.6.19 - Modifier CG                                                    
(Rev. 11937; Issued: 03-31-23; Effective: 04-01-23; Implementation: 04-03-23) 
 
CG: Policy criteria applied 
 
Effective January 1, 2019, modifier CG can be reported with certain device-intensive 
procedures to reflect situations in which a device was not used during the device-
intensive procedure.  Refer to section 61.2.1 of this manual for further information on 
modifier CG. 
 
This modifier would be reported on the UB04 form (CMS Form 1450) for hospital 
outpatient device- intensive procedures. Reporting of this modifier is not required for 
Critical access hospitals (CAHs). While this modifier is required, it does not have an 
effect on payment. 
 
20.7 - Billing of C HCPCS Codes by Non-OPPS Providers 
(Rev. 976, Issued: 06-09-06, Effective: 10-01-06, Implementation: 10-02-06) 
 
Prior to October 1, 2006, the C series of HCPCS codes were used exclusively by 
hospitals subject to OPPS to identify items that may have qualified for transitional pass 
through payment under OPPS or items or services for which an appropriate HCPCS code 
did not exist for the purposes of implementing the OPPS.  The C-codes could not be used 
to bill services payable under other payment systems.  CMS realized that these C-codes 
evolved and also target services that are uniquely hospital services that may be provided 
by an OPPS provider, other providers, or be paid under other payment systems. 
 
Effective October 1, 2006, the following non-OPPS providers may elect to bill using the 
C-codes or an appropriate CPT code on Types of Bill (TOBs) 12X, 13X, or 85X: 
 
  Critical Access Hospitals (CAHs); 
  Indian Health Service Hospitals (IHS); 
  Hospitals located in American Samoa, Guam, Saipan or the Virgin Islands; and 
  Maryland waiver hospitals. 
 
The OPPS providers shall continue to receive pass-through payment on items or services 
that qualify for pass through payment. Non-OPPS providers are not eligible for pass 
through payments. 
 
The C-codes shall be replaced with permanent codes.  Whenever a permanent code is 
established to replace a temporary code, the temporary code is deleted and cross-
referenced to the new permanent code.  Upon deletion of a temporary code, providers 
shall bill using the new permanent code. 
  Providers are encouraged to access the CMS Web site to view the quarterly HCPCS Code 
updates.  The URL to view the quarterly updates is 
http://www.cms.hhs.gov/HCPCSReleaseCodeSets/. 
 
The billing of C-codes by Method I and Method II Critical Access Hospitals (CAHs) is 
limited to the billing for facility (technical) services.  The C-codes shall not be billed by 
Method II CAHs for professional services with revenue codes 96X, 97X, or 98X. 
 
30 - OPPS Coinsurance 
(Rev. 2141, Issued: 01-24-11, Effective: 01-01-11, Implementation: 01-03-11) 
 
OPPS freezes coinsurance for outpatient hospital at 20 percent of the national median 
charge for the services within each APC (wage adjusted for the providers geographic 
area), but coinsurance for an APC cannot be less than 20 percent of the APC payment 
rate.  As the total payment to the provider increases each year based on market basket 
updates, the present or frozen coinsurance amount will become a smaller portion of the 
total payment until coinsurance represents 20 percent of the total payment.  Once 
coinsurance becomes 20 percent of the payment amount, the annual updates will also 
increase coinsurance so that it continues to account for 20 percent of the total payment.  
As previously stated, the wage-adjusted coinsurance for a service under OPPS cannot 
exceed the inpatient deductible amount. 
 
Section 111 of BIPA accelerates the reduction of beneficiary copayment amounts by 
providing that for services furnished on or after April 1, 2001, and before January 1, 
2002, the national unadjusted copayment amount for any ambulatory payment 
classification (APC) group cannot exceed 57 percent of the APC payment rate.  The 
statute makes further reductions in future years so that national unadjusted copayment 
amounts cannot exceed 55 percent of the APC rate in 2002 and 2003, 50 percent in 2004, 
45 percent in 2005, and 40 percent in 2006 and later years. 
 
The annual update of the OPPS Pricer includes updated copayment amounts. 
 
For screening colonoscopies and screening flexible sigmoidoscopies, the coinsurance 
amount is 25 percent of the payment rate, prior to January 1, 2011. Coinsurance does not 
apply to screening colonoscopies, screening sigmoidoscopies, and other specified 
services furnished on or after January 1, 2011. 
 
Coinsurance does not apply to influenza virus vaccines, pneumococcal pneumonia 
vaccines, and clinical diagnostic laboratory services (which includes screening pap 
smears and screening prostate-specific antigen testing). 
 
See 30.2 below for more detail. 
 
Future updates will be issued in a Recurring Update Notification. 
 
30.1 - Coinsurance Election  (Rev. 771, Issued: 12-02-05, Effective: 01-03-06, Implementation: 01-03-06) 
 
The transition to the standard Medicare coinsurance rate (20 percent of the APC payment 
rate) will be gradual.  For those APC groups for which coinsurance is currently a 
relatively high proportion of the total payment, the process will be correspondingly 
lengthy.  The law offers hospitals the option of electing to reduce coinsurance amounts 
and advertise their reduced rates for all OPPS services.  They may elect to receive a 
coinsurance payment from Medicare beneficiaries that is less than the wage adjusted 
coinsurance amount per APC.  That amount will apply to all services within that APC.  
This coinsurance reduction must be offered to all Medicare beneficiaries. 
 
Hospitals should review the list of APCs and their respective coinsurance amounts that is 
published in the Federal Register for the applicable year as a final rule.  After adjusting 
those coinsurance amounts for the wage index applicable to their MSA, hospitals must 
notify their A/B MACs (A) if they wish to charge their Medicare beneficiaries a lesser 
amount.  The election remains in effect until the following calendar year.  The first 
election must be filed by July 1, 2000, for the period August 1, 2000, through December 
31, 2000.  Future calendar year elections must be made by December 1st of the year 
preceding the calendar year for which the election is being made. 
 
Because the final rule on OPPS payment rates for 2002 was not published until March 1, 
2002, providers were unable to make election decisions for 2002 by December 1 
preceding the year the payment rates became effective, the typical deadline for making 
such elections.  The deadline for providers to make elections to reduce beneficiary 
copayments for 2002 was extended until April 1, 2002.  The elections are effective for 
services furnished on or after April 1, 2002. 
 
The lesser amount elected: 
 
  May not be less than 20 percent of the wage adjusted APC payment amount; 
 
  May not be greater than the inpatient hospital deductible for that calendar year 
($812 for 2002); and 
 
  Will not be wage adjusted by the A/B MAC (A) or CMS. 
 
Once an election to reduce coinsurance is made, it cannot be rescinded or changed until 
the next calendar year.  National unadjusted and minimum unadjusted coinsurance 
amounts will be posted each year in the addenda of the OPPS final rule (enter CMS-
1005FC) on CMS Web site (http://cms.hhs.gov/). 
 
This coinsurance election does not apply to partial hospitalization services furnished by 
CHMCs, vaccines provided by a CORF, vaccines, splints, casts, and antigens provided by 
HHAs, or splints, casts, and antigens provided to a hospice patient for the treatment of a 
non-terminal illness.  It also does not apply to screening colonoscopies, screening 
sigmoidoscopies, or screening barium enemas, or to services not paid under OPPS.   
Hospitals must utilize the following format for notification to the A/B MAC (A): 
 
Provider number  1122334455     
Provider name  XYZ Hospital  Effective from  8/1/2000 - 
12/31/2000 
Provider contact  Joe Smith  Phone #  123-456-7890 
Contact e-mail  Jsmith@XYZ.ORG  Fax #  123-456-7891 
 
XYZ Hospital elects to reduce coinsurance to the amount shown for the following APCs: 
 
APC____ Coinsurance___.__ APC____ Coinsurance___.__ 
APC____ Coinsurance___.__ APC____ Coinsurance___.__ 
APC____ Coinsurance___.__ APC____ Coinsurance___.__ 
APC____ Coinsurance___.__ APC____ Coinsurance___.__ 
APC____ Coinsurance___.__ APC____ Coinsurance___.__ 
APC____ Coinsurance___.__ APC____ Coinsurance___.__ 
APC____ Coinsurance___.__ APC____ Coinsurance___.__ 
APC____ Coinsurance___.__ APC____ Coinsurance___.__ 
APC____ Coinsurance___.__ APC____ Coinsurance___.__ 
APC____ Coinsurance___.__ APC____ Coinsurance___.__ 
 
Return to: 
 
Provider Audit & Reimbursement Dept. 
Attn: John Doe 
A/B MAC (A) Address 
 
The A/B MAC (A) must validate that the reduced coinsurance amount elected by the 
hospital is not less than 20 percent of the wage adjusted APC amount nor more than the 
inpatient deductible for the year of the election, and must send an acknowledgment to the 
hospital that the election has been received, within 15 calendar days of receipt. 
 
30.2 - Calculating the Medicare Payment Amount and Coinsurance 
(Rev. 1, 10-03-03) 
A-02-026 
  A program payment percentage is calculated for each APC by subtracting the unadjusted 
national coinsurance amount for the APC from the unadjusted payment rate and dividing 
the result by the unadjusted payment rate.  The payment rate for each APC group is the 
basis for determining the total payment (subject to wage-index adjustment) that a hospital 
will receive from the beneficiary and the Medicare program.  (A hospital that elects to 
reduce coinsurance, as described in 30.1, above, may receive a total payment that is less 
than the APC payment rate.)  The Medicare payment amount takes into account the wage 
index adjustment and the beneficiary deductible and coinsurance amounts.  In addition, 
the amount calculated for an APC group applies to all the services that are classified 
within that APC group.  The Medicare payment amount for a specific service classified 
within an APC group under OPPS is calculated as follows: 
 
Step 1 - Apply the appropriate wage index adjustment to the payment rate that is set 
annually for each APC group; 
 
Step 2 - Subtract from the adjusted APC payment rate the amount of any applicable 
deductible; 
 
Step 3 - Multiply the adjusted APC payment rate, from which the applicable deductible 
has been subtracted, by the program payment percentage determined for the APC group 
or 80 percent, whichever is lower.  This amount is the preliminary Medicare payment 
amount; 
 
Step 4 - Subtract the preliminary Medicare payment amount from the adjusted APC 
payment rate less the amount of any applicable deductible.  If the resulting amount does 
not exceed the annual hospital inpatient deductible amount for the calendar year, the 
resulting amount is the beneficiary coinsurance amount.  If the resulting amount exceeds 
the annual inpatient hospital deductible amount, the beneficiary coinsurance amount is 
limited to the inpatient hospital deductible and the Medicare program pays the difference 
to the provider. 
 
Step 5 - If the wage-index adjusted coinsurance amount for the APC is reduced because it 
exceeds the inpatient deductible amount for the calendar year, add the amount of this 
reduction to the amount determined in Step 3 above to get the final Medicare payment 
amount. 
 
EXAMPLE 1: 
 
The wage-adjusted payment rate for an APC is $300; the program payment percentage 
for the APC group is 70 percent; the wage-adjusted coinsurance amount for the APC 
group is $90; and the beneficiary has not yet satisfied any portion of his or her $100 
annual Part B deductible. 
 
A. Adjusted APC payment rate: $300. 
 
B. Subtract the applicable deductible: $300 - $100 = $200.   
C. Multiply the remainder by the program payment percentage to determine the 
preliminary 
 
Medicare payment amount: 0.7 x $200 = $140. 
 
D. Subtract the preliminary Medicare payment amount from the adjusted APC payment 
rate less any unmet deductible to determine the coinsurance amount, which cannot 
exceed the inpatient hospital deductible for the calendar year: $200 - $140 = $60. 
 
E. Calculate the final Medicare payment amount by adding the preliminary Medicare 
payment amount determined in step (C) to the amount that the coinsurance was 
reduced as a result of the inpatient hospital deductible limitation.  $140 + $0 = $140. 
 
In this case, the beneficiary pays a deductible of $100 and a $60 coinsurance, and the 
program pays $140, for a total payment to the provider of $300.  Applying the program 
payment percentage ensures that the program and the beneficiary pay the same proportion 
of payment that they would have paid if no deductible were taken. 
 
If the annual Part B deductible has already been satisfied, the calculation is as follows: 
 
A. Adjusted APC payment rate: $300. 
 
B. Subtract the applicable deductible: $300 - 0 = $300. 
 
C. Multiply the remainder by the program payment percentage to determine the 
preliminary 
 
Medicare payment amount: 0.7 x $300 = $210. 
 
D. Subtract the preliminary Medicare payment amount from the adjusted APC payment 
rate less deductible to determine the coinsurance amount.  The coinsurance amount 
cannot exceed the amount of the inpatient hospital deductible for the calendar year: 
$300 - $210 = $90. 
 
E. Calculate the final Medicare payment amount by adding the preliminary Medicare 
payment amount determined in step (C) to the amount that the coinsurance was 
reduced as a result of the inpatient hospital deductible limitation: $210 + $0 = $210. 
 
In this case, the beneficiary makes a $90 coinsurance payment and the program pays 
$210, for a total payment to the provider of $300. 
 
EXAMPLE 2: 
 
This example illustrates a case in which the inpatient hospital deductible limit on 
coinsurance amount applies.  Assume that the wage-adjusted payment rate for an APC is  $2,000; the wage-adjusted coinsurance amount for the APC is $900; the program 
payment percentage is 55 percent; and the inpatient hospital deductible amount for the 
calendar year is $776.  The beneficiary has not yet satisfied any portion of his or her $100 
Part B deductible. 
 
A. Adjusted APC payment rate: $2,000. 
 
B. Subtract the applicable deductible: $2,000 - $100 = $1,900. 
 
C. Multiply the remainder by the program payment percentage to determine the 
preliminary Medicare payment amount: 0.55 x $1,900 = $1,045. 
 
D. Subtract the preliminary Medicare payment amount from the adjusted APC payment 
rate less deductible to determine the coinsurance amount.  The coinsurance amount 
cannot exceed the inpatient hospital deductible amount of $776: $1,900 - $1,045 = 
$855, but the coinsurance is limited to $776. 
 
E. Calculate the final Medicare payment amount by adding the preliminary Medicare 
payment amount determined in step (C) to the amount that the coinsurance was 
reduced as a result of the inpatient hospital deductible limitation ($855 - $776 = $79).  
$1,045 + $79 = $1,124. 
 
In this case, the beneficiary pays a deductible of $100 and a coinsurance that is limited to 
$776 and the program pays $1,124 (which includes the amount of the reduction in 
beneficiary coinsurance due to the inpatient hospital deductible limitation) for a total 
payment to the provider of $2,000. 
 
For calendar year 2002, the national unadjusted copayment amount for an ambulatory 
payment classification (APC) is limited to 55 percent of the APC payment rate 
established for a procedure or service.  In addition the wage-adjusted copayment amount 
for a procedure or service cannot exceed the inpatient hospital deductible amount for 
2002 of $812.  These changes were implemented by changes to the OPPS Pricer effective 
for services furnished on or after January 1, 2002. 
 
40 - Outpatient Code Editor (OCE) 
(Rev. 1107, Issued: 11-09-06, Effective: 07-01-07, Implementation: 07-02-07) 
 
The CMS incorporates new processing requirements in the Outpatient Code Editor 
(OCE) by releasing a new or updated version of the software each quarter.  The OCE 
instructions and specifications are utilized under: 
 
  The OPPS for hospital outpatient departments, Community Mental Health 
Centers (CMHCs) and for limited services provided in a Home Health Agency 
(HHA) not under the Home Health Prospective Payment System or to a hospice 
patient for the treatment of a non-terminal illness; 
    The non-OPPS for Indian Health Service Hospitals, Critical Access hospitals 
(CAHs), Maryland hospitals, hospitals located in American Samoa, Guam, the 
Commonwealth of the Northern Mariana Islands.  In addition claims from Virgin 
Island hospitals with dates of service 1/1/02 and later, and hospitals that furnish 
only inpatient Part B services with dates of service 1/1/02 and later are edited in 
the non-OPPS OCE; and 
 
All other outpatient institutional claims. 
 
40.1 - Integrated OCE (July 2007 and Later) 
(Rev. 1590, Issued: 09-08-08, Effective: 10-01-08, Implementation: 10-06-08) 
 
Effective for claims with dates of service July 1, 2007 and after, the non-Outpatient 
Prospective Payment System (OPPS) Outpatient Code Editor (OCE) will be integrated 
into the OPPS OCE.  This integration will result in the routing of all institutional 
outpatient claims, including non-OPPS hospital claims, through a single integrated OCE 
eliminating the need to update two separate OCE software packages on a quarterly basis.  
The integrated OCE does not change the current logic that is applied to outpatient 
bill types that already pass through the OPPS OCE software.  It merely expands the 
software usage to include non-OPPS hospitals.  This new software product will be 
referred to as the Integrated OCE (I/OCE). 
 
The I/OCE instructions and specifications are provided via Recurring Update 
Notifications.  They are also posted on the Web at the following address: 
http://www.cms.hhs.gov/OutpatientCodeEdit/02_OCEQtrReleaseSpecs.asp#TopOfPage 
 
40.1.1 - Patient Status Code and Reason for Patient Visit for the 
Hospital OPPS 
(Rev. 243, Issued 07-23-04, Effective: January 1, 2005/Implementation: January 3, 
2005) 
 
In order to ensure that OPPS claims are being submitted and processed to payment in 
accordance with OPPS payment policy, CMS must be able to monitor information 
reported by hospitals on Form CMS-1450 in Form Locators (FLs) 22 (Patient Status) and 
76 (Reason for Patient Visit).  This instruction requires the Shared System Maintainer to 
make changes to ensure that the information in FLs 22 and 76, from claims submitted on 
bill type 13x, is passed to the OPPS Outpatient Code Editor (OCE) and to the Common 
Working File (CWF).  This instruction also requires the Common Working File 
Maintainer to make changes to ensure that the information in FL 76, from claims 
submitted on bill type 13x, is passed to the National Claims History (NCH) files. 
 
40.2 - Outpatient Prospective Payment System (OPPS) OCE (Prior to 
July 1, 2007) 
(Rev. 1107, Issued: 11-09-06, Effective: 07-01-07, Implementation: 07-02-07) 
 
The OPPS OCE performs the following two major functions:   
  Edit claims data to identify errors and return a series of edit flags; and  
 
  Assign an ambulatory payment classification (APC) number for each service 
covered under OPPS and return information to be used as input to the Pricer 
program. 
 
Effective January 5, 2003, Medicare contractors will be receiving subsequent 
quarterly updates to these Outpatient Code Editor Specifications through a Recurring 
Update Notification. 
 
40.2.1 - Patient Status Code and Reason for Patient Visit for the 
Hospital OPPS 
(Rev. 1107, Issued: 11-09-06, Effective: 07-01-07, Implementation: 07-02-07) 
 
In order to ensure that OPPS claims are being submitted and processed to payment in 
accordance with OPPS payment policy, CMS must be able to monitor information 
reported by hospitals on the claim including Patient Status and Reason for Patient Visit. 
This instruction requires the Shared System Maintainer to make changes to ensure that 
the information from claims submitted on bill type 13x, is passed to the OPPS Outpatient 
Code Editor (OCE) and to the Common Working File (CWF).  This instruction also 
requires the Common Working File Maintainer to make changes to ensure that the 
information regarding Reason for Patient Visit is passed to the National Claims History 
(NCH) file. 
 
40.3 - Non-OPPS OCE (Rejected Items and Processing Requirements 
Prior to 7/1/07 
(Rev. 1107, Issued: 11-09-06, Effective: 07-01-07, Implementation: 07-02-07) 
 
The following error types will be rejected or returned to the provider for development. 
(Numbers correspond to the Non -OPPS OCE documentation.) 
 
1.  Invalid Diagnosis or Procedure Code 
 
The OCE checks each diagnosis code against a table of valid ICD-9-CM diagnosis 
codes and each procedure code against a table of valid HCPCS codes. If the reported 
code is not in these tables, the code is considered invalid. 
 
For a list of all valid ICD-9-CM codes see International Classification of Diseases, 
9th Revision, Clinical Modification (ICD-9-CM), Volume I (Diseases), The CMS 
approved ICD-9-CM addenda, and new codes are furnished by the A/B MAC (A) for 
each hospital.  For a list of valid HCPCS codes see Physicians Healthcare Current 
Procedural Terminology, 4th Edition, CPT and CMS Healthcare Common 
Procedure Coding System (HCPCS).  Providers should review the medical record 
and/or fact sheet and enter the correct diagnosis and procedure codes before returning 
the bill.   
2.  Invalid Fourth or Fifth Digit for Diagnosis Codes 
 
The OCE identifies any diagnosis code that requires a fourth or fifth digit that is 
either missing or not valid for the code in question. 
 
For a list of all valid fourth and fifth digit ICD-9-CM codes see International 
Classification of Diseases, 9th Revision, Clinical Modification (ICD-9-CM), Volume 
I (Diseases), CMS approved ICD-9-CM addenda, and new codes furnished by the 
A/B MAC (A).  Providers should review the medical record and/or fact sheet and 
enter the correct diagnosis before returning the bill. 
 
3.  E-Code as Principal Diagnosis 
 
E codes describe the circumstances that caused an injury, not the nature of the injury, 
and therefore, are not used as a principal diagnosis.  E-codes are all ICD-9-CM 
diagnosis codes that begin with the letter E.  For a list of all E-codes, see 
International Classification of Disease, 9th Revision, Clinical Modification (ICD-9-
CM), Volume I (Diseases).  Providers should review the medical record and/or fact 
sheet and enter the correct diagnosis before returning the bill. 
 
4.  Age Conflict 
 
The OCE detects inconsistencies between a patients age and any diagnosis on the 
patients record. 
 
5.  Sex Conflict 
 
The OCE detects inconsistencies between a patients sex and a diagnosis or procedure 
on the patients bill. 
 
6.  Questionable Covered Procedures 
 
These are procedures that may be covered, depending upon the medical 
circumstances.  For example, HCPCS code 19360 Breast reconstruction with muscle 
or myocutaneous flap is a condition that is not covered when performed for cosmetic 
purposes.  However, if this procedure is performed as a follow-up to a radical 
mastectomy, it is covered. 
 
7.  Noncovered Procedures 
 
These are procedures that are not payable.  The A/B MAC (A) denies the bill. 
 
8.  Medicare as Secondary Payer - MSP Alert (versions V1.0 and V1.1 only) 
  Diagnoses codes that identify situations that may involve automobile medical, no-
fault or liability insurance.  The provider must determine the availability of other 
insurance coverage before billing Medicare. 
 
9.  Invalid Age 
 
If the age reported is not between 0 years and 124 years, the OCE assumes the age is 
in error. 
 
If the beneficiarys age is established at over 124, enter with 123. 
 
10. Invalid Sex 
 
The sex code reported must be either 1 (male) or 2 (female).  Usually, the A/B MAC 
(A) can resolve the issue. 
 
11.  Date Range 
 
This edit is used in internal A/B MAC (A) operations. 
 
12. Valid Date 
 
The OCE checks the month, day, and year from FL 6 (from date). If the date is 
impossible, the A/B MAC (A) returns the bill. 
 
13. Unlisted Procedures 
 
These are codes for surgical procedures (i.e., codes generally ending in 99). 
 
40.4 - Paying Claims Outside of the IOCE 
(Rev. 1649; Issued:  12-18-08; Effective/Implementation Date:  11-25-08) 
 
All institutional outpatient claims are routed through the IOCE before they are processed 
to payment.  There may be special circumstances, however, when it is necessary to pay 
claims bypassing IOCE edits.  The CMS will notify the contractor of these instances.  
They include: 
 
  New coverage policies are enacted by Congress with effective dates that preclude 
making the necessary changes timely; and  
 
  Errors are discovered that cannot be corrected timely.  
 
A/B MACs (A) are responsible for reporting problems timely. 
 
40.4.1 - Requesting to Pay Claims Without IOCE Approval 
(Rev. 1649; Issued:  12-18-08; Effective/Implementation Date:  11-25-08)   
The contractor may also request approval from the RO in specific situations to pay claims 
without first sending them through the IOCE.  Examples of such situations are: 
 
  A systems error cannot be corrected timely, and the provider's cash flow will be 
substantially impacted; and/or  
 
  Administrative Law Judge (ALJ) decisions, court decisions, and CMS instructions 
in particular cases may necessitate that payment be made outside the normal 
process. 
 
40.4.2 - Procedures for Paying Claims Without Passing through the 
IOCE 
(Rev. 4233, Issued: 02-08-19, Effective: 03-12-19, Implementation: 03-12-19) 
 
The term Medicare beneficiary identifier (Mbi) is a general term describing a 
beneficiary's Medicare identification number. For purposes of this manual, Medicare 
beneficiary identifier references both the Health Insurance Claim Number (HICN) and 
the Medicare Beneficiary Identifier (MBI) during the new Medicare card transition 
period and after for certain business areas that will continue to use the HICN as part of 
their processes. 
 
Before an outpatient claim may be paid without first going through the IOCE, the 
contractor shall obtain approval from CMS Central Office or the RO.  In all instances 
involving payment outside the normal outpatient editing process, the contractor applies 
the following procedures:  
 
  Contractors shall submit the claim overriding the IOCE using the appropriate field 
in FISS. 
 
  Pay interest accrued through the date payment is made on clean claims. Do not 
pay any additional interest. 
 
  Maintain a record of payment and implement controls to be sure that incorrect 
payment is not made, i.e., when the claim is paid without being subject to normal 
editing. 
 
  Monitor IOCE software to determine when the impediment to processing is 
removed. 
 
  Consider the claim processed for workload and expenditure reports when it is 
paid. 
 
  Submit to the RO Consortium Contractor Manager (CCM) by the 20th of each 
month a monthly report of all outpatient claims paid without processing through  the IOCE.  The list of claims paid outside of the IOCE is to include the following 
information: 
 
  Mbi 
o
  DCN 
o
  TOB 
o
  DOS (From/Through) 
o
  Provider Number 
o
  MCE/OCE OVR (Claim/Line) 
o
  Reimbursement Amount 
o
  Receipt Date 
o
  Process Date 
o
  Paid Date 
o
 
Also, include summary data for each edit code showing claim volume and payment.  Any 
override approvals received and/or relevant JSM references should be annotated on the 
reports. 
    40.5 - Transitional Pass-Throughs for Designated Drugs or Biologicals 
(Rev. 3941; Issued: 12-22-17; Effective: 01- 01-18; Implementation: 01-02-18) 
 
Certain current designated drugs and biologicals are assigned to special APCs.  I/OCE 
identifies these and assigns the appropriate APC.  Fiscal Intermediary Shared System 
(FISS) establishes payment at the average sales price (ASP) drug fee amount minus the 
portion of the otherwise applicable APC payment amount.  I/OCE and FISS will 
determine the proper payment amount for these APCs as well as the coinsurance and any 
applicable deductible.  All related payment calculations will be returned by the I/OCE 
and FISS, identified as a designated drug and biological with status indicator (SI) 
K.  Certain new designated drugs and biologicals may be approved for payment, and 
their payment will be calculated in the same manner as listed above for current 
designated drugs and biologicals.  IOCE identifies these new designated drugs and 
biologicals (SI G) separately from the current designated drugs and biologicals (SI 
K).  
Note:  See section 40.1 for the I/OCE instructions and specifications 
 
50 - Outpatient Pricer 
(Rev. 1445, Issued:  02-08-08; Effective:  01-01-08; Implementation:  03-10-08) 
 
Outpatient Pricer determines the amount to pay as well as deductions for deductible and 
coinsurance. 
 
This CMS-developed software is updated on a quarterly basis to determine the APC line 
item price (as well as applicable coinsurance/deductible) based on data from the 
Outpatient Provider Specific File (OPSF), the beneficiary deductible record and the OCE 
output file.  Pricer prepares an output data record with the following information: 
 
  All information passed from the OCE; 
 
  The APC line item payment amount; 
 
  The APC line item deductible; 
 
  The APC line item coinsurance amount; 
 
  The total cash deductible applied to the OPPS services on the claim; 
 
  The total blood deductible applied to the OPPS services on the claim; 
 
  The APC line item blood deductible; 
 
  The total outlier amount for the claim to be paid in addition to the line item APC 
payments.  This amount is to be reported to CWF via value code 17 as is the 
process for inpatient outlier payments; and   
  A Pricer assigned review code to indicate why or how Pricer rejected or paid the 
claim. 
 
The Pricer implementation guide has information concerning Pricer processing reports, 
input parameters, and data requirements. 
 
50.1 - Outpatient Provider Specific File 
(Rev. 12369, Issued: 11-17-23; Effective: 01-01-2023; Implementation: 01-03-2023) 
 
The Outpatient Provider Specific File (OPSF) contains the required information about 
each provider to enable the pricing software to calculate the payment amount. Data 
elements and formats are shown below. Contractors must maintain the accuracy of 
the data, and update the file as changes occur in data element values, e.g., changes in 
metropolitan statistical area (MSA), bed size, cost to charge ratio. An update is 
accomplished by preparing and adding an additional complete record showing new 
current values and the effective date of the change. The old record is retained without 
change.   
 
Contractors must also furnish CMS a quarterly file in the same format.   
  
NOTE: All data elements, whether required or optional, must have a default value of 
0 (zero) if numerical, or blank if alphanumerical.  
  
File          
Position  
Format   Title   Description   
1-10    X(10)    National Provider  Alpha-numeric 10 character provider number.   
Identifier (NPI)   
11-16    X(6)    Provider Oscar  Alpha-numeric 6 character provider number.   
Number   
17-24    9(8)    Effective Date    Must be numeric, CCYYMMDD. This is the 
effective date of the provider's first OPPS period. 
For subsequent OPPS periods, the effective date 
is the date of a change to the PROV file. If a 
termination date is present for this record, the 
effective date must be equal to or less than the 
termination date.   
   25-32    9(8)    Fiscal Year   Must be numeric, CCYYMMDD.   
Beginning Date    Month: 01-12   
Day: 01-31   
The date must be greater than 19990630.   
  
33-40    9(8)    Report Date    Must be numeric, CCYYMMDD.   
Month: 01-12   
Day: 01-31   
The created/run date of the PROV report for 
submittal to CO.   
  
41-48    9(8)    Termination Date    Must be numeric, CCYYMMDD. Must be zeroes or 
contain a termination date. (Once the official tie-
out notice from CMS is received). Must be equal 
to or greater than the effective date. 
(Termination date is the date on which the 
reporting contractor ceased servicing the provider 
in question).  
  
49    X(1)    Waiver Indicator    Enter a Y or N.   
Y = waived (provider is not under OPPS)   
      For End Stage Renal Disease (ESRD) facilities 
provider waived blended payment, pay full 
PPS.   
N = not waived (provider is under OPPS)   
     For ESRD facilities provider did not waive 
blended payment. Pay according to 
transitional payment method for ESRD PPS 
through 2013.   
  
50-54    9(5)    Intermediary  Enter the Contractor #.   
Number    55-56    X(2)    Provider Type    This identifies providers that require special 
handling. Enter one of the following codes as 
appropriate.   
  
00 or blanks = Short Term Facility   
02 Long Term   
03 Psychiatric   
04 Rehabilitation Facility   
05 Pediatric   
06 Reserved 
07 Rural Referral Center   
08 Indian Health Service   
13 Cancer Facility   
14 Medicare Dependent Hospital (during cost 
reporting periods that began on or after April 
1, 1990.   
15 Medicare Dependent Hospital/Referral Center 
(during cost reporting periods that began on 
or after April 1, 1990. Invalid October 1, 1994 
through September 30, 1997).   
16 Re-based Sole Community Hospital   
17 Re-based Sole Community Hospital /Referral 
Center   
18 Medical Assistance Facility  
21 Essential Access Community Hospital   
22 Essential Access Community Hospital/Referral 
Center   
23 Rural Primary Care Hospital   
24 Rural Emergency Hospitals  
32 Nursing Home Case Mix Quality 
Demonstration Project  Phase II   
33 Nursing Home Case Mix Quality  
Demonstration Project  Phase III  Step 1  34 
Free-standing Opioid Treatment Program  
35 Hospice   
36 Home Health Agency   
37 Critical Access Hospital   
        38 Skilled Nursing Facility (SNF)  For non-demo 
PPS SNFs  effective for cost reporting periods 
beginning on or after July 1, 1998   
40 Hospital Based ESRD Facility   
41 Independent ESRD Facility   
42 Federally Qualified Health Centers   
43 Religious Non-Medical Health Care Institutions   
44 Rural Health Clinics-Free Standing   
45 Rural Health Clinics-Provider Based   
46 Comprehensive Outpatient Rehab Facilities   
47 Community Mental Health Centers   
48 Outpatient Physical Therapy Services   
49 Psychiatric Distinct Part   
50 Rehabilitation Distinct Part   
51 Short-Term Hospital  Swing Bed   
52 Long-Term Care Hospital  Swing Bed   
53 Rehabilitation Facility  Swing Bed   
54 Critical Access Hospital  Swing Bed  
  
57   X(1)   Special Locality  Indicates the type of special locality provision that 
Indicator   applies.  
  
For End Stage Renal Disease (ESRD) facilities 
value Y equals low volume adjustment 
applicable.  
  
58   X(1)   Change Code For  Enter Y if the hospitals wage index location has 
Wage Index   been reclassified for the year.  Enter N if it has 
not been reclassified for the year. Adjust 
Reclassification  
annually. Does not apply to ESRD Facilities.  
  
59-62   X(4)   Actual   Enter the appropriate code for MSA, 00409965, 
or the rural area, (blank) (blank) 2-digit numeric 
Geographic  
State code, such as _ _ 3 6 for Ohio, where the 
LocationMSA    facility is physically located.  
   63-66   X(4)   Wage Index   The appropriate code for the MSA, 0040-9965, or 
the rural area, (blank)(blank) (2 digit numeric 
LocationMSA   
State code) such as _ _ 3 6 for Ohio, to which a 
hospital has been reclassified for wage index. 
Leave blank or enter the actual location MSA if 
not reclassified. Does not apply to ESRD Facilities.  
  
67-70   9V9(3)   Payment-to-Cost  Enter the providers payment-to-cost ratio. Does 
Ratio   not apply to ESRD Facilities.  
  
71-72   9(2)   State Code   Enter the 2-digit state where the provider is 
located. Enter only the first (lowest) code for a 
given state.  For example, effective October 1, 
2005, Florida has the following State Codes: 10, 
68 and 69. Contractors shall enter a 10 for 
Floridas State Code.    
  
List of valid State Codes is located in Pub. 10007, 
Chapter 2, Section 2779A1.  
73   X(1)   TOPs Indicator   Enter the code to indicate whether TOPs applies 
or not.    
Y = qualifies for TOPs   
N = does not qualify for TOPs  
   74   X(1)   Quality Indicator  Hospital:  
Field  
Enter the code to indicate whether the hospital 
meets data submission criteria per HOP QDRP 
requirements.   
1 = Hospital quality reporting standards have 
been met or hospital is not required to submit 
quality data (e.g., hospitals that are 
specifically excluded from the IPPS or which 
are not paid under the OPPS, including 
psychiatric, rehabilitation, long-term care and 
childrens and cancer hospitals, Maryland 
hospitals, Indian Health Service hospitals, or 
hospital units; or hospitals that are located in 
Puerto Rico or the U.S. territories). The 
reduction does not apply to hospices, CORFs, 
HHAs, CMHCs, critical access hospitals or to 
any other provider type that is not a hospital.    
  
Blank = Hospital does not meet criteria.   
  
Independent and Hospital-based End Stage Renal 
Disease (ESRD)Facilities:  
Enter the code applicable to the ESRD Quality 
Incentive Program (QIP):  
  
Blank = no reduction  
1 = 12 percent payment reduction  
2 = 1 percent payment reduction  
3 = 1 12 percent payment reduction  
4 = 2 percent payment reduction  
  
* Please refer to file position 101 for ESRD 
Childrens Hospitals Quality Indicator.  
  
75   X(1)   Filler   Blank.   76-79   9V9(3)   Outpatient  Cost- Derived from the latest available cost report data.  
to-Charge Ratio   See 10.11 of this chapter for instructions on how 
to calculate and report the Cost-to-Charge Ratio.    
  
Does not apply to ESRD Facilities.  
  
80-84   X(5)   Actual   00001-89999, or the rural area, (blank) (blank)  
Geographic   (blank) 2 digit numeric State code such as _ _ _ 3 
6 for Ohio, where the facility is physically located.  
Location CBSA  
  
85-89   X(5)   Wage Index   Enter the appropriate code for the CBSA, 
0000189999, or the rural area, 
Location CBSA  
(blank)(blank)(blank) (2 digit numeric State code) 
such as _ _ _ 3 6 for Ohio, to which a hospital has 
been reclassified due to its prevailing wage rates. 
Leave blank or enter the Actual Geographic 
Location CBSA, if not reclassified. Pricer will 
automatically default to the actual location CBSA 
if this field is left blank. Does not apply to ESRD 
Facilities.  
  
90-95   9(2)  Special Wage  Enter the special wage index that certain 
V9(4)   Index   providers may be assigned. Enter zeroes unless 
the Special Payment Indicator equals a 1 or 2.  
  
96   X(1)   Special Payment  The following codes indicate the type of special 
Indicator   payment provision that applies.  
  
Blank = not applicable  
Y = reclassified  
1 = special wage index indicator  
2 = both special wage index indicator and 
reclassified  
D = Dual Reclassified 
   97-100   9(4)   Reduced   Enter the number of APCs the provider has 
elected to reduce coinsurance for. The number 
Coinsurance  
cannot be greater than 999.  
Trailer Count  
101   X(1)   Quality Indicator   Childrens Hospitals for End Stage Renal Disease 
(ESRD) Facilities:  
ESRD Childrens  
Enter the code applicable to the ESRD Quality 
Hospitals  
Incentive Program (QIP):  
  
Blank = no reduction  
1 = 12 percent payment reduction  
2 = 1 percent payment reduction  
3 = 1 12 percent payment reduction  
4 = 2 percent payment reduction  
  
102-105   9V9(3)   Device  Derived from the latest available cost report data.    
departments 
  
Cost-to-Charge 
Ratio   Does not apply to ESRD Facilities.  
  
106-112   X(7)   Carrier/Locality  The carrier/locality code for the provider service 
code   facility.  The first five positions represent the 
carrier code and the last two positions represent 
the locality code.  
113-117   9(5)   County Code   Enter the County Code.  
  
Must be 5 numbers.  
  
118-122   X(5)   Payment CBSA    Enter the appropriate code for the CBSA, 
0000189999, or the rural area, 
(blank)(blank)(blank) (2 digit numeric State code) 
such as _ _ _ 3 6 for Ohio, to which a hospital has 
been reclassified due to its prevailing wage rates. 
Leave blank or enter the Actual Geographic 
Location CBSA, if not reclassified. Pricer will 
automatically default to the actual location CBSA  if this field is left blank. Does not apply to ESRD 
Facilities.  
 
9V9(5)   Payment Model  Derived from payment model Technical Direction 
123-128  
Adjustment (PMA)  Letter.  
 
   
129-133   9V9999   Medicare  Enter the MPA percentage calculated and 
Performance  published by the Centers for Medicare & Medicaid 
   
Adjustment (MPA)  Services (CMS).  
   
134-139  Supplemental  Enter the supplemental wage index that certain 
9(2) 
Wage Index  providers may be assigned.  Enter zeroes if it does 
V9(4)  
not apply. 
140-140  X(1)  Supplemental  Enter the supplemental wage index flag: 
Wage Index Flag  1=Prior Year Wage Index 
2=Future use 
3=Future use 
 
Enter blank if it does not apply. 
141-162  X(22)   FILLER    
  
The contractor enters the number of APCs for which the provider has elected to reduce 
coinsurance. Cannot be greater than 999. Reduced Coinsurance Trailer Record - Occurs 0-
999 times depending on the reduced Coinsurance Trailer Count in positions 97-100. Due to 
systems capacity limitations the maximum number of reduced coinsurance trailers allowable 
is 999 at this time. 
 
 
50.2 - Deductible Application 
(Rev. 1, 10-03-03) 
A-03-066 
 
Pricer determines the deductible for OPPS services on a claim, and the A/B MAC (A) 
determines the deductible for other services on the same claim.  Pricer will automatically 
apply the deductible to the APC line item with the largest national unadjusted 
coinsurance as a percent of the APC payment.  Pricer then goes to the next largest 
coinsurance as a percent of the APC payment and so on until the deductible is met or no 
other payments can be used to satisfy the deductible.  This method of applying the  deductible is the most advantageous for the beneficiary.  If less than $100, or less than the 
beneficiarys remaining deductible amount is applied, an additional deductible amount 
from other services, if applicable, is applied to the claim for other types of payments on 
the same claim before submitting to CWF. 
 
The deductible does not apply to the influenza virus vaccines, pneumococcal pneumonia 
vaccine, clinical diagnostic laboratory services (which include screening pap smears), 
screening mammographies, screening pelvic examinations, and screening prostate 
examinations.  Only influenza virus vaccine, pneumococcal pneumonia vaccine, 
screening pelvic examinations and screening prostate examinations are subject to OPPS. 
 
50.3 - Transitional Pass Through Payments for Designated Devices 
(Rev. 3941; Issued: 12-22-17; Effective: 01- 01-18; Implementation: 01-02-18) 
 
Certain designated new devices are assigned to APCs and identified by the OCE as 
eligible for payment based on the reasonable cost of the new device reduced by the 
amount included in the APC for the procedure that reflects the packaged payment for 
devices used with the procedure. OCE will determine the proper payment amount for 
these APCs as well as the coinsurance and any applicable deductible.  All related 
payment calculations will be returned on the same APC line and identified as a 
designated new device. 
 
Refer to https://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/HospitalOutpatientPPS/passthrough_payment.html for the most current OPPS 
APC Offset File. 
 
50.4  Changes to Pricer Logic Effective April 1, 2002 
(Rev. 11941, Issued:04-05-23, Effective: 04-01-02, Implementation: 05-05-23) 
 
The following list contains a description of all OPPS Pricer logic changes that are 
effective beginning April 1, 2002. 
 
A.  New OPPS wage indexes will be effective April 1, 2002.  These are the same wage 
indexes that were implemented on October 1, 2001, for inpatient hospitals.  Some 
corrections have been made since the publication of the inpatient rule, and CMS is 
using the corrected wage indexes where applicable. 
 
B.  Inpatient hospitals considered reclassified on October 1, 2001, will be considered 
reclassified for OPPS on April 1, 2002. 
  C.  Section 401 designations and floor MSA designations will be considered effective for 
OPPS on April 1, 2002. 
 
D.  New payment rates and coinsurance amounts were effective for OPPS on April 1, 2002, 
except those 55 APCs with coinsurance amounts limited to 55 percent of the payment 
rate, which were effective January 1, 2002.  The coinsurance limit equal to the inpatient 
deductible of $812 remains effective January 1, 2002. 
 
E.  APC 339, for Observation, will be priced at 1 unit no matter how many units are 
submitted. 
 
F.  If a claim has more than 1 service with a status indicator (SI) of S or T and any lines 
with SI of S or T have less than $1.01 as charges, charges for all S and/or T lines will 
be summed and the charges will then be divided up proportionately to the payment rate 
for each S or T line.  The new charge amount will be used in place of the submitted 
charge amount in the line item outlier calculation. 
 
EXAMPLE: 
 
SI  Charges  Payment Rate  New Charges Amount 
S  $19,999  $6,000  $12,000 
T  $1  $3,000  $6,000 
S  $0  $1,000  $2,000 
  $20,000  $10,000  $20,000 
 
Because total charges here are $20,000 and the first SI of S gets 6,000 of 10,000 total 
payment, the new charge for that line is 6,000/10,000 * $20,000 = $12,000. 
 
G.  All charges on lines with a SI of N (bundled services) on the claim will be summed and 
the charges will then be divided up proportionately to the payment rate for each S, T, 
V or X line.  This proportional amount will be added to the new charges amount from 
item F above or, if that doesn't apply, they will be added to the actual submitted charges 
for each S, T, V or X before making a line item outlier calculation. 
  H.  Outliers will be calculated at a line item level.  No outlier payment will be calculated 
for SIs of G, K, N or H, although charges for packaged services (SI=N) will be used in 
calculating outlier payments for other services as described in G. above.  Pricer will 
use submitted charges as modified by items F and G above.  The CMS changed the 
factor multiplied times the total claim payments from 2.5 to 3.5 and factor used to 
multiply the difference between claim payments and costs from .75 to .50.  Pricer will 
keep the cost to charge ratio adjustment factor at .981956.  Pricer will sum all line item 
outlier amounts and output them as a single total claim outlier amount, just as it outputs 
the outlier amount that contractors are to place in value code 17. 
 
I.  Any claim with one or more APCs that match those listed in Table 1 of the March 1, 
2002, Federal Register will have all applicable APC offset amounts summed and 
wage adjusted.  The total wage adjusted offset amount will be subtracted 
proportionately from the charges reduced to costs for any SI H devices that have a 
HCPCS code beginning with a C, i.e., C1713 through C2631. 
 
J.  A pro rata reduction of 63.6 percent applies to all SI G and/or H payments.  For H, 
devices, the offset (or reduction) is applied to the final payment amount after all 
device offset amounts (see item I above) have been taken.  For SI G, pass thru drugs, 
CMS determines the pass-through amount (PTA) by subtracting 5 times the minimum 
coinsurance from the Medicare payment amount.  The CMS will multiply .364 times 
the PTA and add that amount to 5 times the minimum coinsurance to get the new 
Medicare payment amount. 
 
K.  The provider specific file for SNFs and HHAs that may be reimbursed for splints, 
casts and/or antigens under OPPS should have a cost to charge ratio of 0.000 (or 
0.001 if the shared system will not allow 0.000.  Pricer will not pay outliers for these 
services. 
 
L.  Pricer Drug Copayment Changes 
 
M. APC  N.  Drug Name  O.  Corrected Copayment 
P.  726  Q.  Dexrazoxane  R.  $27.85 
S.  1607  T.  Eptifibatide  U.  $1.62 
 
50.5 - Changes to Pricer Logic Effective April 1, 2002 
(Rev. 11941, Issued:04-05-23, Effective: 04-01-02, Implementation: 05-05-23) 
  The following list contains a description of all OPPS Pricer logic changes that are 
effective beginning April 1, 2002. 
 
V.  New OPPS wage indexes will be effective April 1, 2002.  These are the same wage 
indexes that were implemented on October 1, 2001, for inpatient hospitals.  Some 
corrections have been made since the publication of the inpatient rule, and CMS is 
using the corrected wage indexes where applicable. 
 
W. Inpatient hospitals considered reclassified on October 1, 2001, will be considered 
reclassified for OPPS on April 1, 2002. 
 
X.  Section 401 designations and floor MSA designations will be considered effective for 
OPPS on April 1, 2002. 
 
Y.  New payment rates and coinsurance amounts were effective for OPPS on April 1, 2002, 
except those 55 APCs with coinsurance amounts limited to 55 percent of the payment 
rate, which were effective January 1, 2002.  The coinsurance limit equal to the inpatient 
deductible of $812 remains effective January 1, 2002. 
 
Z.  APC 339, for Observation, will be priced at 1 unit no matter how many units are 
submitted. 
 
AA.  If a claim has more than 1 service with a status indicator (SI) of S or T and any lines             
with SI of S or T have less than $1.01 as charges, charges for all S and/or T lines will 
be summed and the charges will then be divided up proportionately to the payment rate 
for each S or T line.  The new charge amount will be used in place of the submitted 
charge amount in the line item outlier calculation. 
 
EXAMPLE: 
 
SI  Charges  Payment Rate  New Charges Amount 
S  $19,999  $6,000  $12,000 
T  $1  $3,000  $6,000 
S  $0  $1,000  $2,000  SI  Charges  Payment Rate  New Charges Amount 
  $20,000  $10,000  $20,000 
 
Because total charges here are $20,000 and the first SI of S gets 6,000 of 10,000 total 
payment, the new charge for that line is 6,000/10,000 * $20,000 = $12,000. 
 
BB.  All charges on lines with a SI of N (bundled services) on the claim will be summed 
and the charges will then be divided up proportionately to the payment rate for each S, 
T, V or X line.  This proportional amount will be added to the new charges amount 
from item F above or, if that doesn't apply, they will be added to the actual submitted 
charges for each S, T, V or X before making a line item outlier calculation. 
 
CC.  Outliers will be calculated at a line item level.  No outlier payment will be 
calculated for SIs of G, K, N or H, although charges for packaged services (SI=N) will 
be used in calculating outlier payments for other services as described in G. above.  
Pricer will use submitted charges as modified by items F and G above.  The CMS 
changed the factor multiplied times the total claim payments from 2.5 to 3.5 and factor 
used to multiply the difference between claim payments and costs from .75 to .50.  
Pricer will keep the cost to charge ratio adjustment factor at .981956.  Pricer will sum 
all line item outlier amounts and output them as a single total claim outlier amount, just 
as it outputs the outlier amount that contractors are to place in value code 17. 
 
DD.  Any claim with one or more APCs that match those listed in Table 1 of the March 
1, 2002, Federal Register will have all applicable APC offset amounts summed and 
wage adjusted.  The total wage adjusted offset amount will be subtracted 
proportionately from the charges reduced to costs for any SI H devices that have a 
HCPCS code beginning with a C, i.e., C1713 through C2631. 
 
EE.       A pro rata reduction of 63.6 percent applies to all SI G and/or H payments.  For 
H, devices, the offset (or reduction) is applied to the final payment amount after all 
device offset amounts (see item I above) have been taken.  For SI G, pass thru drugs, 
CMS determines the pass-through amount (PTA) by subtracting 5 times the minimum 
coinsurance from the Medicare payment amount.  The CMS will multiply .364 times 
the PTA and add that amount to 5 times the minimum coinsurance to get the new 
Medicare payment amount. 
 
FF.      The provider specific file for SNFs and HHAs that may be reimbursed for splints, 
casts and/or antigens under OPPS should have a cost to charge ratio of 0.000 (or 
0.001 if the shared system will not allow 0.000.  Pricer will not pay outliers for these 
services.   
GG.  Pricer Drug Copayment Changes 
 
HH.  APC  II.  Drug Name  JJ. Corrected Copayment 
KK.  726  LL. Dexrazoxane  MM.  $27.85 
NN.  1607  OO.  Eptifibatide  PP. $1.62 
 
50.6 - Changes to the OPPS Pricer Logic Effective January 1, 2003 
(Rev. 1, 10-03-03) 
 
The following list contains a description of all OPPS Pricer logic changes that are 
effective beginning January 1, 2003. 
 
A.  New OPPS wage indexes will be effective January 1, 2003.  These are the same wage 
indexes that were implemented on October 1, 2002, for inpatient hospitals.  Some 
corrections have been made since the publication of the inpatient rule and CMS are 
using the corrected wage indexes where applicable. 
 
B.  Inpatient hospitals considered reclassified on October 1, 2002, will be considered 
reclassified for OPPS on January 1, 2003. 
 
C.  Section 301 designations and floor MSA designations will be considered effective for 
OPPS on January 1, 2003. 
 
D.  New payment rates and coinsurance amounts will be effective for OPPS on January 1, 
2003.  Some APCs have coinsurance amounts limited to 55 percent of the payment 
rate effective January 1, 2003.  Some APCs have a coinsurance limit equal to the 
inpatient deductible of $840 effective January 1, 2003. 
 
E.  If a claim has more than 1 service with a status indicator (SI) of T (SI of S has been 
removed from this rule) and any lines with SI T have less than $1.01 as charges, 
charges for all T lines will be summed and the charges will then be divided up 
proportionately to the payment rate for each T line.  The new charge amount will be 
used in place of the submitted charge amount in the line item outlier calculation. 
 
EXAMPLE: 
 
SI  Charges  Payment Rate  New Charges Amount 
T  $19,999  $6,000  $12,000 
T  $1  $3,000  $  6,000  SI  Charges  Payment Rate  New Charges Amount 
T  $0  $1,000  $  2,000 
  $20,000  $10,000  $20,000 
 
Because total charges here are $20,000 and the first SI of T gets 6,000 of 10,000 
total payment, the new charge for that line is 6,000/10,000 x $20,000 = $12,000. 
 
F.  For outliers, CMS will change the factor multiplied times the total line item payments 
from 3.5 to 2.75 and the factor used to multiply the difference between line item 
payments and costs from .50 to .45.  The CMS will eliminate the cost to charge ratio 
adjustment factor of .981956 from outlier and device calculations. 
 
G.  Any claim having one or more APCs that match those listed in the Device Offset 
Table (Table 11) published in the November 1, 2002, Federal Register and a 
HCPCS code with status indicator (SI) H, will have all applicable APC offset 
amounts (multiplied by the number of units and the multiple procedure discount 
factor applicable to that line item) summed and wage adjusted.  If there are more units 
of APCs with offset amounts than there are units of SI H devices that have an active 
(non-deleted) device category HCPCS code beginning with a C, i.e., those codes 
listed in section XXII B. of this PM, the total wage adjusted offset amount will be 
multiplied by the number of units of SI H devices that have a HCPCS code beginning 
with a C and then divided by the number of units of APCs with offset amounts.  The 
total wage adjusted offset amount will then be subtracted proportionately from the 
charges reduced to costs for any SI H devices that have a HCPCS code beginning 
with a C. 
 
The pro rata reduction of 63.6 percent applicable to all SI G and/or H payments is 
eliminated. 
 
50.7 - Changes to the OPPS Pricer Logic, Effective January 1, 2003 
Through January 1, 2006 
(Rev. 1882, Issued:  12-21-09; Effective Date:  01-01-10; Implementation Date:  01-
04-10) 
 
For January Pricers occurring between CY 2003 and 2006, you may find the updates 
outlined in the following CRs: 
 
January 2004 - CR 3007, http://www.cms.hhs.gov/Transmittals/Downloads/R32OTN.pdf 
January 2005 - CR 3586, http://www.cms.hhs.gov/transmittals/Downloads/R385CP.pdf 
January 2006 - CR 4250, http://www.cms.hhs.gov/transmittals/downloads/R804CP.pdf 
 
50.8 - Annual Updates to the OPPS Pricer for Calendar Year (CY) 2007 
and Later  (Rev. 1882, Issued:  12-21-09; Effective Date:  01-01-10; Implementation Date:  01-
04-10) 
 
Starting with the January 2007 update, all annual updates within the OPPS Pricer are 
explained within recurring update notifications located at the Hospital OPPS Transmittals 
Web site found at:  http://www.cms.gov/Regulations-and-
Guidance/Guidance/Transmittals/index.html. 
 
60 - Billing for Devices Eligible for Transitional Pass-Through 
Payments and Items Classified in New Technology APCs 
(Rev. 3425, Issued: 12-18-15, Effective: 01-01-16, Implementation: 01-04-16) 
 
The list of devices eligible for transitional pass-through payments changes as new device 
categories are approved for pass-through payment status on an ongoing basis, and as 
device categories expire from transitional pass-through payment and their costs are 
included in APC rates for associated surgical procedures.  To view or download the latest 
complete list of currently payable and previously payable pass-through device categories, 
refer to https://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/HospitalOutpatientPPS/passthrough_payment.html  Please note that this link 
may change depending on CMS Web design requirements. 
 
Hospitals are required to report device category codes that have expired from pass-
through payment on claims when such devices are used in conjunction with procedures 
billed and paid for under the OPPS.  In a Federal Register notice dated November 15, 
2004 we summarized several provisions (69 FR 65762) related to the required reporting 
of HCPCS codes for devices. 
 
The most recent information concerning applications requesting CMS to establish coding 
and payment and eligibility requirements for additional (new) device categories for pass-
through payment is located on the CMS Web site at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/HospitalOutpatientPPS/passthrough_payment.html.  This Web link may change 
from time to time, depending on CMS Web design requirements. 
 
60.1 - Categories for Use in Coding Devices Eligible for Transitional 
Pass-Through Payments Under the Hospital OPPS 
(Rev. 3685, Issued: 12-22-16, Effective: 01-01-17, Implementation: 01-03-17) 
 
The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act (BIPA) 
of 2000 requires establishing categories for purposes of determining transitional pass-
through payment for devices, effective April 1, 2001.  Each category is defined as a 
separate code in the C series or occasionally a code in another series (e.g., certain codes 
in the L series) of HCPCS.  C-codes are assigned by CMS for this purpose when other 
HCPCS codes for the eligible item do not exist.  Only devices specifically described by 
the long descriptions associated with the currently payable pass-through category codes 
are qualified for transitional pass-through payments.  The complete list of currently and  previously payable pass-through category codes can be viewed and/or downloaded from 
the CMS Web site, currently at https://www.cms.gov/Medicare/Medicare-Fee-for-
Service-Payment/HospitalOutpatientPPS/passthrough_payment.html 
 
Each item that qualifies for transitional pass-through payments fits in one of the device 
categories currently active for pass-through payments.  Devices may be billed using the 
currently active category codes for pass-through payments, as long as they: 
 
  Meet the definition of a device that qualifies for transitional pass-through payments 
and other requirements and definitions put forth below in 60.3. 
 
  Are described by the long descriptor associated with a currently active pass-through 
device category HCPCS code assigned by CMS and 
 
  Are described according to the definitions of terms and other general explanations 
issued by CMS to accompany coding assignments in program instructions.  The 
current definitions and explanations are located with the latest complete list of 
currently payable and previously payable pass-through device categories, found at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/HospitalOutpatientPPS/passthrough_payment.html.  Please note that this 
link may change depending on CMS Web design requirements. 
 
If a device does not meet the description and other coding instructions for currently 
payable categories, even though it appears to meet the other requirements in this section, 
it may not be billed using one of the HCPCS codes for currently payable categories for 
transitional pass-through payments unless an applicable category is established by CMS, 
as discussed in section 60.3 below. 
 
Transitional pass-through payment for a device is based on the charge on the individual 
providers bill, and the amount by which the hospitals charges for a device, adjusted to 
cost (the cost of the device), exceeds the portion of the otherwise applicable Medicare 
outpatient department fee schedule amount associated with the device. 
 
The OCE software determines the reduction to cost and the deduction for similar devices. 
 
The eligibility of a device category for transitional pass-through payments is temporary, 
lasting for at least 2 but no more than 3 years.  (The initial categories expired on January 
1, 2003 or on January 1, 2004.  The underlying provision is permanent, and categories 
established later have expired or will expire in successive years.)  At the time of 
expiration, APC payment rates are adjusted to reflect the costs of devices (and drugs and 
biologicals) that received transitional pass-through payments.  These adjustments are 
based on claims data that reflect the use of transitional pass-through devices, drugs and 
biologicals in conjunction with the associated procedures. 
 
60.2 - Roles of Hospitals, Manufacturers, and CMS for Billing for 
Transitional Pass-Through Items  (Rev. 1336; Issued:  09-14-07; Effective/Implementation Dates:  10-01-07) 
 
In general, hospitals are ultimately responsible for the content of the bills they present to 
Medicare.  If hospitals have questions about appropriate coding that they cannot resolve 
on their own, the appropriate first step would be to review the HCPCS codes and/or the 
regulation governing payment for the year of service.  CMS does not have to have 
qualified a particular device for transitional pass-through payment before a hospital can 
bill for the device.  Hospitals are expected to make appropriate coding decisions based on 
these instructions and other information available to them. 
 
Many device manufacturers routinely provide hospital customers with information about 
appropriate coding of their devices.  This may be helpful but does not supersede Federal 
requirements. 
 
60.3 - Devices Eligible for Transitional Pass-Through Payments 
(Rev. 4494: Issued: 01-15-20: Effective:01-01-20: Implementation; 01-06-20) 
 
The definition of and criteria for devices eligible for establishment of new categories for 
transitional pass-through payments was discussed and defined in a final rule with 
comment period published in the Federal Register on November 1, 2002, (67 FR 
66781).  Two of the criteria were also modified by means of a final rule with comment 
period published in the Federal Register on November 10, 2005 (70 FR 68628).  As of 
January 1, 2010, implantable biologicals that are surgically inserted or implanted 
(through a surgical incision or natural orifice) are being evaluated for device pass-through 
payment as modified by means of a final rule with comment period and published in the 
November 20, 2009 Federal Register (74 FR 60471).  As of January 1, 2015, skin 
substitutes are being evaluated for device pass-through payment as modified by means of 
a final rule with comment period and published in the November 10, 2015 Federal 
Register (79 FR 66885).  As of  January 1, 2016, the application process for device pass-
through payments will add a rulemaking component to the existing quarterly process and 
a requirement will ensure that medical devices seeking pass-through payments are new, 
as modified by means of a final rule with comment period and published in the  
November 13, 2015 Federal Register (80 FR 70417).  As of January 1, 2017, the pass-
through payment time period has been refined by having the pass-through start date begin 
with the date of first payment and by allowing pass-through status to expire quarterly as 
modified by means of a final rule with comment period and published in the November 
14, 2016 Federal Register (81 FR 79655 ).  Also, in calculating the pass-through 
payment, the Implantable Devices Charged to Patients Cost to Charge Ration (CCR) 
will replace the hospital-specific CCR, when available and device offsets will be 
calculated from the HCPCS payment rate, instead of the APC payment rate (81 FR 79655 
through 79656).  As of January 1, 2020, devices that have received FDA marketing 
authorization and a Breakthrough Device designation from the FDA have an alternative 
pathway to qualify for device pass-through payment status, under which devices would 
not be evaluated in terms of the current substantial clinical improvement criterion for the 
purposes of determining device pass-through payment status. The devices must still meet 
the other criteria for pass-through status.    The regulations regarding transitional pass-through payment for devices are compiled at 
42 CFR 419.66.  Additionally, the eligibility criteria for CMS to establish a new category 
for pass-through payment are discussed on the CMS Web site at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/HospitalOutpatientPPS/passthrough_payment.html 
 
60.4 - General Coding and Billing Instructions and Explanations 
(Rev. 11150; Issued: 12-10-21; Effective: 01-01-22; Implementation: 01-03-22) 
 
60.4.1 - Explanations of Terms 
(Rev. 11150; Issued: 12-10-21; Effective: 01-01-22; Implementation: 01-03-22) 
 
Reporting Multiple Units of Pass-Through Device Categories 
 
Hospitals must bill for multiple units of items that qualify for transitional pass-through 
payments when such items are used with a single procedure by entering the number of 
units used on the bill. 
 
Reporting of Multiple Device Categories 
 
For items with multiple component devices that fall in more than one category (e.g., kits 
or systems other than those explicitly identified in the long descriptors), hospitals should 
code the appropriate category separately for each component.  For example, the 
Rotablator Rotational Angioplasty System (with catheter and advancer) consists of 
both a catheter and an advancer/sheath. Hospitals should report category C1724 for the 
catheter and C1894 for the advancer/sheath. 
 
Also, for items packaged as kits that contain a catheter and an introducer, hospitals 
should report both appropriate categories. For example, the Clinicath 16G Peripherally 
Inserted Central Catheter (PICC) Dual-Lumen PolyFlow Polyurethane contains a 
catheter and an introducer.  To appropriately bill for this item, hospitals should report 
category C1751 for the catheter and C1894 for the introducer.  (Please note that the 
device categories C1724, C1894 and C1751 are no longer eligible for pass-through 
payments, but are used here for illustrative purposes for reporting multiple categories. 
However, hospitals should continue to report devices on claims in this manner even after 
the category is no longer eligible for pass-through payment.) 
 
Reprocessed Devices 
 
Hospitals may bill for transitional pass-through payments only for those devices that are 
single use. Reprocessed devices may be considered single use if they are reprocessed 
in compliance with enforcement guidance of the Food and Drug Administration (FDA) 
relating to the reprocessing of devices applicable at the time the service is delivered. The 
FDA phased in new enforcement guidance relating to reprocessing during 2001 and 
2002. For further information, see FDAs guidance document entitled Enforcement  Priorities for Single-Use Devices Reprocessed by Third Parties and Hospitals, published 
August 14, 2000, or any later FDA guidance or enforcement documents currently in 
effect.  
 
60.4.2 - Complete List of Device Pass-through Category Codes  
(Rev. 11937; Issued: 03-31-23; Effective: 04-01-23; Implementation: 04-03-23) 
List of Device Category Codes for Present or Previous Pass-Through 
Payment and Related         Definitions 
The table below shows the complete list of the device category HCPCS codes used 
presently or previously for pass-through payment, along with their expiration dates, 
and definitions. This list does not include all device codes reportable under the 
OPPS; there are additional HCPCS codes for devices that were not eligible for 
pass-through payment. See section 61, Chapter 4 of the IOM, pub. 100-4, 
currently available at https://www.cms.gov/Regulations-and-
Guidance/Guidance/Manuals/downloads/clm104c04.pdf, for detailed information 
on requirements for reporting device codes and satisfying device edits in the 
OPPS. 
Section 402(a) of the Benefits Improvement and Protection Act of 2000 (BIPA), 
which was enacted on December 21, 2000, required the creation of categories 
for pass-through devices under the hospital OPPS. As a result of BIPA, new 
category codes were created for pass-through devices that became effective 
April 1, 2001. 
 
As indicated in section 1833(t)(6) of the Social Security Act, payments for 
pass-through devices are limited to at least two years but no more than three 
years. Starting on January 1, 2017, we changed our policy to allow for 
quarterly expiration of pass-through payment status for devices, beginning 
with pass-through devices approved in CY 2017 and subsequent calendar 
years, to afford a pass-through payment period that is as close to a full 3 years 
as possible for all pass- through payment devices. Note that payment for pass-
through devices is based on the charge on the individua l bill, converted to cost 
by application of a hospital-specific  cost-to-charge ratio, and subject (in some 
instances) to a reduction that offsets the cost of similar devices already 
included in the APC payment rate for the associated procedure. 
 
When the category codes became effective April 1, 2001, many of the item-
specific C-codes that were cross-walked in Transmittal A-01-41 and Transmittal 
A-01-97 to the new category codes were approved for pass-through status before 
April 1, 2001. In determining the expiration dates for those initial pass-through 
device category codes listed below, we determined when specific devices that are 
described by the categories were paid as pass-through devices through their item-
specific C-codes prior to the creation of the categories, pursuant to the statute, 
section 1833(t)(6)(iii)(I). These dates are listed in the column below titled "Date 
First Populated." Thus, many of the category codes that were made effective April  1, 2001, expired on December 31, 2002. Despite the expiration of pass-through 
payment status for device category codes, hospitals are still required to report the 
device category C-codes on claims when such devices are used in conjunction 
with procedures billed and paid under the OPPS. 
 
In the CY 2015 final rule, we finalized a policy and implemented claims 
processing edits that require any of the device codes used in the previous 
device-to-procedure edits to be present on the claim whenever a procedure 
code assigned to any of the APCs listed in Table   H1 (the formerly device 
dependent APCs) is reported on the claim (79 FR 66795). 
 
List of Device Category HCPCS Code s and Definitions Used for Present and 
Previous Pass- Through Payment *** 
 
Pass- 
   
Through 
  HCPCS  Category Long Descriptor  Date First 
Expiration 
Code s  Populate d 
Date*** 
Adaptor/extension, pacing lead or neurostimulator 
1.   C1883*  8/1/00  12/31/02 
lead (implantable) 
10/01/00  
2.  C 1765*   Adhesion barrier  3/31/01;  12/31/03 
7/1/01 
Anchor/screw for opposing bone-to-bone or soft 
3.  C 1713*  8/1/00  12/31/02 
tissue-to-bone (implantable) 
Auditory osseointegrated device, includes all internal 
4.  L 8690  1/1/07  12/31/08 
and external components 
Autograft suspension, including cell processing and 
12/31/2024 
5.   C1832  1/1/22 
application, and all system components 
 
6.  C  1715  Brachytherapy needle  8/1/00  12/31/02 
Brachytherapy source, non-stranded, Gold-198, per 
7.  C 1716#  10/1/00  12/31/02 
source 
Brachytherapy source, non-stranded, high dose rate 
8.  C 1717#  1/1/01  12/31/02 
Iridium-192, per source 
9.  C 1718#  Brachytherapy source, Iodine 125, per source  8/1/00  12/31/02 
Brachytherapy source, non-stranded, non-high dose 
10.  C 1719#  10/1/00  12/31/02 
rate Iridium-192, per source 
11.  C 1720#  Brachytherapy source, Palladium 103, per source  8/1/00  12/31/02 
Brachytherapy source, non-stranded, Yttrium-90, per 
12.  C 2616#  1/1/01  12/31/02 
source 
13.  C  2632  Brachytherapy solution, iodine  125, per mCi  1/1/03  12/31/04 
14.  C  1721  Cardioverter-defibrillator, dual chamber (implantable)  8/1/00  12/31/02  Cardioverter-defibrillator, other than single or dual 
15.  C 1882*  8/1/00  12/31/02 
chamber (implantable) 
Cardioverter-defibrillator, single chamber 
16.  C  1722  8/1/00  12/31/02 
(implantable) 
Catheter, ablation, non-cardiac, endovascular 
17.  C 1888*  7/1/02  12/31/04 
(implantable) 
18.  C 1726*  Catheter, balloon dilatation, non-vascular  8/1/00  12/31/02 
Catheter, balloon tissue dissector, non-vascular 
19.  C 1727*  8/1/00  12/31/02 
(insertable) 
20.  C  1728  Catheter, brachytherapy seed administration  1/1/01  12/31/02 
21.  C 1729*  Catheter, drainage  10/1/00  12/31/02 
Catheter, electrophysiology, diagnostic, other than 3D 
22.  C 1730*  8/1/00  12/31/02 
mapping (19 or fewer electrodes) 
Catheter, electrophysiology, diagnostic, other than 3D 
23.  C 1731*  8/1/00  12/31/02 
mapping (20 or more electrodes) 
Catheter, electrophysiology, diagnostic/ablation, 3D or 
24.  C 1732*  8/1/00  12/31/02 
vector mapping 
Catheter, electrophysiology, diagnostic/ablation, other 
25.  C 1733*  8/1/00  12/31/02 
than 3D or vector mapping, other than cool-tip 
Catheter, electrophysiology, diagnostic/ablation, other 
26.  C 2630*  10/1/00  12/31/02 
than 3D or vector mapping, cool-tip 
Catheter, extravascular tissue ablation, any modality 
27.  C  1886  01/01/12  12/31/13 
(insertable) 
Catheter, guiding (may include infusion/perfusion 
28.  C 1887*  8/1/00  12/31/02 
capability) 
29.  C  1750  Catheter, hemodialysis/peritonea l, long-term  8/1/00  12/31/02 
30.  C  1752  Catheter, hemodialysis/peritonea l, short-term  8/1/00  12/31/02 
Catheter, infusion, inserted peripherally, centrally or 
31.  C  1751  8/1/00  12/31/02 
midline (other than hemodialysis) 
32.  C  1759  Catheter, intracardiac echocardiography  8/1/00  12/31/02 
33.  C  1754  Catheter, intradiscal  10/1/00  12/31/02 
34.  C  1755  Catheter, intraspinal  8/1/00  12/31/02 
35.  C  1753  Catheter, intravascular ultrasound  8/1/00  12/31/02 
36.  C  2628  Catheter, occlusion  10/1/00  12/31/02 
37.  C  1756  Catheter, pacing, transesophageal  10/1/00  12/31/02 
38.  C  2627  Catheter, suprapubic/cystoscopic  10/1/00  12/31/02 
39.  C  1757  Catheter, thrombectomy/embolectomy  8/1/00  12/31/02 
Catheter, transluminal angioplasty, drug-coated, non-
40.  C  2623  4/1/15  12/31/17 
laser 
41.  C 1885*  Catheter, transluminal angioplasty, laser  10/1/00  12/31/02 
Catheter, transluminal angioplasty, non-laser (may 
42.  C 1725*  include  8/1/00  12/31/02 
guidance, infusion/perfusion capability) 
43.  C  1714  Catheter, transluminal atherectomy, directional  8/1/00  12/31/02  44.  C  1724  Catheter, transluminal atherectomy, rotational  8/1/00  12/31/02 
Catheter, transluminal intravascular lithotripsy,  6/30/2024 
45.  C  1761  7/1/21 
coronary   
46.  C 1760*  Closure device, vascular (implantable/insertable)  8/1/00  12/31/02 
47.  L 8614  Cochlear implant system  8/1/00  12/31/02 
48.  C 1762*  Connective tissue, human (includes fascia lata)  8/1/00  12/31/02 
49.  C 1763*  Connective tissue, non-human (includes synthetic)  10/1/00  12/31/02 
50.  C  1881  Dialysis access system (implantable)  8/1/00  12/31/02 
51.  C 1884*  Embolization protective system  1/01/03  12/31/04 
Endoscope, retrograde imaging/illumination 
52.  C  1749  10/01/10  12/31/12 
colonoscope device (implantable) 
Endoscope, single-use (i.e. disposable), Upper GI, 
53.  C  1748  7/1/20  6/30/2023 
imaging/illumination device (insertable) 
54.  C  1764  Event recorder, cardiac (implantable)  8/1/00  12/31/02 
Generator, neurostimulator (implantable), high 
55.  C  1822  frequency, with rechargeable battery and charging  1/1/16  12/31/17 
system 
Generator, neurostimulator (implantable), non-
56.  C 1767**  8/1/00  12/31/02 
rechargeable 
Generator, neurostimulator (implantable), with 
57.  C  1820  1/1/06  12/31/07 
rechargeable battery and charging system 
Generator, neurostimulator (implantable), non-
58.   C1825  rechargeable with carotid sinus baroreceptor  1/1/21  12/31/2023 
stimulation lead(s) 
Generator, neurostimulator (implantable ), 
59.   C1823  nonrechargeable , with transvenous sensing  1/1/19  12/31/2022 
and stimulation le ads 
60.  C  1768  Graft, vascular  1/1/01  12/31/02 
61.  C  1769  Guide wire  8/1/00  12/31/02 
62.   C1052  Hemostatic agent, gastrointestinal, topical  1/1/21  12/31/2023 
63.  C  1770  Imaging coil, magnetic resonance (insertable)  1/1/01  12/31/02 
Implantable wireless pulmonary artery pressure sensor 
64.  C  2624  1/1/15  12/31/16 
with delivery catheter, including all system components 
Infusion pump, non-programmable, permanent 
65.  C  1891  8/1/00  12/31/02 
(implantable) 
Infusion pump, non-programmable, temporary 
66.  C 2626*  1/1/01  12/31/02 
(implantable) 
67.  C  1772  Infusion pump, programmable (implantable)  10/1/00  12/31/02 
68.  C 1818*  Integrated keratoprosthesis  7/1/03  12/31/05 
69.  C  1821  Interspinous process distraction device (implantable)  1/1/07  12/31/08 
Intravertebral body fracture augmentation with 
70.   C1062  1/1/21  12/31/2023 
implant (e.g., metal, polymer) 
Introducer/sheath, guiding, intracardiac 
71.  C  1893  10/1/00  12/31/02 
electrophysiological, fixed-curve, other than peel-away  Introducer/sheath, guiding, intracardiac 
72.  C 1892*  1/1/01  12/31/02 
electrophysiological, fixed-curve, peel-away 
Introducer/sheath, guiding, intracardiac 
73.  C  1766  1/1/01  12/31/02 
electrophysiologica l, steerable, other than peel-away 
Introducer/sheath, other than guiding, other than 
74.  C  1894  8/1/00  12/31/02 
intracardiac electrophysiological, non-laser 
Introducer/sheath, other than guiding, other than 
75.  C  2629  1/1/01  12/31/02 
intracardiac electrophysiological, laser 
76.  C 1776*  Joint device (implantable)  10/1/00  12/31/02 
Lead, cardioverter-defibrillator, endocardial dual coil 
77.  C  1895  8/1/00  12/31/02 
(implantable) 
Lead, cardioverter-defibrillator, endocardial single coil 
78.  C  1777  8/1/00  12/31/02 
(implantable) 
Lead, cardioverter-defibrillator, other than endocardial 
79.  C  1896  8/1/00  12/31/02 
single or dual coil (implantable) 
80.  C 1900*  Lead, left ventricular coronary venous system  7/1/02  12/31/04 
81.  C  1778  Lead, neurostimulator (implantable)  8/1/00  12/31/02 
82.  C  1897  Lead, neurostimulator test kit (implantable)  8/1/00  12/31/02 
Lead, pacemaker, other than transvenous VDD single 
83.  C  1898  8/1/00  12/31/02 
pass 
84.  C 1779*  Lead, pacemaker, transvenous VDD single pass  8/1/00  12/31/02 
Lead, pacemaker/cardioverter-defibrillator combination 
85.  C  1899  1/1/01  12/31/02 
(implantable) 
86.  C 1780*  Lens, intraocular (new technology)  8/1/00  12/31/02 
87.  C  1840  Lens, intraocular (telescopic)  10/01/11  12/31/13 
88.  C  2613  Lung biopsy plug with delivery system  7/1/15  12/31/17 
Material for vocal cord medialization, synthetic 
89.  C 1878*  10/1/00  12/31/02 
(implantable) 
90.  C 1781*  Mesh (implantable)  8/1/00  12/31/02 
Monitor, cardiac, including intracardiac lead and all 
91.   C1833  1/1/22  12/31/2024 
system components (implantable) 
92.  C 1782*  Morcellator  8/1/00  12/31/02 
93.  C 1784*  Ocular device, intraoperative, detached retina  1/1/01  12/31/02 
94.  C  1783  Ocular implant, aqueous drainage assist device  7/1/02  12/31/04 
Pacemaker, dual chamber, non rate-responsive 
95.  C  2619  8/1/00  12/31/02 
(implantable) 
Pacemaker, dual chamber, rate-responsive 
96.  C  1785  8/1/00  12/31/02 
(implantable) 
Pacemaker, other than single or dual chamber 
97.  C 2621*  1/1/01  12/31/02 
(implantable) 
Pacemaker, single chamber, non rate-responsive 
98.  C  2620  8/1/00  12/31/02 
(implantable) 
Pacemaker, single chamber, rate-responsive 
99.  C  1786  8/1/00  12/31/02 
(implantable) 
100.  C 1787*  Patient programmer, neurostimulator  8/1/00  12/31/02  Interbody cage, anterior, lateral or posterior, 
101.   C1831  personalized (implantable)  10/1/21  9/30/2024 
 
102.   C1788  Port, indwelling (implantable)  8/1/00  12/31/02 
103.  C  1830  Powered bone marrow biopsy needle  10/01/11  12/31/13 
104.  C  2618  Probe, cryoablation  4/1/01  12/31/03 
105.  C  2614  Probe, percutaneous lumbar discectomy  1/1/03  12/31/04 
106.  C  1789  Prosthesis, breast (implantable)  10/1/00  12/31/02 
107.  C  1813  Prosthesis, penile, inflatable  8/1/00  12/31/02 
108.  C  2622  Prosthesis, penile, non-inflatable  10/1/01  12/31/02 
109.  C  1815  Prosthesis, urinary sphincter (implantable)  10/1/00  12/31/02 
Receiver and/or transmitter, neurostimulator 
110.  C  1816  8/1/00  12/31/02 
(implantable) 
111.  C 1771*  Repair device, urinary, incontinence, with sling graft  10/1/00  12/31/02 
Repair device, urinary, incontinence, without sling 
112.  C 2631*  8/1/00  12/31/02 
graft 
Retinal prosthesis, includes all internal and external 
113.  C  1841  10/1/13  12/31/15 
Components 
114.  C 1814*  Retinal tamponade device, silicone oil  4/1/03  12/31/05 
115.  C 1773*  Retrieval device, insertable  1/1/01  12/31/02 
116.  C 2615*  Sealant, pulmonary, liquid (implantable)  1/1/01  12/31/02 
117.  C 1817*  Septal defect implant system, intracardiac  8/1/00  12/31/02 
118.  C 1874*  Stent, coated/covered, with delivery system  8/1/00  12/31/02 
119.  C 1875*  Stent, coated/covered, without delivery system  8/1/00  12/31/02 
120.  C 1876*  Stent, non-coated/non-covered, with delivery system  8/1/00  12/31/02 
Stent, non-coated/non-covered, without delivery 
121.  C  1877  8/1/00  12/31/02 
system 
122.  C 2625*  Stent, non-coronary, temporary, with delivery system  10/1/00  12/31/02 
Stent, non-coronary, temporary, without delivery 
123.  C 2617*  10/1/00  12/31/02 
system 
124.  C  1819  Tissue localization excision device  1/1/04  12/31/05 
125.  C 1879*  Tissue marker (implantable)  8/1/00  12/31/02 
126.  C  1880  Vena cava filter  1/1/01  12/31/02 
C1826  1/1/2023  12/31/2025 
Generator, neurostimulator (implantable), includes 
closed feedback loop leads and all implantable 
127.   
components, with rechargeable battery and 
charging system 
 
C1827  1/1/2023  12/31/2025 
Generator, neurostimulator (implantable), non-
rechargeable, with implantable stimulation lead and 
128.   
external paired stimulation controller 
  C1747  1/1/2023  12/31/2025 
Endoscope, single-use (i.e. disposable), urinary 
129.   
tract, imaging/illumination device (insertable) 
 
C1824^  Generator, cardiac contractility modulation  1/1/2020  12/31/2023 
130.   
(implantable) 
C1982^  Catheter, pressure-generating, one-way valve,  1/1/2020  12/31/2023 
131.   
intermittently occlusive 
132.   C1839^  Iris prosthesis  1/1/2020  12/31/2023 
C1734^  Orthopedic/device/drug matrix for opposing bone- 1/1/2020  12/31/2023 
133.   
to-bone or soft tissue-to bone (implantable) 
134.   C2596^  Probe, image-guided, robotic, waterjet ablation  1/1/2020  12/31/2023 
 BOLD codes are still actively receiving pass-through payment. 
 
Italicized codes have received preliminary approval for pass-through payment. 
 
* Refer to the definition below for further information on this device category code. 
** Effective 1/1/06 C1767 descriptor was changed for succeeding claims. See CR 
4250, Jan. 3, 2006 for details. 
 
*** Although the pass-through payment status for device category codes has 
expired, these codes are still active and hospitals are still required to report the 
device category C-codes (except the brachytherapy source codes, which are 
separately paid under the OPPS) on claims when such devices are used in 
conjunction with procedures billed and paid under the OPPS. 
 
# The brachytherapy descriptors were changed to the ones shown above, effective 
7/1/07. These 6 brachytherapy source codes were paid as pass-through devices from 
2000 through 2002, as noted. Beginning in 2004, all brachytherapy sources have been 
paid separately as non-pass-through items from the procedure with which they are 
billed, and additional brachytherapy source HCPCS codes have been added for 
payment. To see the most current comprehensive list of brachytherapy source codes, 
see the latest OPPS/ASC final rule. 
 
^Sec. 4141. Extension of Pass-Through Status Under the Medicare Program for 
Certain Devices Impacted by COVID-19 of the Consolidated Appropriations Act, 
2023 has extended pass-through status for a 1-year period beginning on January 1, 
2023.   
60.4.3. - Explanations of Certain Terms/Definitions Related to Device Pass-
Through Category Codes 
(Rev. 11150; Issued: 12-10-21; Effective: 01-01-22; Implementation: 01-03-22) 
 
3D mapping catheter (C1732) - Refers to a catheter used for mapping the 
electrophysiologic properties of the heart. Signals are identified by a specialized catheter and 
changed into a 3-dimensional map of a specific region of the heart. 
 
Adaptor for a pacing lead (C1883) - Interposed between an existing pacemaker lead and a 
new generator. The end of the adaptor lead has the appropriate connector pin that will enable 
utilization of the existing pacemaker lead with a new generator that has a different 
receptacle. These are required when a generator is replaced or when two leads are connected 
to the same port in the connector block. 
 
Adhesion barrier (C1765) - A bioresorbable substance placed on and around the neural 
structures, which inhibits cell migration (fibroblasts) and minimizes scar tissue formation. It 
is principally used in spine surgeries, such as laminectomies and diskectomies. 
 
Anchor for opposing bone-to-bone or soft tissue-to-bone (C1713) - Implantable pins 
and/or screws that are used to oppose soft tissue-to-bone, tendon-to-bone, or bone-to-bone. 
Screws oppose tissues via drilling as follows: soft tissue-to-bone, tendon-to-bone, or bone-
to-bone fixation. Pins are inserted or drilled into bone, principally with the intent to facilitate 
stabilization or oppose bone-to-bone. This may include orthopedic plates with 
accompanying washers and nuts. This category also applies to synthetic bone substitutes that 
may be used to fill bony void or gaps (i.e., bone substitute implanted into a bony defect 
created from trauma or surgery). 
 
Balloon dilatation catheter, non-vascular (C1726) - Catheter used to dilate strictures or 
stenoses through the insertion of an uninflated balloon affixed to the end of a flexible 
catheter, followed by the inflation of the balloon at the specified site (e.g., common bile 
duct, ureter, small or large intestine). [For the reporting of vascular balloon dilatation 
catheters, see category "Transluminal angioplasty catheter" (C1725 and C1885).] 
 
Balloon tissue dissector catheter (C1727) - Balloon tipped catheter used to separate tissue 
planes, used in procedures such as hernia repairs. 
 
Catheter, ablation, non-cardiac, endovascular (implantable) (C1888)  A 
radiofrequency or laser catheter designed to occlude or obliterate blood vessels (e.g., veins). 
 
Cardioverter-defibrillator, other than single or dual chamber (C1882) - Includes 
cardiac resynchronization devices. 
 
Coated stent (C1874, C1875) - Refers to a stent bonded with drugs (e.g., heparin), layered 
with biocompatible substances (e.g., phosphorylcholine), or with silicone or a silicone 
derivative (e.g., PTFE, polyurethane).   
Connective tissue, human (C1762) - These tissues include a natural, cellular collagen or 
extracellular matrix obtained from autologous rectus fascia, decellularized cadaveric fascia 
lata, or decellularized dermal tissue. They are intended to repair or support damaged or 
inadequate soft tissue. They are used to treat urinary incontinence resulting from 
hypermobility or Intrinsic Sphincter Deficiency (ISD), pelvic floor repair, or for 
implantation to reinforce soft tissues where weakness exists in the urological anatomy. Note 
this excludes those items that are used to replace skin. For reporting mesh when used to treat 
urinary incontinence, see the category Mesh. For reporting urinary incontinence repair 
device when used to treat urinary incontinence, see the category Urinary incontinence 
repair device. 
 
Connective tissue, non-human (includes synthetic) (C1763) - These tissues include a 
natural, acellular collagen matrix typically obtained from porcine or bovine small intestinal 
submucosa, or pericardium. This bio-material is intended to repair or support damaged or 
inadequate soft tissue. They are used to treat urinary incontinence resulting from 
hypermobility or Intrinsic Sphincter Deficiency (ISD), pelvic floor repair, or for 
implantation to reinforce soft tissues where weakness exists in the urological or 
musculoskeletal anatomy. [This excludes those items that are used to replace skin.] [For 
reporting mesh when used to treat urinary incontinence, see the category Mesh.] [For 
reporting urinary incontinence repair device when used to treat urinary incontinence, see the 
category Urinary incontinence repair device.] 
 
Cool-tip electrophysiology catheter (C2630) - Ablation catheter that contains a cooling 
mechanism and has temperature sensing capability. 
 
Covered stent (C1874, C1875) - Refers to a stent layered with silicone or a silicone 
derivative (e.g., PTFE, polyurethane). 
 
Drainage catheter (C1729) - Intended to be used for percutaneous drainage of fluids. 
(NOTE: This category does NOT include Foley catheters or suprapubic catheters. Refer to 
category C2627 to report suprapubic catheters.) 
 
Electrophysiology catheter (C1730, C1731, C1732, C1733, C2630) - Assists in providing 
anatomic and physiologic information about the cardiac electrical conduction system. 
Electrophysiology catheters are categorized into two main groups:  
(1) diagnostic catheters that are used for mapping, pacing, and/or recording only, and  
(2) ablation (therapeutic) catheters that also have diagnostic capability.  
The electrophysiology ablation catheters are distinct from non-cardiac ablation catheters. 
 
Electrophysiology catheters designated as "cool-tip" refer to catheters with tips cooled by 
infused and/or circulating saline. Catheters designated as "other than cool-tip" refer to the 
termister tip catheter with temperature probe that measures temperature at the tissue catheter 
interface. 
  Embolization protective system (C1884)  A system designed and marketed for use to 
trap, pulverize, and remove atheromatous or thrombotic debris from the vascular system 
during an angioplasty, atherectomy, or stenting procedure. 
 
Endoscope, single-use (i.e. disposable), Upper GI, imaging/illumination device 
(insertable) (C1784) - Single-use (i.e.,disposable) endoscope with imaging, illumination, 
and working channels. This single-use (i.e., disposable) endoscope can be used for 
procedures that take place in the Upper Gastrointestinal (GI) tract. 
Extension for a pacing lead (C1883) - Provides additional length to an existing pacing lead 
but does not have the capability of an adaptor. 
 
Extension for a neurostimulator lead (C1883) - Conducts electrical pulses from the power 
source (generator or neurostimulator) to the lead. The terms neurostimulator and generator 
are used interchangeably. 
 
Guiding catheter (C1887) - Intended for the introduction of interventional/diagnostic 
devices into the coronary or peripheral vascular systems. It can be used to inject contrast 
material, function as a conduit through which other devices pass, and/or provide a 
mechanism for measuring arterial pressure, and maintain a pathway created by the guide 
wire during the performance of a procedure. 
 
Infusion pump, non-programmable, temporary (implantable) (C2626) - Short-term pain 
management system that is a component of a permanent implantable system used for 
chronic pain management. 
 
Integrated keratoprosthesis (C1818)  The device is composed of a flexible, one-piece 
biocompatible polymer. It is used to replace diseased corneas in conditions and patient states 
where traditional corneal transplantation is not indicated or possible. Implantation of the 
procedure is done in a two-stage surgical approach. 
 
Intraocular lens (new technology) (C1780) - Refers to the intraocular lenses approved by 
CMS as "new technology IOL." A list of these lenses is published periodically in the Federal 
Register. The latest publication can be found on page 25740 of the Federal Register notice 
dated May 3, 2000. 
Intraoperative ocular device for detached retina (C1784) - A perfluorocarbon substance 
instilled during a vitreoretinal procedure to treat detached retina. 
 
Joint device (C1776) - An artificial joint that is implanted in a patient. Typically, a joint 
device functions as a substitute to its natural counterpart and is not used (as are anchors) to 
oppose soft tissue-to-bone, tendon-to-bone, or bone-to-bone. 
 
Left ventricular coronary venous system lead (C1900) - Designed for left heart 
placement in a cardiac vein via the coronary sinus and is intended to treat the symptoms 
associated with heart failure. This code should be reported with CPT codes 33224 or 33225. 
  Liquid pulmonary sealant (C2615) - An absorbable, synthetic solution that forms a seal 
utilizing a photochemical polymerization process. It is used to seal visceral pleural air leaks 
incurred during pulmonary resection. 
 
Material for vocal cord medialization, synthetic (C1878) - Synthetic material that is 
composed of a non-absorbable substance such as silicone and can be injected or implanted 
to result in vocal cord medialization. 
 
Mesh (C1781) - A mesh implant or synthetic patch composed of absorbable or non-
absorbable material that is used to repair hernias, support weakened or attenuated tissue, 
cover tissue defects, etc. [For reporting connective tissue (human or non-human) when used 
to treat urinary incontinence, see the category Connective tissue, human or Connective 
tissue, non-human.] [For reporting urinary incontinence repair device when used to treat 
urinary incontinence, see the category Urinary incontinence repair device.] 
 
Morcellator (C1782) - Used for cutting, coring, and extracting tissue in laparoscopic 
procedures. These are distinct from biopsy devices because morcellators are used for the 
laparoscopic removal of tissue. 
 
Pacemaker, other than single or dual chamber (C2621) - Includes cardiac 
resynchronization devices as well as other pacemakers that are neither single or dual 
chamber. 
 
Patient programmer (C1787) - Programmer that allows the patient to operate their 
neurostimulator, for example, programming the amplitude and rate of stimulation of a 
neurostimulator system. Only a non-console patient programmer is eligible for transitional 
pass- through payments. 
 
Peel-away introducer/sheath (C1892) - A non-absorbable sheath or introducer that 
separates into two pieces. This device is used primarily when removal of the sheath is 
required after a catheter or lead is in the desired position. 
 
Retinal tamponade device, silicone oil (C1814)  A device used as a permanent/prolonged 
retinal tamponade in the treatment of complex retinal detachments. This is used as a post-
operative retinal tamponade following vitreoretinal surgery. 
 
Retrieval device, insertable (C1773) - A device designed to retrieve other devices or 
portions thereof (e.g., fractured catheters, leads) lodged within the vascular system. This can 
also be used to retrieve fractured medical devices or to exchange introducers/sheaths. 
 
Septal defect implant system (C1817) - An intracardiac metallic implant used for closure 
of various septal defects within the heart. The septal defect implant system includes a 
delivery catheter. The category code for the septal defect implant system (C1817) includes 
the delivery catheter; therefore, the delivery catheter should not be reported separately. 
  Stents with delivery system (C1874, C1876, C2625) - Stents packaged with delivery 
systems generally include the following components: stent mounted or unmounted on a 
balloon angioplasty catheter, introducer, and sheath. These components should not be 
reported separately. 
 
Temporary non-coronary stent (C2617, C2625) - Usually composed of a substance, such 
as plastic or other non-absorbable material, designed to permit removal. Typically, this type 
of stent is placed for a period of less than one year. 
 
Tissue marker (C1879) - A material that is placed in subcutaneous or parenchymal tissue 
(may also include bone) for radiopaque identification of an anatomic site. These markers are 
distinct from topical skin markers, which are positioned on the surface of the skin to serve as 
anatomical landmarks. 
 
Transluminal angioplasty catheter (C1725, C1885) - Designed to dilate stenotic blood 
vessels (arteries and veins). For vascular use, the terms balloon dilatation catheter and 
translumina l angioplasty catheter are frequently used interchangeably. [For the reporting 
of non-vascular balloon dilatation catheters, see the category "Balloon dilatation catheter" 
(C1726).] 
 
Transvenous VDD single pass pacemaker lead (C1779) - A transvenous pacemaker lead 
that paces and senses in the ventricle and senses in the atrium. 
 
Urinary incontinence repair device (C1771, C2631) - Used to attach or insert a sling graft 
for the purpose of strengthening the pelvic floor. It consists of the device components used 
to deliver (suprapubically or transvaginally) and/or fixate (via permanent sutures or bone 
anchors) the sling graft. The device may or may not be packaged with a sling graft. Report 
the appropriate category for a device with or without a sling graft. NOTE: For reporting 
connective tissue (human or non- human) when used to treat urinary incontinence, see the 
category Connective tissue, human (C1762) or Connective tissue, non-human (C1763). 
For reporting mesh when used to treat urinary incontinence, see the category Mesh 
(C1781). 
 
Vascular closure device (implantable /insertable) (C1760) - Used to achieve hemostasis 
at arterial puncture sites following invasive or interventional procedures using biologic 
substances (e.g., collagen) or suture through the tissue tract. 
 
Vector mapping catheter (C1732) - Refers to an electrophysiology catheter with an "in-
plane" orthogonal array of electrodes. This catheter is used to locate the source of a focal 
arrhythmia. 
 
 
60.5 - Services Eligible for New Technology APC Assignment and 
Payments 
(Rev. 3941; Issued: 12-22-17; Effective: 01- 01-18; Implementation: 01-02-18)  Under OPPS, services eligible for payment through New Technology APCs are those 
codes that are assigned to the series of New Technology APCs published in Addendum A 
of the latest OPPS update.  As of January 1, 2018, the range of New Technology APCs 
include  
 
  APCs 1491 through 1500 
  APCs 1502 through 1537 
  APCs 1539 through 1585 
  APCs 1589 through 1599, and 
  APCs 1901 through 1908  
 
OPPS considers any HCPCS code assigned to the above APCs to be a new technology 
procedure or service. 
 
Application procedures for consideration as a New Technology procedure or service may 
be found on the CMS Web site, currently at https://www.cms.gov/Medicare/Medicare-
Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html.  Under the 
Downloads section, refer to the document titled For a New Technology Ambulatory 
Payment Classification (APC) Designation under the Hospital Outpatient Prospective 
Payment System (OPPS) for information on the requirements for submitting an 
application. 
 
The list of HCPCS codes and payment rates assigned to New Technology APCs can be 
found in Addendum B of the latest OPPS update regulation each year at  
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/HospitalOutpatientPPS/Addendum-A-and-Addendum-B-Updates.html. Please 
note that this link may change depending on CMS Web design requirements 
 
61 - Billing for Devices Under the OPPS 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
Future updates will be issued in a Recurring Update Notification. 
 
61.1 - Requirement that Hospitals Report Device Codes on Claims on 
Which They Report Specified Procedures 
(Rev. 11305; Issued: 03-24-22; Effective: 04-01-22; Implementation: 04-04-22) 
Effective January 1, 2005, hospitals paid under the OPPS (bill types 12X and 13X) that 
report procedure codes that require the use of devices must also report the applicable 
HCPCS codes and charges for all devices that are used to perform the procedures where  such codes exist and are designated with a status indicator of N (for packaged payment) 
or H (for pass-through device payment) in the OPPS Addendum B that applies to the 
date of service. If there are device HCPCS codes with status indicators other than N or 
H that describe devices that are used to perform the procedure or that are furnished 
because they are necessary for the function of an implanted device, hospitals should report 
the charges for those other devices on an uncoded revenue code line, but should not report 
the HCPCS codes for those items. Typically, payment for the costs of all internal and 
external components required for the function of a nonpass-through device is packaged 
into the APC payment for the associated procedure in which the device is used. Accurate 
reporting of HCPCS codes and charges for these internal and external device components 
is necessary so that the OPPS payment for the associated procedures will be correct in 
future years in which the claims are used to set the APC payment rates. 
For procedure codes that require the use of devices that are not described by a specific 
HCPCS code, hospitals should report HCPCS code C1889 (Implantable/insertable device, 
not otherwise classified) and charges for all devices that are used to perform the 
procedures. Such devices must: 
  Have received FDA marketing authorization, have received an FDA 
investigational device exemption (IDE) and have been classified as a 
Category B device by FDA in accordance with 405.203 through 405.207 
and 405.211 through 405.215, or meets another appropriate FDA 
exemption from premarket review; 
  Be an integral part of the service furnished;  
  Be used for one patient only; 
  Come in contact with human tissue; 
  Be surgically implanted or inserted (either permanently or temporarily); and  
  Not be either of the following: 
(a)  Equipment, an instrument, apparatus, implement, or item of the type for 
which depreciation and financing expenses are recovered as depreciable assets as 
defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 
15-1); or 
(b)  A material or supply furnished to a service (for example, a suture, 
customized surgical kit, scalpel, or clip, other than a radiological site marker). 
Manufacturers frequently package a number of individual items used with a device in a 
particular procedure. In cases of devices that are described by device category HCPCS 
codes whose pass-through status has expired, or HCPCS codes that describe devices 
without pass-through status, and that are packaged in kits with other items used in a  particular procedure, hospitals may consider all kit costs in their line-item charge for the 
associated device/device category HCPCS code that is assigned status indicator N for 
packaged payment. That is, hospitals may report the total charge for the whole kit with 
the associated device/device category HCPCS code. Payment for device/device category 
HCPCS codes without pass-through status is packaged into payment for the procedures in 
which they are used, and these codes are assigned status indicator N. In the case of a 
device kit, should a hospital choose to report the device charge alone under a 
device/device category HCPCS code with SI=N, the hospital should report charges for 
other items that may be included in the kit on a separate line on the claim. Hospitals may 
use the same revenue code to report all components of the kit. 
 
61.2 - Edits for Claims on Which Specified Procedures are to be 
Reported With Device Codes and For Which Specific Devices are to be 
Reported With Procedure Codes 
(Rev. 3685, Issued: 12-22-16, Effective: 01-01-17, Implementation: 01-03-17) 
 
The OCE will return to the provider any claim that reports a HCPCS code for a device-
intensive procedure that does not also report at least one device HCPCS code required for 
that procedure.  If the claim is returned to the provider for failure to pass the edit, the 
hospital will need to modify the claim by either correcting the procedure code or ensuring 
that one of the required device codes is on the claim before resubmission.  While all 
devices that have device HCPCS codes and that were used in a given procedure should be 
reported on the claim, only one of the possible device codes is required to be on the claim 
for payment to be made, unless otherwise specified. 
 
The device edit does not apply to the specified procedure code if the provider reports one 
of the following modifiers with the procedure code: 
 
52 - Reduced Services; 
73 - Discontinued outpatient procedure prior to anesthesia administration; and 
74 - Discontinued outpatient procedure after anesthesia administration. 
 
Where a procedure that normally requires a device is interrupted, either before or after 
the administration of anesthesia if anesthesia is required or at any point if anesthesia is 
not required, and the device is not used, hospitals should report modifier 52, 73 or 74 as 
applicable.  The device edit is not applied in these cases. 
 
The OCE will also return to the provider claims for which specified devices are billed 
without the procedure code that is necessary for the device to have therapeutic benefit to 
the patient.  If the claim is returned to the provider for failure to pass the edit, the hospital 
will need to modify the claim by either correcting the device code or ensuring that one of 
the required procedure codes is on the claim before resubmission. 
 
 
 
  61.2.1  Bypass Edit Modifier CG for Claims on Which Specified 
Procedures are to be Reported With Device Codes                            
(Rev.4513, Issued: 02-04-2020, Effective: 01-01- 2020, Implementation: 01-06-2020) 
 
For certain device-intensive procedures, providers may bypass the device edit requiring at 
least one device HCPCS code for the procedure. For situations where no device was 
performed with certain device-intensive procedures, providers may bypass the edit by 
reporting modifier CG. 
 
61.3 - Billing for Devices Furnished Without Cost to an OPPS Hospital 
or Beneficiary or for Which the Hospital Receives a Full or Partial 
Credit and Payment for OPPS Services Required to Furnish the Device 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
61.3.1 - Reporting and Charging Requirements When a Device is 
Furnished Without Cost to the Hospital Prior to January 1, 2014 
(Rev. 2903, Issued: 03-11-14, Effective: 04-01-14, Implementation: 04-07-14) 
 
Effective January 1, 2007, the definition of modifier -FB is Item Provided Without 
Cost to Provider, Supplier or Practitioner, or Credit Received for Replacement 
Device (Examples, but not Limited to:  Covered Under Warranty, Replaced Due to 
Defect, Free Samples). 
 
When a hospital furnishes a device received without cost or with full credit from a 
manufacturer, the hospital must append modifier -FB to the procedure code (not the 
device code) that reports the service provided to furnish the device.  The hospital must 
report a token charge for the device (less than $1.01) in the covered charge field. 
 
This includes circumstances in which the cost of a replacement device is less than the 
cost of the device being replaced, such that the hospital incurs no net cost for the device 
being inserted.  For example, if a device that originally cost $20,000 fails and is replaced 
by a device that costs $16,000 and for which the manufacturer gives a credit of $16,000, 
there is no cost to the hospital for the device being inserted and the hospital would 
append modifier -FB to the procedure code and report a token charge for the device. 
 
61.3.2 - Reporting and Charging Requirements When the Hospital 
Receives Full Credit for the Replaced Device against the Cost of a More 
Expensive Replacement Device Prior to January 1, 2014 
(Rev. 2903, Issued: 03-11-14, Effective: 04-01-14, Implementation: 04-07-14) 
 
When a hospital replaces a device with a more expensive device and receives a credit in 
the amount that the device being replaced would otherwise cost, the hospital must append 
modifier -FB to the procedure code (not on the device code) that reports the service 
provided to replace the device.  The hospital must charge the difference between its usual  charge for the device being implanted and its usual charge for the device for which it 
received credit.  This charge should be billed in the covered charge field. 
 
Hospitals should not report modifier -FB when the hospital receives a partial credit for a 
replacement device when the amount of the credit is less than the amount that the device 
would otherwise cost the hospital.  For example, a device fails in the 6th month of a 1 
year warranty and under the terms of the warranty, the hospital receives a credit of 50 
percent of the cost of a replacement device.  The hospital should not append modifier -FB 
to the procedure code in which the device is implanted.  See the Medicare Claims 
Processing Manual, Pub 100-04, Chapter 4, 61.3.3 for billing instructions pertaining to 
partial credit situations. 
 
61.3.3 - Reporting Requirements When the Hospital Receives Partial 
Credit for the Replacement Device Prior to January 1, 2014 
(Rev. 2903, Issued: 03-11-14, Effective: 04-01-14, Implementation: 04-07-14) 
 
When a hospital receives a partial credit of 50 percent or more of the cost of a new 
replacement device due to warranty, recall, or field action, the hospital must append 
modifier -FC to the procedure code (not on the device code) that reports the service 
provided to replace the device. 
 
61.3.4 - Medicare Payment Adjustment Prior to January 1, 2014 
(Rev. 2903, Issued: 03-11-14, Effective: 04-01-14, Implementation: 04-07-14) 
 
Effective January 1, 2007, Medicare payment is reduced by the full offset amount for 
specified procedure codes reported with modifier -FB.  Effective January 1, 2008, 
Medicare payment is reduced by the partial offset amount for specified procedure codes 
reported with modifier -FC.  Effective January 1, 2009, payment is only reduced for 
procedure codes that map to the Ambulatory Payment Classification groups (APCs) on 
the list of APCs subject to the adjustment that are reported with modifier -FB or -FC and 
that are present on claims with specified device HCPCS codes. 
 
The Integrated Code Editor (I/OCE) assigns a payment adjustment flag when a procedure 
code in an APC subject to an offset adjustment is billed with modifier -FB or -FC and a 
specified device HCPCS code.  The payment adjustment flag communicates to the OPPS 
PRICER that the payment for the procedure code line is to be reduced by the established 
full or partial offset amount for the APC to which the procedure code is assigned.  The 
I/OCE uses the offset APC payment rate (APC payment amount minus the established 
offset amount) as the rate used in the I/OCEs determination of which multiple procedure 
line(s) will be discounted. 
 
The OPPS PRICER then applies the multiple procedure discounting and terminated 
procedure discounting factors after offsetting the unadjusted APC payment rate.  The 
offset reduction also is made to the unadjusted payment rate before wage adjustment, 
which ensures that the beneficiary's coinsurance is based on the reduced amount. 
  NOTE:  The tables of APCs and devices to which the offset reductions apply, and the 
full and partial offset amounts, are available on the CMS Web site at: 
www.cms.hhs.gov/HospitalOutpatientPPS/. 
 
61.3.5 - Reporting and Charging Requirements When a Device is 
Furnished Without Cost to the Hospital or When the Hospital Receives 
a Full or Partial Credit for the Replacement Device Beginning January 
1, 2014 
(Rev. 3181, Issued: 01-30-15, Effective: 07-01-15, Implementation: 07-06-15) 
 
Effective January 1, 2014, when a hospital furnishes without cost an initial placement of 
a medical device as part of a clinical trial  or a free sample medical device or when a 
hospital furnishes without cost a new replacement device or with a credit of 50 percent or 
more of the cost of a new replacement from a manufacturer, due to warranty, recall, or 
field action, the hospital must report the amount of the device credit in the amount 
portion for value code FD (Credit Received from the Manufacturer for a Medical 
Device).  Also effective January 1, 2014 hospitals must report one of the following 
condition codes when the value code FD is present on the claim:  
 
  49 Product Replacement within Product LifecycleReplacement of a product earlier 
than the anticipated lifecycle.  
 
  50 Product Replacement for Known Recall of a ProductManufacturer or FDA has 
identified the product for recall and therefore replacement.  
 
  53 Initial placement of a medical device provided as part of a clinical trial or free 
sample Code is for outpatient claims that have received a device credit upon initial 
medical device placement in a clinical trial or a free sample. 
 
No-Cost Device Coding 
 
When a hospital furnishes a device for which it incurs no cost, (these cases include, but 
are not limited to, devices replaced under warranty, due to recall, or due to defect in a 
previous device; devices provided in a clinical trial; or devices provided as a sample) the 
hospital charge for a device furnished to the hospital at no cost should equal $0.00.  
However, some hospitals billing systems require that a charge be reported for separately 
billable codes in order for the claim to be submitted for payment, even items for which 
the hospital incurs no cost. 
 
Hospitals paid under the OPPS that implant a device furnished at no cost to the hospital 
shall report a charge of zero for the device, or, if the hospitals billing system requires 
that a charge be entered, the hospital shall submit a token charge (e.g. $1.00) on the line 
with the device code. 
  CMS recognizes that showing a charge for a device that has been furnished without cost 
is not optimal, but showing a token charge in this circumstance will allow claims for 
reasonable and necessary services to be adjudicated. 
 
61.3.6 - Medicare Payment Adjustment Beginning January 1, 2014 
(Rev. 2903, Issued: 03-11-14, Effective: 04-01-14, Implementation: 04-07-14) 
 
Effective January 1, 2014, Medicare payment is reduced by the amount of the device 
credit for specified procedure codes reported with value code FD.  The payment 
deduction is limited to the full device offset when the FD value code appears on a claim.  
Payment is only reduced for procedure codes that map to the Ambulatory Payment 
Classification groups (APCs) on the list of APCs subject to the adjustment that are 
reported with value code FD and that are present on claims with specified device 
HCPCS codes. 
 
The OPPS Pricer deducts the lesser of the device credit or the full unadjusted device 
offset amount from the Medicare payment for a procedure code in an APC subject to the 
adjustment when billed with value code FD on the claim.  This deduction is made from 
the Medicare payment after the multiple procedure discounting and terminated procedure 
discounting factors are applied, units of service are accounted for, and after the APC 
payment has been wage adjusted. 
 
When two or more procedures assigned to APCs subject to the adjustment are reported 
with value code FD the OPPS Pricer will apportion the device credit to the applicable 
line on the claim for each procedure assigned to an APC subject to the adjustment.  When 
value code FD is reported on a claim where multiple APCs would be subject to the 
adjustment, the OPPS Pricer apportions the device credit to each of those lines.  The 
percentage of the device credit apportioned to each applicable line is based on the 
percentage that the unadjusted payment of each applicable line represents, relative to the 
total unadjusted payment for all applicable lines. 
 
NOTE:  The tables of APCs and devices to which the offset reductions apply, and the 
full and partial offset amounts, are available on the CMS Web site at: 
www.cms.hhs.gov/HospitalOutpatientPPS/. 
 
 
61.4 - Billing and Payment for Brachytherapy Sources 
(Rev. 1445, Issued:  02-08-08; Effective:  01-01-08; Implementation:  03-10-08) 
 
61.4.1 - Billing for Brachytherapy Sources - General 
(Rev. 2718, Issued: 06-07-13, Effective: 07-01-13, Implementation: 07-01-13) 
 
Brachytherapy sources (e.g., brachytherapy devices or seeds, solutions) are paid 
separately from the services to administer and deliver brachytherapy in the OPPS, per 
section 1833(t)(2)(H) of the Act, reflecting the number, isotope, and radioactive intensity 
of devices furnished, as well as stranded versus non-stranded configurations of sources.   Therefore, providers must bill for brachytherapy sources in addition to the brachytherapy 
services with which the sources are applied, in order to receive payment for the sources.  
The separately payable sources are found in Addendum B of the most recent OPPS 
annual update published on the CMS web site.  New sources meeting the OPPS definition 
of a brachytherapy source may be added for payment beginning any quarter, and the new 
source codes and descriptors are announced in recurring update notifications. 
 
Each unit of a billable source is identified by the unit measurement in the respective 
sources long descriptor.  Seed-like sources are generally billed and paid per source 
based on the number of units of the source HCPCS code reported, including the billing of 
the number of sources within a stranded configuration of sources.  Providers therefore 
must bill the number of units of a source used with the brachytherapy service rendered. 
 
61.4.2 - Definition of Brachytherapy Source for Separate Payment  
61.4.2 - Definition of Brachytherapy Source for Separate Payment  
(Rev. 1445, Issued:  02-08-08; Effective:  01-01-08; Implementation:  03-10-08) 
 
Brachytherapy sources eligible for separate billing and payment must be radioactive 
sources, meaning that the source contains a radioactive isotope.  Separate brachytherapy 
source payments reflect the number, isotope, and radioactive intensity of sources 
furnished to patients, as well as stranded and non-stranded configurations. 
 
61.4.3 - Billing of Brachytherapy Sources Ordered for a Specific Patient 
(Rev. 1445, Issued:  02-08-08; Effective:  01-01-08; Implementation:  03-10-08) 
 
A hospital may report and charge Medicare and the Medicare beneficiary for all 
brachytherapy sources that are ordered by the physician for a specific patient, acquired by 
the hospital, and used in the care of the patient.  Specifically, brachytherapy sources 
prescribed by the physician in accordance with high quality clinical care, acquired by the 
hospital, and actually implanted in the patient may be reported and charged.  In the case 
where most, but not all, prescribed sources are implanted in the patient, CMS will 
consider the relatively few brachytherapy sources that were ordered but not implanted 
due to specific clinical considerations to be used in the care of the patient and billable to 
Medicare under the following circumstances.  The hospital may charge for all sources if 
they were specifically acquired by the hospital for the particular patient according to a 
physicians prescription for the sources that was consistent with standard clinical practice 
and high quality brachytherapy treatment, in order to ensure that the clinically 
appropriate number of sources was available for the implantation procedure, and they 
were not implanted in any other patient.  Those sources that were not implanted must 
have been disposed of in accordance with all appropriate requirements for their handling.  
In general, the number of sources used in the care of the patient but not implanted would 
not be expected to constitute more than a small fraction of the sources actually implanted 
in the patient.  Under these circumstances, the beneficiary is liable for the copayment for 
all the sources billed to Medicare. 
  61.4.4 - Billing for Brachytherapy Source Supervision, Handling and 
Loading Costs 
(Rev. 1445, Issued:  02-08-08; Effective:  01-01-08; Implementation:  03-10-08) 
 
Providers should report charges related to supervision, handling, and loading of radiation 
sources, including brachytherapy sources, in one of two ways: 
 
1.  Report the charge separately using CPT code 77790 (Supervision, handling, loading 
of radiation source), in addition to reporting the associated HCPCS procedure code(s) for 
application of the radiation source; 
 
2.  Include the supervision, handling, and/or loading charges as part of the charge 
reported with the HCPCS procedure code(s) for application of the radiation source. 
Do not bill a separate charge for brachytherapy source storage costs. These costs are 
treated as part of the department's overhead costs. 
 
61.4.5 - Payment for New Brachytherapy Sources 
(Rev. 2718, Issued: 06-07-13, Effective: 07-01-13, Implementation: 07-01-13) 
 
Not otherwise specified (NOS) brachytherapy source codes are available for payment of 
new brachytherapy sources for which source codes have not yet been established: C2698 
(Brachytherapy source, stranded, not otherwise specified, per source), and C2699 
(Brachytherapy source, non-stranded, not otherwise specified, per source).  The payment 
rates for these NOS codes are based on a rate equal to the lowest stranded or non-
stranded payment rate for such sources, respectively, on a per source basis (as opposed, 
for example, to per mCi).  Once CMS establishes a new HCPCS code for a new source, 
the new code will be assigned to its own APC, with the payment rate set based on 
consideration of external data and other relevant information, until claims data are 
available for the standard OPPS rate making methodology. 
 
61.5 - Billing for Intracoronary Stent Placement 
(Rev. 2611, Issued: 12-14-12, Effective: 01-01-13, Implementation, 01-07-13) 
 
Since CY 2003, under the OPPS, we assign coronary stent placement procedures to 
separate APCs based on the use of nondrug-eluting or drug-eluting stents (APC 0104 
(Transcatheter Placement of Intracoronary Stents) or APC 0656 (Transcatheter Placement 
of Intracoronary Drug-Eluting Stents), respectively).  In order to effectuate this policy, we 
created HCPCS G-codes G0290 (Transcatheter placement of a drug eluting intracoronary 
stent(s), percutaneous, with or without other therapeutic intervention, any method; single 
vessel) and G0291 (Transcatheter placement of a drug eluting intracoronary stent(s), 
percutaneous, with or without other therapeutic intervention, any method; each additional 
vessel) for drug-eluting intracoronary stent placement procedures that parallel existing 
CPT codes 92980 (Transcatheter placement of an intracoronary stent(s), percutaneous, 
with or without other therapeutic intervention, any method; single vessel) and 92981 
(Transcatheter placement of an intracoronary stent(s), percutaneous, with or without other 
therapeutic intervention, any method; each additional vessel), which are used to describe  nondrug-eluting intracoronary stent placement procedures. For CY 2012 and years prior, 
CPT codes 92980 and 92981 have been assigned to APC 0104, while HCPCS codes G0290 
and G0291 have been assigned to APC 0656. 
 
Effective January 1, 2013, the AMAs CPT Editorial Panel is deleting CPT codes 92980 
and 92981 and replacing them with the following new CPT codes: 
 
  CPT code 92928 (Percutaneous transcatheter placement of intracoronary stent(s), 
with coronary angioplasty when performed; single major coronary artery or 
branch)  
 
  CPT code 92929 (Percutaneous transcatheter placement of intracoronary stent(s), 
with coronary angioplasty when performed; each additional branch of a major 
coronary artery (List separately in addition to code for primary procedure)); 
 
  CPT code 92933 (Percutaneous transluminal coronary atherectomy, with 
intracoronary stent, with coronary angioplasty when performed; single major 
coronary artery or branch); 
 
  CPT code 92934 (Percutaneous transluminal coronary atherectomy, with 
intracoronary stent, with coronary angioplasty when performed; each additional 
branch of a major coronary artery (List separately in addition to code for primary 
procedure)); 
 
  CPT code 92937 (Percutaneous transluminal revascularization of or through 
coronary artery bypass graft (internal mammary, free arterial, venous), any 
combination of intracoronary stent, atherectomy and angioplasty, including distal 
protection when performed; single vessel); 
 
  CPT code 92938 (Percutaneous transluminal revascularization of or through 
coronary artery bypass graft (internal mammary, free arterial, venous), any 
combination of intracoronary stent, atherectomy and angioplasty, including distal 
protection when performed; each additional branch subtended by the bypass graft 
(List separately in addition to code for primary procedure)); 
 
  CPT code 92941 (Percutaneous transluminal revascularization of acute 
total/subtotal occlusion during acute myocardial infarction, coronary artery or 
coronary artery bypass graft, any combination of intracoronary stent, atherectomy 
and angioplasty, including aspiration thrombectomy when performed, single 
vessel); 
    CPT code 92943 (Percutaneous transluminal revascularization of chronic total 
occlusion, coronary artery, coronary artery branch, or coronary artery bypass 
graft, any combination of intracoronary stent, atherectomy and angioplasty; single 
vessel); and 
 
  CPT code 92944 (Percutaneous transluminal revascularization of chronic total 
occlusion, coronary artery, coronary artery branch, or coronary artery bypass 
graft, any combination of intracoronary stent, atherectomy and angioplasty;  each 
additional coronary artery, coronary artery branch, or bypass graft (List separately 
in addition to code for primary procedure)). 
 
In order to maintain the existing policy of differentiating payment for intracoronary stent 
placement procedures involving nondrug-eluting and drug-eluting stents, we are deleting 
HCPCS codes G0290 and G0291 and replacing them with the following new HCPCS C-
codes to parallel the new CPT codes: 
 
  HCPCS code C9600 (Percutaneous transcatheter placement of drug eluting 
intracoronary stent(s), with coronary angioplasty when performed; single major 
coronary artery or branch); 
 
  HCPCS code C9601 (Percutaneous transcatheter placement of drug-eluting 
intracoronary stent(s), with coronary angioplasty when performed;  each 
additional branch of a major coronary artery (List separately in addition to code 
for primary procedure)); 
 
  HCPCS code C9602 (Percutaneous transluminal coronary atherectomy, with drug 
eluting intracoronary stent, with coronary angioplasty when performed; single 
major coronary artery or branch); 
 
  HCPCS code C9603 (Percutaneous transluminal coronary atherectomy, with 
drug-eluting intracoronary stent, with coronary angioplasty when performed; each 
additional branch of a major coronary artery (List separately in addition to code 
for primary procedure)); 
 
  HCPCS code C9604 (Percutaneous transluminal revascularization of or through 
coronary artery bypass graft (internal mammary, free arterial, venous), any 
combination of drug-eluting intracoronary stent, atherectomy and angioplasty, 
including distal protection when performed; single vessel); 
 
  HCPCS code C9605 (Percutaneous transluminal revascularization of or through 
coronary artery bypass graft (internal mammary, free arterial, venous), any  combination of drug-eluting intracoronary stent, atherectomy and angioplasty, 
including distal protection when performed;  each additional branch subtended by 
the bypass graft (List separately in addition to code for primary procedure)); 
 
  HCPCS code C9606 (Percutaneous transluminal revascularization of acute 
total/subtotal occlusion during acute myocardial infarction, coronary artery or 
coronary artery bypass graft, any combination of drug-eluting intracoronary stent, 
atherectomy and angioplasty, including aspiration thrombectomy when 
performed, single vessel); 
 
  HCPCS code C9607 (Percutaneous transluminal revascularization of chronic total 
occlusion, coronary artery, coronary artery branch, or coronary artery bypass 
graft, any combination of drug-eluting intracoronary stent, atherectomy and 
angioplasty; single vessel); and 
 
  HCPCS code C9608 (Percutaneous transluminal revascularization of chronic total 
occlusion, coronary artery, coronary artery branch, or coronary artery bypass 
graft, any combination of drug-eluting intracoronary stent, atherectomy and 
angioplasty;  each additional coronary artery, coronary artery branch, or bypass 
graft (List separately in addition to code for primary procedure)). 
 
CPT codes 92928, 92933, 92929, 92934, 92937, 92938, 92941, 92943, and 92944 should 
be used to describe nondrug-eluting intracoronary stent placement procedures and are 
assigned to APC 0104.  HCPCS codes C9600, C9601, C9602, C9603, C9604, C9605, 
C9606, C9607, and C9608 are assigned to APC 0656. 
 
70 - Transitional Corridor Payments 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (BBRA) 
established transitional payments to limit providers losses under the OPPS; the 
additional payments are for 3 1/2 years for community mental health centers (CMHCs) 
and most hospitals, and permanent for cancer hospitals effective August 1, 2000. 
 
Section 405 of BIPA provides that childrens hospitals described in 1886(d)(1)(B)(iii) 
are held harmless permanently for purposes of calculating TOP amounts, retroactive to 
August 1, 2000.  Some rural hospitals are also held harmless for several years after the 
implementation of the OPPS, as discussed in detail below.  Contractors determine TOPs 
eligibility and calculate interim TOPs. 
 
Beginning September 1, 2000, and every month thereafter until further notice, the shared 
system maintainers must provide contractors with software that gathers all data required 
to calculate a TOP amount for each hospital and CMHC.  The software must calculate  and pay the TOP amount for OPPS services on claims processed during the preceding 
month, maintain an audit trail (including the ability to generate a hardcopy report) of 
these TOP amounts, and transfer to the PS&R system any necessary data.  TOP amounts 
should be paid before the next month begins and they are not subject to normal payment 
floor requirements. 
 
Several items contained in the Inpatient or Outpatient Provider Specific File (IPSF or 
OPSF) are needed to determine TOP eligibility for each hospital or CMHC.  They are: 
 
  The provider number; 
 
  Fiscal year begin date; 
 
  The provider type; 
 
  Actual geographic location - CBSA (from the IPSF); 
 
  Wage index location - CBSA (from the IPSF); and 
 
  Bed size (from the IPSF) 
 
Pursuant to 403 of BIPA, a TOP may be made to hospitals and CMHCs that did not file 
a cost report for the cost reporting period ending in calendar year 1996.  The law was 
amended to provide that if a hospital did not file a cost report for a cost reporting period 
ending in calendar year 1996, the payment-to-cost ratio used in calculating a TOP will be 
based on the hospitals first cost report for a period ending after calendar year 1996 and 
before calendar year 2001.  This provision is effective retroactively to August 1, 2000. 
 
Future updates will be issued in a Recurring Update Notification. 
 
70.1 - Transitional Outpatient Payments (TOPs) for CY 2000 and CY 
2001 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
Monthly TOPs calculations that contractors are required to calculate are described below.  
This calculation is effective for services provided between August 1, 2000, and 
December 31, 2001. 
 
Step 1 - Compute the pre-BBA amount for each month by first multiplying the total 
charges for covered services for all OPPS services on claims paid during the month 
and reduce the total charges to cost by multiplying them by the outpatient cost to 
charge ratio and then multiplying this amount by the provider-specific payment-to-
cost ratio (PSPCR). 
 
Step 2 - Add together the total Medicare program payments, unreduced coinsurance 
and deductible applied for all APCs, as well as all outlier payments and transitional  pass-through payments for drugs, biologicals and/or devices for those same claims 
paid during the month as those used in Step 1.  If the result is greater than the result of 
step 1, go to step 9.  No transitional payment is due this month. 
 
Step 3 - If the hospital is a childrens hospital, a small rural hospital with not more 
than 100 beds or a cancer hospital, go to step 4.  If any other type of hospital, divide 
the result of step 2 by the result of step 1, skip step 4 and perform step 5, 6, 7, or 8 as 
appropriate. 
 
Step 4 - If the hospital is a childrens hospital, a small rural hospital with not more 
than 100 beds or a cancer hospital, subtract the result of step 2 from the result of step 
1 and pay .85 times this amount.  Do not perform steps 5-8. 
 
Step 5 - If the result of step 3 is equal to or greater than .9 but less than 1.0, subtract 
the result of step 2 from the result of step 1, and multiply the difference by .8 and pay 
.85 times this amount. 
 
Step 6 - If the result of step 3 is equal to or greater than .8 but less than .9, subtract .7 
times the result of step 2 from .71 times the result of step 1, and pay .85 times this 
amount. 
 
Step 7 - If the result of step 3 is equal to or greater than .7 but less than .8, subtract .6 
times the result of step 2 from .63 times the result of step 1, and pay .85 times this 
amount. 
 
Step 8 - If the result of step 3 is less than .7, multiply the result of step 1 by .21 and 
pay .85 times this amount. 
 
Step 9 - When the result of step 2 is greater than the result of step 1 for the final 
month of a providers cost report period, do nothing more.  When the result of step 2 
is greater than the result of step 1 for any other month, store all step 1 and step 2 
totals and include these totals with the totals for the next months TOP calculation. 
 
70.2 - Transitional Outpatient Payments (TOPs) for CY 2002 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
For services provided during calendar years 2002, TOPs were gradually reduced for all 
providers except those hospitals that receive hold harmless TOPs (cancer hospitals, 
childrens hospitals, and rural hospitals having 100 or fewer beds).  To avoid TOP 
overpayments, contractors were instructed to revise the monthly interim TOP calculations 
to reflect the new calculation. 
 
Monthly TOPs calculations that contractors are required to calculate are described below.  
This calculation is effective for services provided between January 1, 2002, and 
December 31, 2002. 
  Step 1 - Compute the pre-BBA amount for each month by first multiplying the total 
charges for covered services for all OPPS services on claims paid during the month 
and reduce the total charges to cost by multiplying them by the outpatient cost-to- 
charge ratio and then multiplying this amount by the provider-specific payment-to-
cost ratio (PSPCR). 
 
Step 2 - Add together the total Medicare program payments, unreduced coinsurance 
and deductible applied for all APCs, as well as all outlier payments and transitional 
pass-through payments for drugs, biologicals and/or devices for those same claims 
paid during the month as those used in Step 1.  If the result is greater than the result of 
step 1, go to step 8.  No transitional payment is due this month. 
 
Step 3 - If the hospital is a childrens hospital, a small rural hospital with not more 
than 100 beds or a cancer hospital go to step 4.  If any other type of hospital, divide 
the result of step 2 by the result of step 1, skip step 4 and perform steps 5, 6, or 7 as 
appropriate. 
 
Step 4 - If the hospital is a childrens hospital, a small rural hospital with not more 
than 100 beds or a cancer hospital, subtract the result of step 2 from the result of step 
1 and pay .85 times this amount.  Do not perform steps 5-7. 
 
Step 5 - If the result of step 3 is equal to or greater than  .9 but less than 1.0, subtract 
the result of step 2 from the result of step 1, and multiply the difference by .7 and pay 
.85 times this amount. 
 
Step 6 - If the result of step 3 is equal to or greater than  .8 but less than .9, subtract .6 
times the result of step 2 from .61 times the result of step 1, and pay .85 times this 
amount. 
 
Step 7 - If the result of step 3 is less than .8, multiply the result of step 1 by .13 and 
pay .85 times this amount. 
 
Step 8 - When the result of step 2 is greater than the result of step 1 for the final 
month of a providers cost report period, do nothing more.  When the result of step 2 
is greater than the result of step 1 for any other month, store all step 1 and step 2 
totals and include these totals with the totals for the next months TOP calculation. 
 
70.3 - Transitional Outpatient Payments (TOPs) for CY 2003 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
For services provided during calendar years 2003, TOPs continued to decrease for all 
providers except those hospitals that receive hold harmless TOPs (cancer hospitals, 
childrens hospitals, and rural hospitals having 100 or fewer beds).  To avoid TOP 
overpayments, contractors were instructed to revise the monthly interim TOP calculations 
to reflect the new calculation. 
  Monthly TOPs calculations that contractors are required to calculate are described below.  
This calculation is effective for services provided between January 1, 2003, and 
December 31, 2003. 
 
Step 1 - Compute the pre-BBA amount for each month by first multiplying the total 
charges for covered services for all OPPS services on claims paid during the month 
and reduce the total charges to cost by multiplying them by the outpatient cost to 
charge ratio and then multiplying this amount by the provider-specific payment-to-
cost ratio (PSPCR). 
 
Step 2 - Add together the total Medicare program payments, unreduced coinsurance 
and deductible applied for all APCs, as well as all outlier payments and transitional 
pass-through payments for drugs, biologicals and/or devices for those same claims 
paid during the month as those used in Step 1.  If the result is greater than the result of 
step 1, go to step 7.  No transitional payment is due this month. 
 
Step 3 - If the hospital is a childrens hospital, a small rural hospital with not more 
than 100 beds or a cancer hospital go to step 4.  If any other type of hospital, divide 
the result of step 2 by the result of step 1, skip step 4 and perform step 5 or 6 as 
appropriate. 
 
Step 4 - If the hospital is a childrens hospital, a small rural hospital with not more 
than 100 beds or a cancer hospital, subtract the result of step 2 from the result of step 
1 and pay .85 times this amount.  Do not perform steps 5-6. 
 
Step 5 - If the result of step 3 is equal to or greater than  .9 but less than 1.0, subtract 
the result of step 2 from the result of step 1, and multiply the difference by .6 and pay 
.85 times this amount. 
 
Step 6 - If the result of step 3 is less than .9, multiply the result of step 1 by .06 and 
pay .85 times this amount. 
 
Step 7 - When the result of step 2 is greater than the result of step 1 for the final 
month of a providers cost report period, do nothing more.  When the result of step 2 
is greater than the result of step 1 for any other month, store all step 1 and step 2 
totals and include these totals with the totals for the next months TOP calculation. 
 
70.4 - Transitional Outpatient Payments (TOPs) for CY 2004 and CY 
2005 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
Section 411 of the Medicare Modernization Act (MMA) provided that for services 
provided on or after January 1, 2004, TOPs are discontinued for all CMHCs and all 
hospitals except for rural hospitals having 100 or fewer beds, sole community hospitals 
(SCHs) which are located in rural areas, and cancer and childrens hospitals.  For  CMHCs and hospitals for which TOPs will be discontinued, interim TOPs are to be paid 
for services furnished through December 31, 2003. 
 
Hold harmless TOPs shall continue for services rendered through December 31, 2005, for 
rural hospitals having 100 or fewer beds.  Cancer hospitals and childrens hospitals are 
permanently held harmless.  In addition, hold harmless TOPs are paid to sole community 
hospitals that are located in rural areas, with respect to services furnished during the 
period that begins with the providers first cost reporting period beginning on or after 
January 1, 2004, and ends on December 31, 2005.  NOTE:  If a qualifying SCH has a 
cost reporting period that begins on a date other than January 1, TOPs and interim TOPs 
payments will not be paid for services furnished after December 31, 2003, and before the 
beginning of the providers next cost reporting period.  If a hospital qualifies as both a 
rural hospital having 100 or fewer beds and as a SCH located in a rural area, for purposes 
of  70.4, the hospital will be treated as a rural hospital having 100 or fewer beds, thereby 
avoiding a gap in payment if the cost reporting period does not begin on January 1. 
 
If the contractor identifies additional hospitals that are eligible for TOPs payments, the 
contractor shall make the appropriate interim payments retroactive to January 1, 2004, for 
small rural hospitals and retroactive to the providers first day of the cost reporting period 
beginning on or after January 1, 2004 for rural SCHs having greater than 100 beds. 
 
For 2004-2005, providers will receive interim TOPs payments of 85 percent, and will 
receive the additional 15 percent (to reach 100 percent) at cost report settlement. 
 
Monthly TOPs calculations that contractors are required to calculate are described below.  
This calculation is effective for services provided between January 1, 2004, and 
December 31, 2005. 
 
Step 1 - Compute the pre-BBA amount for each month by first multiplying the total 
charges for covered services for all OPPS services on claims paid during the 
month and reduce the total charges to cost by multiplying them by the 
outpatient cost-to-charge ratio and then multiplying this amount by the 
provider-specific payment-to-cost ratio (PSPCR). 
 
Step 2 - Add together the total Medicare program payments, unreduced coinsurance 
and deductible applied for all APCs, as well as all outlier payments and 
transitional pass-through payments for drugs, biologicals and/or devices for 
those same claims paid during the month as those used in Step 1.  If the 
result is greater than the result of step 1, go to step 4.  No transitional 
payment is due this month. 
 
Step 3 - If the hospital is a childrens hospital, a small rural hospital with not more 
than 100 beds, a rural sole community hospital, or a cancer hospital, subtract 
the result of step 2 from the result of step 1 and pay .85 times this amount. 
  Step 4 - When the result of step 2 is greater than the result of step 1 for the final 
month of a providers cost report period, do nothing more.  When the result 
of step 2 is greater than the result of step 1 for any other month, store all 
step 1 and step 2 totals and include these totals with the totals for the next 
months TOP calculation. 
 
70.5 - Transitional Outpatient Payments (TOPs) for CY 2006-CY 2008 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
Hold harmless transitional outpatient payments (TOPs) to small rural hospitals and rural 
sole community hospitals were scheduled to expire December 31, 2005.  Section 5105 of 
The Deficit Reduction Act (DRA) of 2005 reinstituted these hold harmless payments 
through December 31, 2008, for rural hospitals having 100 or fewer beds that are not sole 
community hospitals.  Small rural hospitals will continue to receive TOPs payments 
through December 31, 2008.  Sole community hospitals are no longer eligible for TOPs 
payments.  Essential Access Community Hospitals (EACHs) are considered to be sole 
community hospitals under section 1886(d)(5)(D)(iii)(III) of the Act.  Therefore, EACHs 
are not eligible for TOPs payments for CY 2006-CY 2008.  If a hospital qualifies as both 
a small rural hospital and a rural SCH, for purposes of receiving TOPs and interim TOPs 
in 70.5, the hospital will be treated as a rural SCH.  These providers are not eligible for 
TOPs for services furnished on or after January 1, 2006. 
 
The DRA specifies that providers will receive 95 percent of the hold harmless amount 
during 2006, 90% of the hold harmless amount in 2007, and 85 percent of the hold 
harmless amount in 2008.  Interim TOPs payments will continue at 85 percent, and the 
provider will continue to receive additional payments at cost report settlement, similar to 
past policy. 
 
For 2006, providers will continue to receive interim TOPS payments of 85 percent and 
will receive the additional 10 percent (to reach 95 percent) at cost report settlement.  For 
2007, providers will receive the additional 5 percent (to reach 90 percent) at cost report 
settlement.  For 2008, providers will not receive any additional money at cost report 
settlement. 
 
Cancer and children's hospitals are permanently held harmless and will continue to 
receive TOPs payments in 2006 and beyond. 
 
Monthly TOPs calculations that contractors are required to calculate are described below.  
This calculation is effective for services provided between January 1, 2006, and 
December 31, 2008. 
 
Step 1 - Compute the pre-BBA amount for each month by first multiplying the total 
charges for covered services for all OPPS services on claims paid during the 
month and reduce the total charges to cost by multiplying them by the 
outpatient cost-to-charge ratio and then multiplying this amount by the 
provider-specific payment-to-cost ratio (PSPCR).   
Step 2 - Add together the total Medicare program payments, unreduced coinsurance 
and deductible applied for all APCs, as well as all outlier payments and 
transitional pass-through payments for drugs, biologicals and/or devices for 
those same claims paid during the month as those used in Step 1.  If the 
result is greater than the result of step 1, go to step 59.  No transitional 
payment is due this month. 
 
Step 3 - If the hospital is a childrens hospital, a small rural hospital that is not also a 
SCH, EACH, or a cancer hospital, go to step 4. 
 
Step 4 - If the hospital is a childrens hospital, a small rural hospital with not more 
than 100 beds or a cancer hospital, subtract the result of step 2 from the 
result of step 1 and pay .85 times this amount. 
 
Step 5 - When the result of step 2 is greater than the result of step 1 for the final 
month of a providers cost report period, do nothing more.  When the result 
of step 2 is greater than the result of step 1 for any other month, store all 
step 1 and step 2 totals and include these totals with the totals for the next 
months TOP calculation. 
 
70.6 - Transitional Outpatient Payments (TOPs) for CY 2009 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
Hold harmless transitional outpatient payments (TOPs) to small rural hospitals and rural 
sole community hospitals that were scheduled to expire December 31, 2008.  Section 147 
of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) extends 
the hold harmless provision for small rural hospitals with 100 or fewer beds through 
December 31, 2009, at 85 percent of the hold harmless amount.  Section 147 also 
provides 85 percent of the hold harmless amount from January 1, 2009, through 
December 31, 2009, to sole community hospitals with 100 or fewer beds.  Essential 
Access Community Hospitals (EACHs) are considered to be sole community hospitals 
under section 1886(d)(5)(D)(iii)(III) of the Act.  Therefore, EACHs are also eligible for 
TOPs for CY 2009. 
 
Cancer and children's hospitals are permanently held harmless and continue to receive 
TOPs payments in CY 2009. 
 
Monthly TOPs calculations that contractors are required to calculate are described below.  
This calculation is effective for services provided between January 1, 2009, and 
December 31, 2009. 
 
Step 1 - Compute the pre-BBA amount for each month by first multiplying the total 
charges for covered services for all OPPS services on claims paid during the 
month and reduce the total charges to cost by multiplying them by the  outpatient cost-to-charge ratio and then multiplying this amount by the 
provider-specific payment-to-cost ratio (PSPCR). 
 
Step 2 - Add together the total Medicare program payments, unreduced coinsurance 
and deductible applied for all APCs, as well as all outlier payments 
(including reconciled outlier payments and the time value of money) and 
transitional pass-through payments for drugs, biologicals and/or devices for 
those same claims paid during the month as those used in Step 1.  If the 
result is greater than the result of step 1, go to step 4.  No transitional 
payment is due this month. 
 
Step 3 - If the hospital is a childrens hospital, a cancer hospital, a rural hospital with 
100 or fewer beds, or a sole community hospital (including EACHs) with 
100 or fewer beds, subtract the result of step 2 from the result of step 1 and 
pay .85 times this amount.  If the hospital is not one of the hospital types 
listed above, no payment is made. 
 
Step 4 - When the result of step 2 is greater than the result of step 1 for the final 
month of a providers cost report period, do nothing more.  When the result of step 2 
is greater than the result of step 1 for any other month, store all step 1 and step 2 
totals and include these totals with the totals for the next months TOP calculation. 
 
70.7 - Transitional Outpatient Payments (TOPs) for CY 2010 through 
CY 2012 
(Rev. 2531, 08-24-12, Effective:10-01-12, Implementation:10-01-12) 
 
Hold harmless transitional outpatient payments (TOPs) to small rural hospitals and rural 
sole community hospitals were scheduled to expire December 31, 2009. Section 3121 of 
the Affordable Care Act extended the hold harmless provision for small rural hospitals 
with 100 or fewer beds through December 31, 2010, at 85 percent of the hold harmless 
amount.  Sole Community Hospitals (SCHs) and Essential Access Community Hospitals 
(EACHs) are no longer limited to those with 100 or fewer beds effective January 1, 2010 
through December 31, 2010 and these providers will receive TOPs payments at 85 
percent of the hold harmless amount until December 31, 2010.  Section 108 of the 
Medicare and Medicaid Extenders Act of 2010 (MEA) further extended the hold 
harmless provision for rural hospitals with 100 or fewer beds and to all SCHs (and 
EACHs) regardless of bed size through December 31, 2011 at 85 percent of the hold 
harmless amount.  
 
Section 308 of the Temporary Payroll Tax Cut Continuation Act of 2011 (TPTCCA) as 
amended by section 3002 of the Middle Class Tax Relief and Jobs Creation Act, extends 
the Outpatient Hold-Harmless provision, effective for dates of service on or after January 
1, 2012, through December 31, 2012, to rural hospitals with 100 or fewer beds.  
 
Section 308 of the Temporary Payroll Tax Cut Continuation Act of 2011 also extended 
through February 29, 2012 the hold harmless provision for SCHs (and EACHs) without  the bed size limitation.  However, section 3002 of the Middle Class Tax Relief and Jobs 
Creation Act extended through December 31, 2012, the hold harmless provision for 
SCHs (and EACHs) that have no more than 100 beds. 
 
Cancer and children's hospitals are permanently held harmless under section 
1833(t)(7)(D)(ii) of the Social Security Act. 
 
Monthly TOPs calculations that contractors are required to calculate are described below.  
This calculation is effective for services provided by SCH (and EACHs) with more than 
100 beds between January 1, 2010 and February 29, 2012.  This calculation is effective 
for services provided by rural hospitals with 100 or fewer beds and SCHs (and EACHs) 
with 100 or fewer beds between January 1, 2010 and December 31, 2012. 
 
Step 1 - Compute the pre-BBA amount for each month by first multiplying the total 
charges for covered services for all OPPS services on claims paid during the 
month and reduce the total charges to cost by multiplying them by the 
outpatient cost-to-charge ratio and then multiplying this amount by the 
provider-specific payment-to-cost ratio (PSPCR).  
 
Step 2 - Add together the total Medicare program payments, unreduced coinsurance 
and deductible applied for all APCs, as well as all outlier payments 
(including reconciled outlier payments and the time value of money) and 
transitional pass-through payments for drugs, biologicals and/or devices for 
those same claims paid during the month as those used in Step 1.  If the 
result is greater than the result of step 1, go to step 4.  No transitional 
payment is due this month.  
 
Step 3 - If the hospital is a childrens hospital, a rural hospital with 100 or fewer beds, 
or a sole community hospital (including EACHs), subtract the result of step 
2 from the result of step 1 and pay .85 times this amount.  If the hospital is 
not one of the hospital types listed above, no payment is made.  
 
Step 4 - When the result of step 2 is greater than the result of step 1 for the final month of 
a providers cost report period, do nothing more.  When the result of step 2 is greater than 
the result of step 1 for any other month, store all step 1 and step 2 totals and include these 
totals with the totals for the next months TOP calculation. 
 
70.8 - TOPs Overpayments 
(Rev. 2141, Issued: 01-24-11, Effective: 01-01-11, Implementation: 01-03-11) 
 
Because the revised TOP calculations are often implemented in the system after their 
effective date, overpayments or underpayments in interim TOPs to providers are 
expected. 
 
Unless directed by CMS, retroactive calculations of monthly interim TOP amounts are 
not necessary because any difference in interim TOP payments and actual TOP amounts  determined on the cost report will be taken into account in the cost report settlement 
process, including tentative settlements. 
 
If mutually agreed upon by both the contractor and the provider, the contractor can pay 
less than 85 percent of the monthly TOP payment to that provider, to avoid significant 
overpayments throughout the year that must be paid back to the contractor at cost report 
settlement. 
 
Contractors should advise providers of the revised TOP calculations and other changes in 
OPPS using their normal communication protocols (Web site, regularly scheduled 
bulletins, electronic bulletin boards, or listserv). 
 
80 - Shared system Requirements to Incorporate Provider-Specific 
Payment-to-Cost Ratios into the Calculation of Interim Transitional 
Outpatient Payments Under OPPS 
(Rev. 1, 10-03-03) 
A-01-44 
 
80.1 - Background - Payment-to-Cost Ratios 
(Rev. 1060, Issued: 09-18-06, Effective: 10-01-06, Implementation: 10-02-06) 
 
Under regulations at 42 CFR 419.70, hospitals and community mental health centers 
(CMHCs) that are subject to the OPPS may be eligible to receive a transitional corridor 
payment, frequently referred to as a TOP.  The purpose of the TOP is to restore some of 
the decrease in the payment that a provider may experience under the OPPS.  Providers 
that are eligible for TOPs receive monthly interim payments.  However, the final TOP 
amount is calculated based on the providers settled cost report.  Final TOP payments for 
a calendar year are based on the difference between what the provider was paid under the 
OPPS, and the providers pre-Balanced Budget Act (BBA) amount.  The pre-BBA 
amount is an estimate of what the provider would have been paid during the calendar 
year for the same services under the system that was in effect prior to OPPS.  If the pre-
BBA amount exceeds the actual OPPS payments a provider received during a calendar 
year, qualifying cancer centers and childrens hospitals are permanently held harmless, 
and will receive the entire amount of the difference between their OPPS payments and 
their pre-BBA amount.  Other hospitals and CMHCs may receive a portion of the 
difference as a TOP, depending on the rules listed above. 
 
The pre-BBA amount is calculated by multiplying the providers PCR, based on the 
providers base year cost report, times the reasonable costs the provider incurred during a 
calendar year to furnish the services that were paid under the OPPS.  For most hospitals 
and CMHCs, the base year cost report used to calculate the payment-to-cost ratio is the 
cost report that ended during calendar year 1996.  However, if a hospital or CMHC did 
not file a cost report that ended in calendar year 1996, the payment-to cost ratio will be 
calculated using the providers first cost report that ended after calendar year 1996 and 
before calendar year 2001. 
  80.2 - Using the Newly Calculated PCR for Determining Final TOP 
Amounts 
(Rev. 1, 10-03-03) 
A-01-44 
 
Final TOP amounts are determined for each calendar year, based on the calendar year or 
portion of a calendar year that falls within a providers cost reporting period.  The PCR is 
one factor used on Worksheet E, Part B, of the hospital cost report (Form CMS-2552 - 
96), and Worksheet J-3 of the CMHC cost report (Form CMS-2088) in calculating the 
providers final TOP amount. 
 
Once calculated, the providers PCR will be used to calculate the providers pre- BBA 
amount for all calendar years for which the provider may be eligible for a TOP payment.  
The PCR will not change each year. 
 
80.3 - Using the Newly Calculated PCR for Determining Interim TOPs 
(Rev. 1060, Issued: 09-18-06, Effective: 10-01-06, Implementation: 10-02-06) 
 
Providers that are eligible for TOPs receive monthly interim payments.  Initially, the 
calculation of the monthly payment used a national uniform PCR of 80 percent for all 
providers.  After A/B MACs (A) calculated a provider-specific PCR, no later than 
October 1, 2001, that PCR shall be used in calculating monthly interim payments to the 
provider.  The shared systems maintainers will populate the PCR field of the Provider 
Specific File (formerly cost-of-living adjustment field) to reflect the provider-specific 
PCR. 
 
The shared systems maintainers will revise the monthly TOPs calculation to use the 
provider-specific PCR, taken from the Provider Specific File, in lieu of the national PCR 
of 80 percent.  If the value in the PCR field in the Provider Specific File is blank (i.e., the 
A/B MAC (A) has not yet calculated a provider-specific PCR), the A/B MAC (A) must 
immediately calculate a provider-specific PCR and cannot continue to use the national 
PCR of 80 percent.  The change to the provider-specific file and the change in the 
calculation of TOPs payments were effective on July 1, 2001. 
 
90 - Discontinuation of Value Code 05 Reporting 
(Rev. 1777; Issued:  07-24-09; Effective Date:  01-01-08; Implementation Date:  01-
04-10) 
 
Value code 05, Professional Component Included in Charges and Also Billed Separately 
to Carrier, was discontinued with the implementation of OPPS, including claims for 
Critical Access Hospitals and other hospitals not subject to OPPS. 
 
100 - Medicare Summary Notice (MSN) 
(Rev. 1, 10-03-03) 
  Effective for claims with dates of service on or after August 1, 2000, A/B MACs (A) 
must modify the MSN for services provided by providers under OPPS to reflect the 
addition of an APC number.  This APC number should be placed next to the HCPCS 
code included under the Services Provided column, and must be within a parenthesis.  
The coinsurance column should reflect the coinsurance amount for which the beneficiary 
is responsible. 
 
In addition, the back of the notice must be modified.  In place of the current language, the 
notice should reflect the following language: 
 
THE AMOUNT YOU MAY BE BILLED for Part B services includes: 
 
Annual deductible, the first $100 of Medicare Part B charges each year; 
 
After the deductible has been met for the year, depending on services received, a 
coinsurance amount (20 percent of the amount charged), or a fixed copayment for 
each service; and 
 
Charges for services or supplies that are not covered by Medicare.  You may not 
have to pay for certain denied services.  If so, a note on the front will tell you. 
 
The Spanish version should read as follows: 
 
La cantidad por la cual usted podria ser facturado incluye: 
 
Un deducible anual, los primeros $100 de Medicare Parte B de cargos aprobados 
cada ano, Despues de que haya cumplido con el deducible, dependiendo de los 
servicios recibidos, un coaseguro (20% de la cantidad cobrada), o un copago fijo 
por cada servicio; y  
 
Cargos por servicios/suministros que no estan cubiertos por Medicare.  Es posible 
que usted no tenga que pagar por ciertos cargos se servicios denegados.  De ser el 
caso, una NOTA en la parte del frente le indicara. 
 
Also, A/B MACs (A) print the following message in the General Information Section: 
 
If the coinsurance amount you paid is more than the amount shown on your 
notice, you are entitled to a refund.  Please contact your provider. 
 
Spanish Version:  
 
Si la cantidad de coaseguro que usted pago es mayor que la cantidad que muestra 
su notificacion, tiene derecho a un reembolso.  Por favor comuniquese con su 
proveedor. 
 
110 - Procedures for Submitting Late Charges Under OPPS  (Rev. 1, 10-03-03) 
A-01-93 
 
Hospitals and CMHCs may not submit a late charge bill (code 5 in the third position of 
the bill type) for bill types 12X, 13X, 14X, and 76X effective for claims with dates of 
service on or after August 1, 2000.  They must submit an adjustment bill for any services 
required to be billed with HCPCS codes, units and line item dates of service.  A 7 in 
the third position of the bill type indicates an adjustment.  See Chapter 25 for additional 
instructions for reporting adjustments.  Separate bills containing only late charges will 
not be permitted for these bill types. 
 
The submission of an adjustment bill, instead of a late charge bill, will ensure proper 
duplicate detection, bundling, correct application of coverage policies and proper editing 
by OCE and payment under OPPS. 
 
120 - General Rules for Reporting Outpatient Hospital Services 
(Rev. 3019, Issued: 08-07-14, Effective: 01-01-12, ICD-10: Upon Implementation of 
ICD- 10, Implementation: 09-08-14, ICD-10: Upon Implementation of ICD- 10)  
 
Hospitals use the electronic ASC X12 837 institutional claim transaction format or the 
hardcopy Form CMS-1450 to bill for covered outpatient services (type of bill 13X or 
83X, and 85X).  The ASC X12 837 institutional claim transaction is required unless the 
hospital meets certain exception criteria.  These criteria are described in Chapter 24, 
90-90.5.4 of this manual. 
 
See: 
 
  Medicare Benefit Policy Manual, Chapter 6, for definition of an outpatient; 
  Medicare Claims Processing Manual, Chapter 3, Inpatient Part A Hospital Billing, 
for outpatient services treated as inpatient services; 
  Medicare Claims Processing Manual Chapter 24, 90-90.5.4 for when paper 
billing is permissible; and 
  Medicare Claims Processing Manual, Chapter 25, for general instructions for 
completing the hospital claim data set. 
 
The HCPCS code is used to describe services where payment is under the Hospital OPPS 
or where payment is under a fee schedule or other outpatient payment methodology.  
Line item dates of service are reported for every line where a HCPCS code is required 
under OPPS.  For providers paid via OPPS, A/B MACs (A) return to provider (RTP) bills 
where a line item date of service is not entered for each HCPCS code reported, or if the 
line item dates of service reported are outside of the statement-covers period.  This 
includes those claims where the from and through dates are equal. 
 
NOTE:  Effective for dates of service on or after January 1, 2008, the A/B MAC (A) no 
longer processes claims on TOB 83X for ASCs.  All IHS ASC providers must submit 
their claims to the designated A/B MAC (B).   
120.1 - Bill Types Subject to OPPS 
(Rev. 795, Issued:  12-30-05; Effective:  10-01-04; Implementation: 04-03-06) 
 
The following bill types are subject to OPPS: 
 
  All outpatient hospital Part B bills (bill types 12X, 13X with condition code 41 
14X and 13X without condition code 41) with the exception of bills from 
hospitals in Maryland, Indian Health Service, CAHs, hospitals located in Saipan, 
American Samoa, the Virgin Islands and Guam; and hospitals that provide Part B 
only services to their inpatients.  Effective 4/1/06 the 14X type of bill is for non-
patient laboratory specimens and is no longer applicable for partial hospitalization 
billing. 
 
  CMHC bills (bill type 76X); 
 
  CORF claims for hepatitis B vaccines (bill type 75X); 
 
  HHA claims for antigens, hepatitis B vaccines, splints and casts  (bill type 34X); 
and 
 
  For splints, casts and antigens when provided to hospice patients for treatment of 
a non-terminal illness by other than a hospital outpatient department.  This 
requires reporting of condition code 07. 
 
As a result, A/B MACs (A) shall instruct CORFs, HHAs, and other providers to report 
HCPCS for these services, in order to assure payment under this system.  Payment will 
continue to be made for vaccines provide to hospice patients by the Medicare A/B MAC 
(B).  The appropriate HCPCS codes are as follows: 
 
Categories of Services Requiring HCPCS Codes 
Category  HCPCS Codes 
Antigens  95144-95149, 95165, 95170, 95180, and 95199 
Vaccines  90657-90659, 90732, 90744, 90746, 90747, 90748, G0008, G0009, and 
G0010 
Splints  29105-29131, 29505-29515 
Casts  29000-29085, 29305, 29325-29445, 29450, 29700-29750, 29799 
 
NOTE:  A/B MACs (HHH) shall advise their HHAs to report the above HCPCS codes 
with the exception of vaccines under Revenue Code 0550 (Skilled Nursing).  The only 
time revenue code 0550 may be reported is when the HHA is billing for antigens, splints, 
or casts.  See Chapter 18 for the reporting of vaccines by HCPCS codes. 
 
120.2 - Routing of Claims 
(Rev. 1, 10-03-03) 
A-02-00-026   
Effective April 1, 2002, the following types of bills (TOBs) should be rerouted back to 
the OPPS OCE: 
 
TOB  Description 
22X  Skilled Nursing Facility (SNF) Inpatient Part B 
23X  SNF/Outpatient 
24X  SNF Part B 
32X  Home Health Agency (HHA) visits under a Part B Plan of Treatment 
(POT) 
33X  HHA visits under a Part A (POT) 
34X  HHA visits under a POT 
71X  Rural Health Clinic 
72X  Hospital Based or Independent Renal Dialysis Center 
73X  Federally Qualified Health Center 
74X  Other Rehabilitation Facility 
75X  Comprehensive Outpatient Rehabilitation Facility (CORF) 
81X  Hospice (non-hospital based) 
82X  Hospice (hospital based) 
 
Claims containing the above TOBs, other than 32X and 33X, with services that span 
beyond April 1, 2001, must be split prior to their submittal.  For example, if a claim 
contains services prior to and after April 1, 2002, the provider must submit two separate 
claims.  One for the services prior to April 1, 2002, which will be routed to the non-OPPS 
OCE and another claim for the services April and later which will be routed to the OPPS 
OCE.  In the event the A/B MAC (A) receives a claim containing pre- and post-April 1, 
2002, dates of service, it returns it to the provider requesting that the claim be split as 
indicated above. 
 
Claims containing the above TOBs with dates of service January 1, 2002, through March 
31, 2002, should continue to be routed through the non-OPPS OCE. 
 
NOTE:  TOBs (12X, 13X, 14X, and 85X) from Critical Access Hospitals, Maryland 
Hospitals, Indian Health Service Hospitals, U.S.  Virgin Island Hospitals, and those 
hospitals located in the Pacific (American Samoa, Guam, and Saipan) do not have to be 
rerouted since they are sent through the non-OPPS OCE. 
 
140 - All-Inclusive Rate Hospitals 
(Rev. 1, 10-03-03) 
A-01-93, A-03-066 
 
All-inclusive rate hospitals are required to code with HCPCS the outpatient services they 
provide and bill charges at the HCPCS level.  In addition, they are required to follow bill 
reporting instructions contained in 30.  Unlike other hospitals, all-inclusive rate 
hospitals do not have outpatient departmental cost-to-charge ratios from prior year cost 
reports that may be used for calculating outlier payments, device pass-through payments,  or interim transitional corridor payments.  As a result, A/B MACs (A) use the statewide 
average urban or rural outpatient cost-to-charge ratio, as appropriate, for all-inclusive rate 
hospitals.  In the future, once cost and charge data for an all-inclusive rate hospital is 
available, the A/B MAC (A) will be able to apply a cost-to-charge ratio that is specific to 
the hospital. 
 
141 - Maryland Waiver Hospitals 
(Rev. 771; Issued: 12-02-05; Effective Date: 01-03-06; Implementation Date: 01-03-
06) 
 
In accordance with 1814 (b)(3) of the Act, services provided by hospitals in Maryland 
subject to the Health Services Cost Review Commission are paid according to the terms 
of the waiver, that is 94% of submitted charges subject to any unmet Part B deductible 
and coinsurance. Payment should not be made under a fee schedule or other payment 
method for outpatient items and services provided except the following situations: 
 
  Non-patient laboratory specimens are paid under the clinical diagnostic laboratory 
fee schedule (bill type 14X); and  
 
Ambulance services which are subject to the ambulance fee schedule. 
 
150 - Hospitals That Do Not Provide Outpatient Services 
(Rev. 1, 10-03-03) 
HO-440.1, A-00-21, A-02-064 
 
Covered Part B-only services furnished to inpatients when they are furnished by a 
hospital that does no Medicare billing for hospital outpatients services under Part B are 
excluded from OPPS.  The Part B-only services, which are payable for hospital inpatients 
who have either exhausted their Part A benefits or who are not entitled to Part A benefits, 
are specified in Chapter 3.  These services include, but are not limited to, diagnostic tests; 
x-ray and radioactive isotope therapy; surgical dressings; limb braces and trusses; and 
artificial limbs and eyes.  Medicare payment for excluded Part B-only services furnished 
by these hospitals is determined using the method under which the hospital was paid prior 
to OPPS. 
 
Hospitals must notify their A/B MAC (A) if they do not submit claims for outpatient Part 
B services, so that their claims can be excluded from the OPPS.  The hospital must also 
notify the A/B MAC (A) if it begins to furnish Part B outpatient services.  OPPS will 
apply at that time unless other exclusions are applicable. 
 
160 - Clinic and Emergency Visits 
(Rev. 1445, Issued:  02-08-08; Effective:  01-01-08; Implementation:  03-10-08) 
 
CMS has acknowledged from the beginning of the OPPS that CMS believes that CPT 
Evaluation and Management (E/M) codes were designed to reflect the activities of 
physicians and do not describe well the range and mix of services provided by hospitals  during visits of clinic and emergency department patients.  While awaiting the 
development of a national set of facility-specific codes and guidelines, providers should 
continue to apply their current internal guidelines to the existing CPT codes.  Each 
hospitals internal guidelines should follow the intent of the CPT code descriptors, in that 
the guidelines should be designed to reasonably relate the intensity of hospital resources 
to the different levels of effort represented by the codes.  Hospitals should ensure that 
their guidelines accurately reflect resource distinctions between the five levels of codes. 
 
Effective January 1, 2007, CMS is distinguishing between two types of emergency 
departments: Type A emergency departments and Type B emergency departments. 
 
A Type A emergency department is defined as an emergency department that is available 
24 hours a day, 7 days a week and is either licensed by the State in which it is located 
under applicable State law as an emergency room or emergency department or it is held 
out to the public (by name, posted signs, advertising, or other means) as a place that 
provides care for emergency medical conditions on an urgent basis without requiring a 
previously scheduled appointment. 
 
A Type B emergency department is defined as an emergency department that meets the 
definition of a dedicated emergency department as defined in 42 CFR 489.24 under the 
EMTALA regulations.  It must meet at least one of the following requirements: 
 
  (1)  It is licensed by the State in which it is located under applicable State law as 
an emergency room or emergency department; 
 
  (2)  It is held out to the public (by name, posted signs, advertising, or other 
means) as a place that provides care for emergency medical conditions on an 
urgent basis without requiring a previously scheduled appointment; or 
 
  (3)  During the calendar year immediately preceding the calendar year in which 
a determination under 42 CFR 489.24 is being made, based on a 
representative sample of patient visits that occurred during that calendar 
year, it provides at least one-third of all of its outpatient visits for the 
treatment of emergency medical conditions on an urgent basis without 
requiring a previously scheduled appointment. 
 
Hospitals must bill for visits provided in Type A emergency departments using CPT 
emergency department E/M codes.  Hospitals must bill for visits provided in Type B 
emergency departments using the G-codes that describe visits provided in Type B 
emergency departments. 
 
Hospitals that will be billing the new Type B ED visit codes may need to update their 
internal guidelines to report these codes. 
  Emergency department and clinic visits are paid in some cases separately and in other 
cases as part of a composite APC payment.  See section 10.2.1 of this chapter for further 
details. 
 
 
160.1 - Critical Care Services 
(Rev. 2141, Issued: 01-24-11, Effective: 01-01-11, Implementation: 01-03-11) 
 
Hospitals should separately report all HCPCS codes in accordance with correct coding 
principles, CPT code descriptions, and any additional CMS guidance, when available.  
Specifically with respect to CPT code 99291 (Critical care, evaluation and management 
of the critically ill or critically injured patient; first 30-74 minutes), hospitals must follow 
the CPT instructions related to reporting that CPT code.  Prior to January 1, 2011, any 
services that CPT indicates are included in the reporting of CPT code 99291 (including 
those services that would otherwise be reported by and paid to hospitals using any of the 
CPT codes specified by CPT) should not be billed separately by the hospital.  Instead, 
hospitals should report charges for any services provided as part of the critical care 
services. In establishing payment rates for critical care services, and other services, CMS 
packages the costs of certain items and services separately reported by HCPCS codes into 
payment for critical care services and other services, according to the standard OPPS 
methodology for packaging costs. 
 
Beginning January 1, 2011, in accordance with revised CPT guidance, hospitals that 
report in accordance with the CPT guidelines will begin reporting all of the ancillary 
services and their associated charges separately when they are provided in conjunction 
with critical care.  CMS will continue to recognize the existing CPT codes for critical 
care services and will establish payment rates based on historical data, into which the cost 
of the ancillary services is intrinsically packaged.  The I/OCE conditionally packages 
payment for the ancillary services that are reported on the same date of service as critical 
care services in order to avoid overpayment.  The payment status of the ancillary services 
does not change when they are not provided in conjunction with critical care services.  
Hospitals may use HCPCS modifier -59 to indicate when an ancillary procedure or 
service is distinct or independent from critical care when performed on the same day but 
in a different encounter. 
 
Beginning January 1, 2007, critical care services will be paid at two levels, depending on 
the presence or absence of trauma activation.  Providers will receive one payment rate for 
critical care without trauma activation and will receive additional payment when critical 
care is associated with trauma activation. 
 
To determine whether trauma activation occurs, follow the National Uniform Billing 
Committee (NUBC) guidelines in the Claims Processing Manual, Pub 100-04, Chapter 
25, 75.4 related to the reporting of the trauma revenue codes in the 68x series.  The 
revenue code series 68x can be used only by trauma centers/hospitals as licensed or 
designated by the state or local government authority authorized to do so, or as verified 
by the American College of Surgeons.  Different subcategory revenue codes are reported  by designated Level 1-4 hospital trauma centers. Only patients for whom there has been 
prehospital notification based on triage information from prehospital caregivers, who 
meet either local, state or American College of Surgeons field triage criteria, or are 
delivered by inter-hospital transfers, and are given the appropriate team response can be 
billed a trauma activation charge. 
 
When critical care services are provided without trauma activation, the hospital may bill 
CPT code 99291, Critical care, evaluation and management of the critically ill or 
critically injured patient; first 30-74 minutes (and 99292, if appropriate).  If trauma 
activation occurs under the circumstances described by the NUBC guidelines that would 
permit reporting a charge under 68x, the hospital may also bill one unit of code G0390, 
which describes trauma activation associated with hospital critical care services.  
Revenue code 68x must be reported on the same date of service.  The OCE will edit to 
ensure that G0390 appears with revenue code 68x on the same date of service and that 
only one unit of G0390 is billed.  CMS believes that trauma activation is a one-time 
occurrence in association with critical care services, and therefore, CMS will only pay for 
one unit of G0390 per day. 
 
The CPT code 99291 is defined by CPT as the first 30-74 minutes of critical care.  This 
30 minute minimum has always applied under the OPPS.  The CPT code 99292, Critical 
care, evaluation and management of the critically ill or critically injured patient; each 
additional 30 minutes, remains a packaged service under the OPPS, so that hospitals do 
not have the ongoing administrative burden of reporting precisely the time for each 
critical service provided.  As the CPT guidelines indicate, hospitals that provide less than 
30 minutes of critical care should bill for a visit, typically an emergency department visit, 
at a level consistent with their own internal guidelines. 
 
Under the OPPS, the time that can be reported as critical care is the time spent by a 
physician and/or hospital staff engaged in active face-to-face critical care of a critically ill 
or critically injured patient.  If the physician and hospital staff or multiple hospital staff 
members are simultaneously engaged in this active face-to-face care, the time involved 
can only be counted once. 
 
  Beginning in CY 2007 hospitals may continue to report a charge with RC 68x 
without any HCPCS code when trauma team activation occurs.  In order to 
receive additional payment when critical care services are associated with trauma 
activation, the hospital must report G0390 on the same date of service as RC 68x, 
in addition to CPT code 99291 (or 99292, if appropriate.) 
 
  Beginning in CY 2007 hospitals should continue to report 99291 (and 99292 as 
appropriate) for critical care services furnished without trauma team activation.  
CPT 99291 maps to APC 0617 (Critical Care).  (CPT 99292 is packaged and not 
paid separately, but should be reported if provided.) 
 
Critical care services are paid in some cases separately and in other cases as part of a 
composite APC payment.  See Section 10.2.1 of this chapter for further details.   
Future updates will be issued in a Recurring Update Notification. 
 
170 - Hospital and CMHC Reporting Requirements for Services 
Performed on the Same Day 
(Rev. 11937; Issued: 03-31-23; Effective: 04-01-23; Implementation: 04-03-23) 
When reporting a HCPCS code for a separately payable, non-repetitive hospital OPPS 
service, report charges for all services and supplies associated with that service that were 
furnished on the same date (services subject to the 3-day payment window are an 
exception to this OPPS policy). 
 
When a hospital provides electroconvulsive therapy (ECT) on the same day as partial 
hospitalization services, both the ECT and partial hospitalization services should be 
reported on the same hospital claim. In this instance, the claim should contain condition 
code 41. As noted above, report charges for all services and supplies associated with the 
ECT service that were furnished on the same date(s) on the same claim. 
 
When a hospital provides non-partial hospitalization mental health services to a partial 
hospitalization patient, all partial hospitalization services and non-partial hospitalization 
mental health services should be reported on the same hospital claim with condition code 
41.  
 
NOTE: For a list of revenue codes that are considered repetitive services, see Chapter 1, 
50.2.2. 
 
EXAMPLE 1 
If a patient receives a laboratory service on May 1st and has an emergency room (ER) 
visit on the same day, one bill may be submitted since the laboratory service is paid under 
the clinical diagnostic laboratory fee schedule and not subject to OPPS. In this situation, 
the laboratory service was not related to the ER visit or done in conjunction with the ER 
visit. 
 
EXAMPLE 2 
If the patient receives physical therapy on July 7th, 29th, and 30th, and receives services 
in the ER on July 28th, the provider shall submit separate claims since the isolated 
individual service (ER visit) did not occur on the same day as the repetitive service 
(physical therapy). 
 
EXAMPLE 3 
If a patient has an ER visit (OPPS service) on May 15th and also receives a physical 
therapy visit (repetitive, non-OPPS service) on the same day (as well as other physical 
therapy visits provided May 1st through May 31st) the services shall be billed on separate 
claims. The provider would bill the ER service on one claim and the therapy services on 
the monthly repetitive claim. Please note, as stated above, the procedures for billing  repetitive services remains in effect under OPPS. Therefore, in this example, it would not 
be appropriate to submit one therapy claim for services provided May 1st through May 
15th, a second claim for the ER visit provided on May 15th, and a third claim for therapy 
visits provided on May 16th through May 31st. Providers shall not split repetitive 
services in mid-month when another outpatient service occurs. 
EXAMPLE 4 
 
If a patient receives chemotherapy, or radiation therapy, clinical laboratory services, a CT 
scan and an outpatient consultation on the same date of service, the hospital may report 
all services on the same claim or may submit multiple claims. Chemotherapy, while 
commonly administered in multiple encounters across a span of time, is not a repetitive 
service as defined in Chapter 1, Section 50.2.2. The clinical laboratory services may be 
reported either on the single consolidated claim or on a separate claim that reports the 
services furnished on the same date as the laboratory services. 
 
EXAMPLE 5 
If a partial hospitalization patient receives remote non-partial hospitalization mental 
health services, the hospital should report all partial hospitalization services and non-
partial hospitalization remote mental health services on the same claim.  For each date of 
service with at least 3 partial hospitalization services (see section 260.1 of this chapter), 
all partial hospitalization services will be packaged under the hospital-based partial 
hospitalization APC 5863.  When APC 5863 is assigned, all remote non-partial 
hospitalization mental health services on the same date of service will be packaged under 
APC 8010 with no additional payment. For any dates of service with less than 3 partial 
hospitalization services, each remote non-partial hospitalization mental health service 
will be paid at the corresponding APC payment rate or packaged under the daily mental 
health composite APC 8010. 
 
180 - Accurate Reporting of Surgical and Medical Procedures and 
Services 
(Rev. 1109, Issued: 11-09-06, Effective: 10-01-05, Implementation: 04-02-07) 
 
180.1 - General Rules 
(Rev. 1325; Issued:  08-29-07; Effective:  01-01-08; Implementation:  01-07-08) 
 
Hospitals subject to OPPS are required, beginning with claims with dates of service on or 
after August 1, 2000, to report in Form Locator 6 Statement Covers Period From Date 
the earliest date that services were rendered.  As a result, preoperative laboratory services 
will always have a line item date of service within the from and through dates on the 
claim. 
 
Indian Health Service hospitals continue to bill for surgeries utilizing bill type 83X.  For 
other hospitals outpatient surgery subject to the ASC payment limit with dates of service 
prior to August 1, 2000, is reported on bill type 83X, and surgeries performed August 1, 
2000 and later are reported with bill type 13X.   
NOTE:  Effective for dates of service on or after January 1, 2008, the A/B MAC (A) no 
longer processes claims on TOB 83X for ASCs.  All IHS ASC providers must submit 
their claims to the designated A/B MAC (B). 
 
180.2 - Selecting and Reporting Procedure Codes 
(Rev. 1, 10-03-03) 
A-01-50, A3-3626.4.B.3 
 
Using medical records as basic sources, hospitals report HCPCS surgical procedure codes 
for outpatient surgery in FL 44 adjacent to the revenue code for the operating room or 
other room used for the surgery.  The bill includes the hospitals charges for the surgery 
as well as all other services provided on the day the procedure was performed. 
 
When multiple surgical procedures are performed at the same session, it is not necessary 
to bill separate charges for each procedure.  It is acceptable to bill a single charge under 
the revenue code that describes where the procedure was performed (e.g., operating 
room, treatment room, etc.) on the same line as one of the surgical procedure 
CPT/HCPCS codes and bill the other procedures using the appropriate CPT/HCPCS code 
and the same revenue code, but with 0 charges in the charge field. 
 
In the past, some hospitals billed a single emergency room (ER) visit charge, which 
included charges for any surgical procedures that were performed in the ER at the time of 
the ER visit.  Under the OPPS, CMS requires hospitals to bill a separate charge for ER 
visits and surgical procedures effective with claims with dates of service on or after July 
1, 2001.  If a surgical procedure is performed in the ER, the charge for the procedure 
must be billed with the emergency room revenue code.  If an ER visit occurs on the same 
day, a charge should be billed for the ER visit and a separate charge should be billed for 
the surgical procedure(s) performed.  As described above, a single charge may be billed 
for all surgical procedures if more than one is performed in the ER during the same 
session. 
 
EXAMPLE:  The following is an example of how a claim should be completed under 
these reporting requirements: 
 
Date of   Revenue   HCPCS  Modifier  Charges 
Service  Code 
7/5/2001  0450  99283  25  $150 
7/5/2001  0450  12011    $300 
7/5/2001  0450  12035     
7/5/2001  0250      $70  Date of   Revenue   HCPCS  Modifier  Charges 
Service  Code 
7/5/2001  0270      $85 
 
The charge for both surgical procedures in this example is reflected in the $300 charge 
shown on the line with procedure code 12011. 
 
180.3 - Unlisted Service or Procedure 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
An unlisted HCPCS code represents an item, service, or procedure for which there is no 
specific CPT or Level II alphanumeric HCPCS code.  The CPT code book lists a number 
of unlisted service or procedure codes, which can be found at the end of a section or 
subsection.  Alternatively, a summary list of the unlisted CPT codes can be found in the 
Guidelines section for each chapter of the CPT code book.  The long descriptors for these 
codes start with the term Unlisted and the last 2 digits of the codes often end in 99. 
 
Under the OPPS, CMS generally assigns the unlisted service or procedure codes to the 
lowest level APC within the most appropriate clinically related series of APCs.  Payment 
for items reported with unlisted codes is often packaged. 
 
For non-OPPS payment purposes, when an unlisted service or procedure code is reported, 
a report describing the service or procedure shall be submitted with the claim.  Pertinent 
information includes a definition or description of the nature, extent, and need for the 
procedure or service, as well as the providers time, effort, and equipment necessary to 
provide the service. 
 
When a Medicare contractor receives a claim with an unlisted HCPCS code for non-
OPPS payment, the contractor shall verify that no existing HCPCS code adequately 
describes the procedure or service.  Unlisted codes should be reported only if no other 
specific HCPCS codes adequately describe the procedure or service.  If an unlisted code 
is submitted on a claim and the contractor has verified that the code submitted is correct, 
the contractor pays the claim using the unlisted code, based on the applicable non-OPPS 
payment methodology.  However, if it is determined that an unlisted code was submitted 
in error because the procedure or service is described by a specific HCPCS code, the 
contractor shall advise the hospital or CAH of the appropriate code and process the claim.  
If a procedure or service reported with an unlisted code is reported frequently, the 
contractor shall advise the provider that a request for a specific CPT code or 
alphanumeric HCPCS code should be made. 
 
The latest list of Unlisted CPT codes for procedures and services can be found at 
http://www.cms.hhs.gov/HospitalOutpatientPPS/.  Select Annual Policy Files from the 
box at the left, then select the applicable year, and scroll down to Related Links.  Select 
CYXXXX Unlisted CPT Codes.   
Medicare contractors shall review this list once a year since it is updated annually on or 
about January 1 of the calendar year. 
 
Future updates will be issued in a Recurring Update Notification. 
 
180.4 - Proper Reporting of Condition Code G0 (Zero) 
(Rev. 1, 10-03-03) 
 
Hospitals subject to OPPS report Condition Code G0 on FLs 24-30 (or the corresponding 
electronic location) when multiple medical visits occurred on the same day in the same 
revenue center but the visits were distinct and constituted independent visits.  An 
example of such a situation would be a beneficiary going to the emergency room twice 
on the same day, in the morning for a broken arm and later for chest pain. 
 
Multiple medical visits on the same day in the same revenue center may be submitted on 
separate claims.  Hospitals should report condition code G0 on the second claim.  
Appropriate reporting of Condition Code G0 allows for accurate payment under OPPS in 
this situation.  The OCE contains an edit that will reject multiple medical visits on the 
same day with the same revenue code without the presence of Condition Code G0. 
 
To further illustrate, the following table describes actions the OCE takes when multiple 
medical visits occur on the same day in the same revenue code center: 
 
Evaluation and  Revenue Center  Condition  OCE Action 
Management  Code 
(E&M) 
2 or more  Two or more E&M codes  No G0  Assign medical APC to 
have the same revenue  each line item with 
center  E&M code and deny all 
line items with E&M 
code except the line 
item with the highest 
APC payment 
2 or more  Two or more E&M codes  G0  Assign medical APC to 
have the same revenue  each line item with 
center  E&M code. 
 
180.5 - Proper Reporting of Condition Codes 20 and 21 
(Rev. 1, 10-03-03) 
 
Hospitals and CMHCs report condition codes 20 and 21 when they realize the services 
are excluded from coverage but:   
  The beneficiary has requested a formal determination (condition code 20) (claim 
may contain both covered and noncovered charges); or 
 
  The provider is requesting a denial notice from Medicare to bill Medicaid or other 
insurers (condition code 21). 
 
The A/B MACs (A) advise hospitals and CMHCs when billing condition code 21 that a 
separate claim must be submitted.  Claims with condition code 21 must be submitted with 
all noncovered charges. 
 
180.6 - Emergency Room (ER) Services That Span Multiple Service 
Dates 
(Rev. 2361, Issued: 11-25-11, Effective: 01-01-12 and 04-01-12, Implementation; 04-
02-12) 
 
Emergency room (ER) services provided by hospital outpatient departments (OPPS & 
Non-OPPS) should be billed in the following manner: 
 
  Emergency room services are reported under the 045x revenue code 
 
  The line item date of service for the ER encounter is the date the patient entered 
the ER even if the patients encounter spans multiple service dates 
 
  For all other services related to the ER encounter (i.e., lab, radiology, etc) the line 
item date of service reported is the date the service was actually rendered 
 
Note: For patients in a Skilled Nursing Facility (SNF) see Chapter 6, Section 20.1.2.2 
Emergency Services for special billing instructions using the ET modifier.  Chapter 6, 
Section 20.1.2.2 applies to hospital ER services spanning multiple service dates that are 
provided to patients in a Part A SNF stay and related CWF SNF consolidated billing 
edits. 
 
For patients with end stage renal disease (ESRD) see Chapter 8, Section 50.1.6 for billing 
instructions requiring the use of the ET modifier.  Chapter 8, Section 50.1.6 applies to 
hospital ER services spanning multiple service dates including laboratory services. 
 
180.7 - Inpatient-only Services                                                           
(Rev. 4513, Issued: 02-04-2020, Effective: 01-01- 2020, Implementation: 01-06-2020) 
 
Section 1833(t)(1)(B)(i) of the Act allows CMS to define the services for which payment 
under the OPPS is appropriate and the Secretary has determined that the services 
designated to be inpatient only services are not appropriate to be furnished in a hospital 
outpatient department. Inpatient only services are generally, but not always, surgical 
services that require inpatient care because of the nature of the procedure, the typical  underlying physical condition of patients who require the service, or the need for at least 
24 hours of postoperative recovery time or monitoring before the patient can be safely 
discharged. An example of an inpatient only service is CPT code 33513, Coronary 
artery bypass, vein only; four coronary venous grafts. The designation of services to be 
inpatient-only is open to public comment each year as part of the annual rulemaking 
process. Procedures removed from the inpatient only list may be appropriately 
furnished in either the inpatient or outpatient settings and such procedures continue to be 
payable when furnished in the inpatient setting. 
There is no payment under the OPPS for services that CMS designates to be inpatient-
only services. These services have an OPPS status indicator of C in the OPPS 
Addendum B and are listed together in Addendum E of each years OPPS/ASC final rule. 
For the most current Addendum B and for Addendum E published with the OPPS notices 
and regulations, see http://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/HospitalOutpatientPPS/index.html. 
Excluding the handful of exceptions discussed below, CMS does not pay for an 
inpatient-only service furnished to a person who is registered in the hospital as an 
outpatient and reports the service on the outpatient hospital bill type (TOB 13X). CMS 
also does not pay for all other services on the same day as the inpatient only procedure. 
There are two exceptions to the policy of not paying for outpatient services furnished on 
the same day with an inpatient-only service that would be paid under the OPPS if the 
inpatient service had not been furnished: 
Exception 1: If the inpatient-only service is defined in CPT to be a separate 
procedure and the other services billed with the inpatient-only service contain a 
procedure that can be paid under the OPPS and that has an OPPS SI=T on the same date 
as the inpatient-only procedure or OPPS SI = J1 on the same claim as the inpatient-
only procedure, then the inpatient-only service is denied but CMS makes payment for 
the separate procedure and any remaining payable OPPS services. The list of separate 
procedures is available with the Integrated Outpatient Code Editor (I/OCE) 
documentation. See http://www.cms.gov/Medicare/Coding/OutpatientCodeEdit/. 
Exception 2: If an inpatient-only service is furnished but the patient expires before 
inpatient admission or transfer to another hospital and the hospital reports the inpatient 
only service with modifier CA, then CMS makes a single payment for all services 
reported on the claim, including the inpatient only procedure, through one unit of APC 
5881, (Ancillary outpatient services when the patient dies.) Hospitals should report 
modifier CA on only one procedure. 
As of January 1, 2020, procedures that have been removed from the inpatient-only (IPO) 
list are exempt from certain medical review activities related to compliance with the 2-
midnight rule, which states that generally services are considered appropriate for 
inpatient hospital admission and payment under Medicare Part A when the physician 
expects the patient to require a stay that crosses at least 2 midnights and admits the 
patient to the hospital based upon that expectation (78 FR 50913 through 50954).    
Specifically, procedures that have been removed from the IPO list are not eligible for 
referral to Recovery Audit Contractors (RACs) for noncompliance with the 2-midnight  rule within the 2-calendar years following their removal from the IPO list. These 
procedures will not be considered by the Beneficiary and Family-Centered Care Quality 
Improvement Organizations (BFCC-QIOs) in determining whether a provider exhibits 
persistent noncompliance with the 2-midnight rule for purposes of referral to the RAC 
nor will these procedures be reviewed by RACs for patient status within the 2-calendar 
years following their removal from the IPO list.  
During the 2-year exemption period, BFCC-QIOs will have the opportunity to review 
claims for procedures that have been recently removed from the IPO list in order to 
provide education for practitioners and providers regarding compliance with the 2-
midnight rule, but claims identified as noncompliant with the 2-midnight rule will not be 
denied with respect to the site-of-service under Medicare Part A. 
190  Payer Only Codes Utilized by Medicare 
(Rev. 4391, Issued: 09-06-19, Effective: 07-01-19, Implementation: 07-01-19) 
 
This section contains the listing of payer codes designated by the National Uniform 
Billing Committee to be assigned by payers only.  Providers shall not submit these codes 
on their claims forms.  The definitions indicating Medicares usage for these 
systematically assigned codes are indicated next to each code value. 
 
Condition Codes  
 
12-14 - Not currently used by Medicare. 
 
15  Clean claim is delayed in CMS Processing System. 
 
16  SNF Transition exception. 
 
60  Operating Cost Day Outlier. 
 
61  Operating Cost Outlier. 
 
62  PIP Bill. 
 
63  Bypass CWF edits for incarcerated beneficiaries. Indicates services rendered to a 
prisoner or a patient in State or local custody meets the requirement of 42 CFR 
411.4(b) for payment. 
 
64  Other Than Clean Claim. 
 
65  Non-PPS Bill. 
 
98  Data Associated With DRG 468 Has Been Validated. 
 
EY  Lung Reduction Study Demonstration Claims. 
  M0  All-Inclusive Rate for Outpatient - Used by a Critical Access Hospital electing 
to be paid an all-inclusive rate for outpatient services. 
 
M1  Roster Billed Influenza Virus Vaccine or Pneumococcal Pneumonia Vaccine 
(PPV). Code indicates the influenza virus vaccine or pneumonia vaccine (PPV) is 
being billed via the roster billing method by providers that mass immunize. 
 
M2  Allows Home Health claims to process if provider reimbursement > 
$150,000.00. HHA Payment Significantly Exceeds Total Charges. Used when 
payment to an HHA is significantly in excess of covered billed charges. 
 
M3  SNF 3 Day stay bypass for NG/Pioneer ACO waiver. 
 
M4  Presence of infected wound or wound with morbid obesity 
  
M5  Not currently used by Medicare  
 
M6  PA Rural Health Model 
  
M7-M9  Not currently used by Medicare. 
 
MA  GI Bleed. (Bill Type 72x) 
 
MA  Managed Care Enrollee (Bill Type 12x, 13x, and 76x) 
 
MB  Pneumonia. (Bill Type 72x) 
 
MC  Pericarditis. (Bill Type 72x) 
 
MD - Myelodysplastic Syndrome. (Bill Type 72x) 
 
ME - Hereditary Hemolytic and Sickle Cell Anemia. (Bill Type 72x) 
 
MF - Monoclonal Gammopathy. (Bill Type 72x) 
 
MG  Grandfathered Tribal Federally Qualified Health Centers. 
 
MH-MO  Not currently used by Medicare.  
 
MP  PHP claim contains initial admit week  
 
MQ  PHP claim contains final discharge week 
  
MR-MW  Not currently used by Medicare.  
 
MX  Wrong Surgery on Patient (Inpatient)  
  MY  Surgery Wrong Body Part (Inpatient)  
 
MY  Outlier Cap Bypass (CMHC)  
 
MZ  Surgery Wrong Patient (Inpatient) 
 
MZ  IOCE error code bypass 
 
UU  Not currently used by Medicare. 
 
Occurrence Codes 
 
23 - Date of Cancellation of Hospice Election period. 
 
48 - Date hospice face-to-face encounter was untimely 
 
49  Original Notice of Election (NOE) receipt date 
 
Occurrence Span Codes 
 
79 - Verified non-covered stay dates for which the provider is liable. 
 
Value Codes 
 
17- Operating Outlier Amount  The A/B MAC (A) reports the amount of operating 
outlier payment amount made (either cost or day (day outliers have been obsolete 
since 1997)) in CWF with this code.  It does not include any capital outlier payment 
in this entry. 
 
18  Operating Disproportionate Share Amount  The A/B MAC (A) REPORTS 
THE OPERATING DISPROPORTIONATE SHARES AMOUNT APPLICIALBE.  
It uses the amount provided by the disproportionate share field in PRICER.  It does 
not include any PPS capital IME adjustment entry. 
 
19  The Medicare shared system will display this payer only code on the claim for 
low volume providers to identify the amount of the low volume adjustment being 
included in the providers reimbursement.  This payer only code 19 is also used for 
IME on hospital claims.  This instruction shall only apply to ESRD bill type 72x and 
must not impact any existing instructions for other bill types. 
 
19 - Operating Indirect Medical Education Amount  The A/B MAC (A) reports 
operating indirect medical education amount applicable.  It uses the amount provided 
by the indirect medical education field in PRICER.  It does not include any PPS 
capital IME adjustment in this entry. 
 
20  Total payment sent provider for capital under PPS, including HSP, FSP, outlier, 
old capital, DSH adjustment, IME adjustment, and any exception amount.   
62   On Type of Bill 032x:  HH Visits - Part A - The number of visits determined by 
Medicare to be payable from the Part A trust fund to reflect the shift of payments 
from the Part A to the Part B Trust Fund as mandated by 1812(a)(3) of the Social 
Security Act. 
On Type of Bills 081x 0r 082x: Number of High Routine Home Care Days - Days 
that fall within the first 60 days of a routine home care hospice claim. 
 
63  On Type of Bill 032x:  HH visits  Part B - The number of visits determined by 
Medicare to be payable from the Part B trust fund to reflect the shift of payments 
from the Part A to the Part B Trust Fund as mandated by 1812(a)(3) of the Social 
Security Act. 
On Type of Bills 081x 0r 082x: Number of Low Routine Home Care Days - Days that 
come after the first 60 days of a routine home care hospice claim. 
63  On Type of Bills 081x 0r 082x: Number of Low Routine Home Care Days - Days 
that come after the first 60 days of a routine home care hospice claim. 
 
64 - HH Reimbursement  Part A - The dollar amounts determined to be associated 
with the HH visits identified in a value code 62 amount.  This Part A payment reflects 
the shift of payments from the Part A to the Part B Trust Fund as mandated by 
1812(a)(3) of the Social Security Act. 
 
65 - HH Reimbursement  Part B - The dollar amounts determined to be associated 
with the HH visits identified in a value code 63 amount.  This Part B payment reflects 
the shift of payments from the Part A to the Part B Trust Fund as mandated by 
1812(a)(3) of the Social Security Act. 
 
70 - Interest Amount - The contractor reports the amount of interest applied to this 
Medicare claim. 
 
71 - Funding of ESRD Networks - The A/B MAC (A) reports the amount the 
Medicare payment was reduced to help fund ESRD networks. 
 
72- Flat Rate Surgery Charge - The standard charge for outpatient surgery where the 
provider has such a charging structure. 
 
73- Sequestration adjustment amount. 
 
74  Low volume hospital payment amount 
 
75- Prior covered days for an interrupted stay. 
 
76  Providers Interim Rate Providers percentage of billed charges interim rate 
during this billing period.  This applies to all outpatient hospital and skilled nursing 
facility (SNF) claims and home health agency (HHA) claims to which an interim rate 
is applicable.  The contractor reports to the left of the dollar/cents delimiter. An 
interim rate of 50 percent is entered as follows: 50.00.   
77 - Medicare New Technology Add-On Payment - Code indicates the amount of 
Medicare additional payment for new technology. 
 
78  Off-site Zip Code - When the facility zip (Loop 2310E N403 Segment) is present 
for the following bill types: 12X, 13X, 14X, 22X, 23X, 34X, 72X, 74X, 75X, 81X, 
82X, and 85X.  The ZIP code is associated with this value and is used to price MPFS 
HCPCS and Anesthesia Services for CAH Method II. 
 
79  Total payments for services applicable to the ESRD -  The Medicare shared system 
will display this payer only code on the claim.  The value represents the dollar 
amount for Medicare allowed payments applicable for the calculation in determining 
an outlier payment. 
 
Q0  Pioneer Accountable Care Organization (ACO) non-model payment or Next 
Generation ACO non-model payment 
 
Q1  Pioneer ACO model payment amount including reduction or NG ACO payment 
amount including reduction 
 
Q2  Hospice claim paid from Part B Trust Fund 
 
Q3  Prior Authorization 25% Penalty 
 
Q4  PA Rural Model Exclusion - Physician Service Claim Reimbursement 
 
Q5  EHR 
 
Q6  PQRS 
       
      Q7  Islet Isolation Add-on payment amount 
 
Q8 - Transitional Drug Add-On Payment Adjustment (TDAPA) 
 
Q9  Medicare Performance Adjustment (MPA) 
 
QA-QC  Not used by Medicare 
 
QD  Device Credit 
 
QE-QL  Not used by Medicare 
 
QM  MIPS adjustment amount 
 
QN  First APC pass-through device offset 
 
QO  Second APC pass-through device offset   
QP  Third APC pass-through device offset 
 
QQ  Terminated procedure with device offset 
 
QR  First APC pass-through drug or biological offset 
 
QS  Second APC pass-through drug or biological offset 
 
QT  Third APC pass-through drug or biological offset 
 
QU Device credit with device offset 
 
QV  Value-based purchasing adjustment amount 
 
QW  Placeholder reserved for future use 
 
QX-QZ  Not used by Medicare 
 
200 - Special Services for OPPS Billing 
(Rev. 1445, Issued:  02-08-08; Effective:  01-01-08; Implementation:  03-10-08) 
 
200.1 - Billing for Corneal Tissue 
(Rev. 3425, Issued: 12-18-15, Effective: 01-01-16, Implementation: 01-04-16) 
 
Corneal tissue will be paid on a cost basis, not under OPPS, only when it is used in a 
corneal transplant procedure described by one of the following CPT codes: 65710, 65730, 
65750, 65755, 65756, 65765, 65767, and any successor code or new code describing a 
new type of corneal transplant procedure that uses eye banked corneal tissue.  In all other 
procedures cornea tissue is packaged.  To receive cost based reimbursement hospitals 
must bill charges for corneal tissue using HCPCS code V2785. 
 
200.2 - Hospital Dialysis Services For Patients With and Without End 
Stage Renal Disease (ESRD) 
(Rev. 2455, Issued: 04-26-12, Effective: 10-01-12, Implementation; 10-01-12) 
 
Effective with claims with dates of service on or after August 1, 2000, hospital-based End 
Stage Renal Disease (ESRD) facilities must submit services covered under the ESRD 
benefit in 42 CFR 413.174 (maintenance dialysis and those items and services directly 
related to dialysis such as drugs, supplies) on a separate claim from services not covered 
under the ESRD benefit.  Items and services not covered under the ESRD benefit must be 
billed by the hospital using the hospital bill type and be paid under the Outpatient 
Prospective Payment System (OPPS) (or to a CAH at reasonable cost).  Services covered 
under the ESRD benefit in 42 CFR 413.174 must be billed on the ESRD bill type and 
must be paid under the ESRD PPS.  This requirement is necessary to properly pay only  unrelated ESRD services (those not covered under the ESRD benefit) under OPPS (or to 
a CAH at reasonable cost). 
 
Medicare does not allow payment for routine or related dialysis treatments, which are 
covered and paid under the ESRD PPS, when furnished to ESRD patients in the 
outpatient department of a hospital. However, in certain medical situations in which the 
ESRD outpatient cannot obtain her or his regularly scheduled dialysis treatment at a 
certified ESRD facility, the OPPS rule for 2003 allows payment for non-routine dialysis 
treatments (which are not covered under the ESRD benefit) furnished to ESRD 
outpatients in the outpatient department of a hospital.  Payment for unscheduled dialysis 
furnished to ESRD outpatients and paid under the OPPS is limited to the following 
circumstances: 
 
  Dialysis performed following or in connection with a dialysis-related procedure 
such as vascular access procedure or blood transfusions; 
 
  Dialysis performed following treatment for an unrelated medical emergency; e.g., 
if a patient goes to the emergency room for chest pains and misses a regularly 
scheduled dialysis treatment that cannot be rescheduled, CMS allows the hospital 
to provide and bill Medicare for the dialysis treatment; or 
 
  Emergency dialysis for ESRD patients who would otherwise have to be admitted 
as inpatients in order for the hospital to receive payment. 
 
 
In these situations, non-ESRD certified hospital outpatient facilities are to bill Medicare 
using the Healthcare Common Procedure Coding System (HCPCS) code G0257 
(Unscheduled or emergency dialysis treatment for an ESRD patient in a hospital 
outpatient department that is not certified as an ESRD facility).   
 
HCPCS code G0257 may only be reported on type of bill 13X (hospital outpatient 
service) or type of bill 85X (critical access hospital) because HCPCS code G0257 only 
reports services for hospital outpatients with ESRD and only these bill types are used to 
report services to hospital outpatients.  Effective for services on and after October 1, 
2012, claims containing HCPCS code G0257 will be returned to the provider for 
correction if G0257 is reported with a type of bill other than 13X or 85X (such as a 12x 
inpatient claim).  
 
HCPCS code 90935 (Hemodialysis procedure with single physician evaluation) may be 
reported and paid only if one of the following two conditions is met: 
 
1)  The patient is a hospital inpatient with or without ESRD and has no coverage 
under Part A, but has Part B coverage.  The charge for hemodialysis is a charge 
for the use of a prosthetic device.  See Benefits Policy Manual 100-02 Chapter 15 
section 120.  A.  The service must be reported on a type of bill 12X or type of bill 
85X.  See the Benefits Policy Manual 100-02 Chapter 6 section 10 (Medical and  Other Health Services Furnished to Inpatients of Participating Hospitals) for the 
criteria that must be met for services to be paid when a hospital inpatient has Part 
B coverage but does not have coverage under Part A; or 
 
2)  A hospital outpatient does not have ESRD and is receiving hemodialysis in the 
hospital outpatient department.  The service is reported on a type of bill 13X or 
type of bill 85X.   
 
CPT code 90945 (Dialysis procedure other than hemodialysis (e.g. peritoneal dialysis, 
hemofiltration, or other continuous replacement therapies)), with single physician 
evaluation, may be reported by a hospital paid under the OPPS or CAH method I or 
method II on type of bill 12X, 13X or 85X. 
 
200.3 - Billing Codes for Intensity Modulated Radiation Therapy 
(IMRT) and Stereotactic Radiosurgery (SRS) 
(Rev. 1445, Issued:  02-08-08; Effective:  01-01-08; Implementation:  03-10-08) 
 
200.3.1 - Billing Instructions for IMRT Planning and Delivery 
(Rev. 3685, Issued: 12-22-16, Effective: 01-01-17, Implementation: 01-03-17) 
 
Payment for the services identified by CPT codes 77014, 77280, 77285, 77290, 77295, 
77306 through 77321, 77331, and 77370 are included in the APC payment for CPT code 
77301 (IMRT planning). These codes should not be reported in addition to CPT code 
77301 when provided prior to or as part of the development of the IMRT plan.  In 
addition, CPT codes 77280-77290 (simulation-aided field settings) should not be reported 
for verification of the treatment field during a course of IMRT. 
 
 
 
200.3.2 - Billing for Multi-Source Photon (Cobalt 60-Based) Stereotactic 
Radiosurgery (SRS) Planning and Delivery 
(Rev. 3941; Issued: 12-22-17; Effective: 01- 01-18; Implementation: 01-02-18) 
 
Effective for services furnished on or after January 1, 2014, hospitals must report SRS 
planning and delivery services using only the CPT codes that accurately describe the 
service furnished.  For the delivery services, hospitals must report CPT code 77371, 
77372, or 77373. 
 
CPT Code  Long Descriptor 
77371  Radiation treatment delivery, stereotactic radiosurgery (srs), complete 
course of treatment of cranial lesion(s) consisting of 1 session; multi- 
source cobalt 60 based  CPT Code  Long Descriptor 
77372  Radiation treatment delivery, stereotactic radiosurgery (srs), complete 
course of treatment of cranial lesion(s) consisting of 1 session; linear 
accelerator based 
77373  Stereotactic body radiation therapy, treatment delivery, per fraction to 1 
or more lesions, including image guidance, entire course not to exceed 5 
fractions 
 
As instructed in the CY 2014 OPPS/ASC final rule, CPT code 77371 is to be used only 
for single session cranial SRS cases performed with a Cobalt-60 device, and CPT code 
77372 is to be used only for single session cranial SRS cases performed with a linac- 
based device.  The term cranial means that the pathological lesion(s) that are the target 
of the radiation is located in the patients cranium or head.  The term single session 
means that the entire intracranial lesion(s) that comprise the patients diagnosis are 
treated in their entirety during a single treatment session on a single day.  CPT code 
77372 is never to be used for the first fraction or any other fraction of a fractionated SRS 
treatment.  CPT code 77372 is to be used only for single session cranial linac-based SRS 
treatment.  Fractionated SRS treatment is any SRS delivery service requiring more than a 
single session of SRS treatment for a cranial lesion, up to a total of no more than five 
fractions, and one to five sessions (but no more than five) for non-cranial lesions.  CPT 
code 77373 is to be used for any fraction (including the first fraction) in any series of 
fractionated treatments, regardless of the anatomical location of the lesion or lesions 
being radiated.  Fractionated cranial SRS is any cranial SRS that exceeds one treatment 
session and fractionated non-cranial SRS is any non-cranial SRS, regardless of the 
number of fractions but never more than five.  Therefore, CPT code 77373 is the 
exclusive code (and the use of no other SRS treatment delivery code is permitted) for any 
and all fractionated SRS treatment services delivered anywhere in the body, including, 
but not limited to, the cranium or head.  77372 is not to be used for the first fraction of a 
fractionated cranial SRS treatment series and must only be used in cranial SRS when 
there is a single treatment session to treat the patients entire condition. 
 
In addition, for the planning services, hospitals must report the specific CPT code that 
accurately describes the service provided.  The planning services may include but are not 
limited to CPT code 77290, 77295, 77300, 77334, or 77370. 
 
CPT Code  Long Descriptor 
77290  Therapeutic radiology simulation-aided field setting; complex 
77295  Therapeutic radiology simulation-aided field setting; 3-dimensional  CPT Code  Long Descriptor 
77300  Basic radiation dosimetry calculation, central axis depth dose calculation, 
tdf, nsd, gap calculation, off axis factor, tissue inhomogeneity factors, 
calculation of non-ionizing radiation surface and depth dose, as required 
during course of treatment, only when prescribed by the treating 
physician 
77334  Treatment devices, design and construction; complex (irregular blocks, 
special shields, compensators, wedges, molds or casts) 
77370  Special medical radiation physics consultation 
 
Effective for cranial single session stereotactic radiosurgery procedures (CPT code 77371 
or 77372) furnished on or after January 1, 2016, costs for certain adjunctive services 
(e.g., planning and preparation) are not factored into the APC payment rate for APC 5627 
(Level 7 Radiation Therapy).  Rather, the ten planning and preparation codes, will be paid 
according to their assigned status indicator when furnished 30 days prior or 30 days post 
SRS treatment delivery. A list of the excluded planning and preparation CPT codes is 
provided in the CY 2018 OPPS/ASC final rule with comment period.  
 
200.4 - Billing for Amniotic Membrane 
(Rev. 1445, Issued:  02-08-08; Effective:  01-01-08; Implementation:  03-10-08) 
 
Hospitals should report HCPCS code V2790 (Amniotic membrane for surgical 
reconstruction, per procedure) to report amniotic membrane tissue when the tissue is 
used.  A specific procedure code associated with use of amniotic membrane tissue is CPT 
code 65780 (Ocular surface reconstruction; amniotic membrane transplantation).  
Payment for the amniotic membrane tissue is packaged into payment for CPT code 65780 
or other procedures with which the amniotic membrane is used. 
 
200.5 - Reserved 
(Rev. 1882, Issued:  12-21-09; Effective Date:  01-01-10; Implementation Date:  01-
04-10) 
 
200.6 - Billing and Payment for Alcohol and/or Substance Abuse 
Assessment and Intervention Services 
(Rev. 1445, Issued:  02-08-08; Effective:  01-01-08; Implementation:  03-10-08) 
 
For CY 2008, the CPT Editorial Panel has created two new Category I CPT codes for 
reporting alcohol and/or substance abuse screening and intervention services.  They are 
CPT code 99408 (Alcohol and/or substance (other than tobacco) abuse structured 
screening (e.g., AUDIT, DAST), and brief intervention (SBI) services; 15 to 30 minutes); 
and CPT code 99409 (Alcohol and/or substance (other than tobacco) abuse structured  screening (e.g., AUDIT, DAST), and brief intervention (SBI) services; greater than 30 
minutes).  However, screening services are not covered by Medicare without specific 
statutory authority, such as has been provided for mammography, diabetes, and colorectal 
cancer screening.  Therefore, beginning January 1, 2008, the OPPS recognizes two 
parallel G-codes (HCPCS codes G0396 and G0397) to allow for appropriate reporting 
and payment of alcohol and substance abuse structured assessment and intervention 
services that are not provided as screening services, but that are performed in the context 
of the diagnosis or treatment of illness or injury. 
 
Contractors shall make payment under the OPPS for HCPCS code G0396 (Alcohol 
and/or substance (other than tobacco) abuse structured assessment (e.g., AUDIT, DAST) 
and brief intervention, 15 to 30 minutes) and HCPCS code G0397, (Alcohol and/or 
substance (other than tobacco) abuse structured assessment (e.g., AUDIT, DAST) and 
intervention greater than 30 minutes), only when reasonable and necessary (i.e., when the 
service is provided to evaluate patients with signs/symptoms of illness or injury) as per 
section 1862(a)(1)(A) of the Act. 
 
HCPCS codes G0396 and G0397 are to be used for structured alcohol and/or substance 
(other than tobacco) abuse assessment and intervention services that are distinct from 
other clinic and emergency department visit services performed during the same 
encounter.  Hospital resources expended performing services described by HCPCS codes 
G0396 and G0397 may not be counted as resources for determining the level of a visit 
service and vice versa (i.e., hospitals may not double count the same facility resources in 
order to reach a higher level clinic or emergency department visit).  However, alcohol 
and/or substance structured assessment or intervention services lasting less than 15 
minutes should not be reported using these HCPCS codes, but the hospital resources 
expended should be included in determining the level of the visit service reported. 
 
200.7 - Billing for Cardiac Echocardiography Services 
(Rev. 1445, Issued:  02-08-08; Effective:  01-01-08; Implementation:  03-10-08) 
 
200.7.1 - Cardiac Echocardiography Without Contrast 
(Rev. 1445, Issued:  02-08-08; Effective:  01-01-08; Implementation:  03-10-08) 
 
Hospitals are instructed to bill for echocardiograms without contrast in accordance with 
the CPT code descriptors and guidelines associated with the applicable Level I CPT 
code(s) (93303-93350). 
 
200.7.2 - Cardiac Echocardiography With Contrast 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
Hospitals are instructed to bill for echocardiograms with contrast using the applicable 
HCPCS code(s) included in Table 200.7.2 below.  Hospitals should also report the 
appropriate units of the HCPCS codes for the contrast agents used in the performance of 
the echocardiograms. 
  Table 200.7.2 - HCPCS Codes For Echocardiograms With Contrast 
 
HCPCS  Long Descriptor 
Transthoracic echocardiography with contrast, or without contrast 
C8921  followed by with contrast, for congenital cardiac anomalies; 
complete 
Transthoracic echocardiography with contrast, or without contrast 
C8922  followed by with contrast, for congenital cardiac anomalies; 
follow-up or limited study 
Transthoracic echocardiography with contrast, or without contrast 
followed by with contrast, real-time with image documentation 
C8923 
(2D), includes M-mode recording, when performed, complete, 
without spectral or color Doppler echocardiography 
Transthoracic echocardiography with contrast, or without contrast 
followed by with contrast, real-time with image documentation 
C8924 
(2D), includes M-mode recording, when performed, follow-up or 
limited study 
Transesophageal echocardiography (TEE) with contrast, or without 
contrast followed by with contrast, real time with image 
C8925  documentation (2D) (with or without M-mode recording); 
including probe placement, image acquisition, interpretation and 
report   
Transesophageal echocardiography (TEE) with contrast, or without 
contrast followed by with contrast, for congenital cardiac 
C8926 
anomalies; including probe placement, image acquisition, 
interpretation and report 
Transesophageal echocardiography (TEE) with contrast, or without 
contrast followed by with contrast, for monitoring purposes, 
including probe placement, real time 2-dimensional image 
C8927 
acquisition and interpretation leading to ongoing (continuous) 
assessment of (dynamically changing) cardiac pumping function 
and to therapeutic measures on an immediate time basis 
Transthoracic echocardiography with contrast, or without contrast 
followed by with contrast, real-time with image documentation 
(2D), includes M-mode recording, when performed, during rest 
C8928 
and cardiovascular stress test using treadmill, bicycle exercise 
and/or pharmacologically induced stress, with interpretation and 
report  HCPCS  Long Descriptor 
Transthoracic echocardiography with contrast, or without contrast 
followed by with contrast, real-time with image documentation 
C8929  (2D), includes M-mode recording, when performed, complete, 
with spectral Doppler echocardiography, and with color flow 
Doppler echocardiography 
Transthoracic echocardiography, with contrast, or without contrast 
followed by with contrast, real-time with image documentation 
(2D), includes M-mode recording, when performed, during rest 
C8930  and cardiovascular stress test using treadmill, bicycle exercise 
and/or pharmacologically induced stress, with interpretation and 
report; including performance of continuous electrocardiographic 
monitoring, with physician supervision 
 
200.8 - Billing for Nuclear Medicine Procedures 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
Beginning January 1, 2008, the I/OCE began editing for the presence of a radiolabeled 
product when a separately payable nuclear medicine procedure is present on a claim.  
Hospitals should include radiolabeled product HCPCS codes on the same claim as a 
nuclear medicine procedure beginning on January 1, 2008. 
 
Hospitals are required to submit the HCPCS code for the radiolabeled product on the 
same claim as the HCPCS code for the nuclear medicine procedure.  Hospitals are also 
instructed to submit the claim so that the services on the claim each reflect the date the 
particular service was provided.  Therefore, if the nuclear medicine procedure is provided 
on a different date of service from the radiolabeled product, the claim will contain more 
than one date of service.  More information regarding these edits is available on the 
OPPS Web site at http://www.cms.hhs.gov/HospitalOutpatientPPS/. 
 
Hospitals are instructed to use HCPCS code C9898 (Radiolabeled product provided 
during a hospital inpatient stay) on outpatient claims for nuclear medicine procedures to 
indicate that a radiolabeled product that provides the radioactivity necessary for the 
reported diagnostic nuclear medicine procedure was provided during a hospital inpatient 
stay.  This HCPCS code is assigned status indicator N because no separate payment is 
made for the code under the OPPS.  The effective date of the code is January 1, 2008, the 
date the nuclear medicine procedure-to-radiolabeled product edits were initially 
implemented.  Because the Medicare claims processing system requires that there be a 
charge for each HCPCS code reported on the claim, hospitals should always report a 
token charge of less than $1.01 for HCPCS code C9898.  The date of service reported on 
the claim for HCPCS code C9898 should be the same as the date of service for the 
nuclear medicine procedure HCPCS code, which should always accompany the reporting 
of HCPCS code C9898.  HCPCS code C9898 should never be reported on a claim  without a diagnostic nuclear medicine procedure that is subject to the nuclear medicine 
procedure-to-radiolabeled product edits. 
 
More information regarding these edits is available on the OPPS Web site at 
http://www.cms.hhs.gov/HospitalOutpatientPPS 
 
Future updates to this section will be communicated in a Recurring Update Notification. 
 
200.9 - Billing for Sometimes Therapy Services that May be Paid as 
Non-Therapy Services for Hospital Outpatients 
(Rev. 3156, Issued: 12-22-14, Effective: 01-01-15, Implementation: 01-05-15) 
 
Section 1834(k) of the Act, as added by Section 4541 of the BBA, allows payment at 80 
percent of the lesser of the actual charge for the services or the applicable fee schedule 
amount for all outpatient therapy services; that is, physical therapy services, speech-
language pathology services, and occupational therapy services.  As provided under 
Section 1834(k)(5) of the Act, a therapy code list was created based on a uniform coding 
system (that is, the HCPCS) to identify and track these outpatient therapy services paid 
under the Medicare Physician Fee Schedule (MPFS). 
 
The list of therapy codes, along with their respective designation, can be found on the 
CMS Website, specifically at 
http://www.cms.hhs.gov/TherapyServices/05_Annual_Therapy_Update.asp#TopOfPage.  
Two of the designations that are used for therapy services are: always therapy and 
sometimes therapy.  An always therapy service must be performed by a qualified 
therapist under a certified therapy plan of care, and a sometimes therapy service may 
be performed by physician or a non-physician practitioner outside of a certified therapy 
plan of care. 
 
Under the OPPS, separate payment is provided for certain services designated as 
sometimes therapy services if these services are furnished to hospital outpatients as a 
non-therapy service, that is, without a certified therapy plan of care. Specifically, to be 
paid under the OPPS for a non-therapy service, hospitals SHOULD NOT append the 
therapy modifier GP (physical therapy), GO (occupational therapy), or GN (speech 
language pathology), or report a therapy revenue code 042x, 043x, or 044x in association 
with the sometimes therapy codes listed in the table below. 
 
To receive payment under the MPFS, when sometimes therapy services are performed 
by a qualified therapist under a certified therapy plan of care, providers should append 
the appropriate therapy modifier GP, GO, or GN, and report the charges under an 
appropriate therapy revenue code, specifically 042x, 043x, or 044x. This instruction does 
not apply to claims for sometimes therapy codes furnished as non-therapy services in 
the hospital outpatient department and paid under the OPPS. 
 
Effective January 1, 2015, two HCPCS codes designated as Sometimes Therapy 
services, G0456 (Negative pressure wound therapy, (e.g. vacuum assisted drainage  collection) using a mechanically-powered device, not durable medical equipment, 
including provision of cartridge and dressing(s), topical application(s), wound 
assessment, and instructions for ongoing care, per session; total wounds(s) surface area 
less than or equal to 50 square centimeters) and G0457 (Negative pressure wound 
therapy, (e.g. vacuum assisted drainage collection) using a mechanically-powered device, 
not durable medical equipment, including provision of cartridge and dressing(s), topical 
application(s), wound assessment, and instructions for ongoing care, per session; total 
wounds(s) surface area greater than 50 square centimeters) would be terminated and 
replaced with two new CPT codes 97607 (Negative pressure wound therapy, (eg, vacuum 
assisted drainage collection), utilizing disposable, non-durable medical equipment 
including provision of exudate management collection system, topical application(s), 
wound assessment, and instructions for ongoing care, per session; total wounds(s) surface 
area less than or equal to 50 square centimeters) and 97608 (Negative pressure wound 
therapy, (eg, vacuum assisted drainage collection), utilizing disposable, non-durable 
medical equipment including provision of exudate management collection system, topical 
application(s), wound assessment, and instructions for ongoing care, per session; total 
wounds(s) surface area greater than 50 square centimeters).  
 
The list of HCPCS codes designated as sometimes therapy services that may be paid as 
non-therapy services when furnished to hospital outpatients is displayed in the table 
below. 
 
Services Designated as Sometimes Therapy that May be Paid as Non-Therapy 
Services for Hospital Outpatients 
HCPCS  Long Descriptor 
Code 
92520  Laryngeal function studies (i.e., aerodynamic testing and acoustic 
testing) 
97597  Removal of devitalized tissue from wound(s), selective debridement, 
without anesthesia (eg., high pressure waterjet with/without suction, 
sharp selective debridement with scissors, scalpel and forceps), with or 
without topical application(s), wound assessment, and instruction(s) for 
ongoing care, may include use of a whirlpool, per session; total 
wound(s) surface area less than or equal to 20 square centimeters 
97598  Removal of devitalized tissue from wound(s), selective debridement, 
without anesthesia (e.g., high pressure waterjet with/without suction, 
sharp selective debridement with scissors, scalpel and forceps), with or 
without topical application(s), wound assessment, and instruction(s) for 
ongoing care, may include use of a whirlpool, per session; total 
wound(s) surface area greater than 20 square centimeters 
97602  Removal of devitalized tissue from wound(s), non-selective 
debridement, without anesthesia (e.g., wet-to-moist dressings, 
enzymatic, abrasion), including topical application(s), wound 
assessment, and instruction(s) for ongoing care, per session  HCPCS  Long Descriptor 
Code 
97605  Negative pressure wound therapy (e.g., vacuum assisted drainage 
collection), including topical application(s), wound assessment, and 
instruction(s) for ongoing care, per session; total wound(s) surface area 
less than or equal to 50 square centimeters 
97606  Negative pressure wound therapy (e.g., vacuum assisted drainage 
collection), including topical application(s), wound assessment, and 
instruction(s) for ongoing care, per session; total wound(s) surface area 
greater than 50 square centimeters 
97607  Negative pressure wound therapy, (eg, vacuum assisted drainage 
collection), utilizing disposable, non-durable medical equipment 
including provision of exudate management collection system, topical 
application(s), wound assessment, and instructions for ongoing care, per 
session; total wounds(s) surface area less than or equal to 50 square 
centimeters 
97608  Negative pressure wound therapy, (eg, vacuum assisted drainage 
collection), utilizing disposable, non-durable medical equipment 
including provision of exudate management collection system, topical 
application(s), wound assessment, and instructions for ongoing care, per 
session; total wounds(s) surface area greater than 50 square centimeters 
97610  Low frequency, non-contact, non-thermal ultrasound, including topical 
application(s), when performed, wound assessment, and instruction(s) 
for ongoing care, per day 
 
200.10 - Billing for Cost Based Payment for Certified Registered Nurse 
Anesthetists (CRNA) Services Furnished by Outpatient Prospective 
Payment System (OPPS) Hospitals 
(Rev. 3065, Issued: 09-12-14, Effective: 04-01-03, Implementation: 12-15-14) 
 
Payment of outpatient services of CRNAs furnished by small rural hospitals subject to 
OPPS that qualify for cost based payment under 42 CFR 412.113(c) are made through 
biweekly interim payments that are calculated based on retrospective adjustments from a 
settled cost report. 
 
In order for interim payments to be made to these hospitals based on submitted claims, a 
number of changes were required in the reporting and acceptance of revenue code 0964 
Anesthetists (CRNA).  Those changes are as follows:  
 
(1) Hospitals that qualify for cost based CRNA services must report these services under 
revenue code 0964;  
 
(2) Shared System Maintainer is required to accept revenue code 0964 on type of bill 
013X for these hospitals; and  
  (3) Reporting and acceptance of revenue code 0964 from other OPPS hospitals (without a 
CRNA pass-through exemption) may not be allowed. 
 
NOTE:  Value code 05 Professional Component Included In Charges and Also Billed 
Separately to A/B MACs (B), should not be reported with revenue code 0964. 
 
The Integrated Outpatient Code Editor (IOCE) will assign a service indicator of F to 
revenue code 0964. This allows for cost-based payment for revenue code 0964. 
 
The facility is paid a cost-based interim payment (charges multiplied by the hospitals 
outpatient interim rate) for the revenue code 0964 charge on the claim, and assume when 
calculating the interim payment that coinsurance is billed (by the hospital to the 
beneficiary) in the amount of 20 percent of the submitted charges.  In addition, an 
adjustment to the hospitals biweekly interim payment amount for cost paid services 
should exclude any amounts attributable to outpatient hospital CRNA services from all 
future biweekly interim payments. 
 
Hospitals shall not bill Healthcare Common Procedure Coding System (HCPCS) when 
billing for CRNA services.  Beneficiaries are billed for coinsurance for cost based CRNA 
services billed under revenue code 0964.  Coinsurance is based on 20 percent of the 
submitted covered charges.  The Part B deductible is applicable. 
 
200.11  Billing Advance Care Planning (ACP) as an Optional Element 
of an Annual Wellness Visit (AWV)  
 
(Rev. 3739, Issued: 03-17-17, Effective: 01-01-16, Implementation: 06-19-17)  
 
Effective January 1, 2016 payment for the service described by CPT code 99497 
(Advance care planning including the explanation and discussion of advance directives 
such as standard forms (with completion of such forms, when performed), by the 
physician or other qualified health care professional; first 30 minutes, face-to-face with 
the patient, family member(s), and/or surrogate) is conditionally packaged under the 
OPPS and is consequently assigned to a conditionally packaged payment status indicator 
of Q1. When this service is furnished with another service paid under the OPPS, 
payment is packaged; when it is the only service furnished, payment is made separately. 
CPT code 99498 (Advance care planning including the explanation and discussion of 
advance directives such as standard forms (with completion of such forms, when 
performed), by the physician or other qualified health care professional; each additional 
30 minutes (List separately in addition to code for primary procedure)) is an add-on code 
and therefore payment for the service described by this code is unconditionally packaged 
(assigned status indicator N) in the OPPS in accordance with 42 CFR 419.2(b)(18). 
 
In addition, for services furnished on or after January 1, 2016, Advance Care Planning 
(ACP) is treated as a preventive service when furnished with an AWV. The Medicare 
coinsurance and Part B deductible are waived for ACP when furnished as an optional 
element of an AWV.    
The codes for the optional ACP services furnished as part of an AWV are 99497 
(Advance care planning including the explanation and discussion of advance directives 
such as standard forms (with completion of such forms, when performed), by the 
physician or other qualified health professional; first 30 minutes, face-to-face with the 
patient, family member(s) and/or surrogate;) and an add-on code 99498 (each additional 
30 minutes (List separately in addition to code for primary procedure)). When ACP 
services are provided as a part of an AWV, practitioners would report CPT code 99497 
(and add-on CPT code 99498 when applicable) for the ACP services in addition to either 
of the AWV codes (G0438 or G0439).  
 
The deductible and coinsurance for ACP will only be waived when billed on the same 
day and on the same claim as an AWV (code G0438 or G0439), and must also be 
furnished by the same provider. Waiver of the deductible and coinsurance for ACP is 
limited to once per year. Payment for an AWV is limited to once per year. If the AWV 
billed with ACP is denied for exceeding the once per year limit, the deductible and 
coinsurance will be applied to the ACP.  
 
Also see Pub. 100-02, Medicare Benefit Policy Manual, chapter 15, section 280.5.1 for 
more information. 
 
230 - Billing and Payment for Drugs and Drug Administration 
(Rev. 573, Issued: 06-03-05, Effective: 01-01-05, Implementation: 06-01-05) 
 
This section provides billing guidance and payment instructions for hospitals when 
providing drugs and drug administration services in the hospital outpatient department. 
 
230.1 - Coding and Payment for Drugs and Biologicals, and 
Radiopharmaceuticals 
(Rev. 1445, Issued:  02-08-08; Effective:  01-01-08; Implementation:  03-10-08) 
 
This section provides hospitals with coding instructions and payment information for 
drugs paid under OPPS.  For additional information on coding and payment for drugs and 
biologicals under the OPPS, see the Medicare Claims Processing Manual, Chapter 17 
Drugs and Biologicals. 
 
230.2 - Coding and Payment for Drug Administration 
(Rev. 2141, Issued: 01-24-11, Effective: 01-01-11, Implementation: 01-03-11) 
 
A.  Overview 
 
Drug administration services furnished under the Hospital Outpatient Prospective 
Payment System (OPPS) during CY 2005 were reported using CPT codes 90780, 90781, 
and 96400-96459. 
  Effective January 1, 2006, some of these CPT codes were replaced with more detailed 
CPT codes incorporating specific procedural concepts, as defined and described by the 
CPT manual, such as initial, concurrent, and sequential. 
 
Hospitals are instructed to use the full set of CPT codes, including those codes 
referencing concepts of initial, concurrent, and sequential, to bill for drug administration 
services furnished in the hospital outpatient department beginning January 1, 2007.  In 
addition, hospitals are instructed to continue billing the HCPCS codes that most 
accurately describe the service(s) provided. 
 
Hospitals are reminded to bill a separate Evaluation and Management code (with 
modifier 25) only if a significant, separately identifiable E/M service is performed in the 
same encounter with OPPS drug administration services. 
 
B.  Billing for Infusions and Injections 
 
Beginning in CY 2007, hospitals were instructed to use the full set of drug administration 
CPT codes (90760-90779; 96401-96549), (96413-96523 beginning in CY 2008) (96360-
96549 beginning in CY 2009) when billing for drug administration services provided in 
the hospital outpatient department.  In addition, hospitals are to continue to bill HCPCS 
code C8957 (Intravenous infusion for therapy/diagnosis; initiation of prolonged infusion 
(more than 8 hours), requiring use of portable or implantable pump) when appropriate.  
Hospitals are expected to report all drug administration CPT codes in a manner consistent 
with their descriptors, CPT instructions, and correct coding principles.  Hospitals should 
note the conceptual changes between CY 2006 drug administration codes effective under 
the OPPS and the CPT codes in effect beginning January 1, 2007, in order to ensure 
accurate billing under the OPPS.  Hospitals should report all HCPCS codes that describe 
the drug administration services provided, regardless of whether or not those services are 
separately paid or their payment is packaged. 
 
Medicares general policy regarding physician supervision within hospital outpatient 
departments meets the physician supervision requirements for use of CPT codes 90760-
90779, 96401-96549, (96413-96523 beginning in CY 2008).  (Reference:  Pub.100-02, 
Medicare Benefit Policy Manual, Chapter 6, 20.4.) 
 
Drug administration services are to be reported with a line item date of service on the day 
they are provided.  In addition, only one initial drug administration service is to be 
reported per vascular access site per encounter, including during an encounter where 
observation services span more than 1 calendar day. 
 
C.  Payments For Drug Administration Services 
 
For CY 2007, OPPS drug administration APCs were restructured, resulting in a six-level 
hierarchy where active HCPCS codes have been assigned according to their clinical 
coherence and resource use.  Contrary to the CY 2006 payment structure that bundled 
payment for several instances of a type of service (non-chemotherapy, chemotherapy by  infusion, non-infusion chemotherapy) into a per-encounter APC payment, structure 
introduced in CY 2007 provides a separate APC payment for each reported unit of a 
separately payable HCPCS code. 
 
Hospitals should note that the transition to the full set of CPT drug administration codes 
provides for conceptual differences when reporting, such as those noted below. 
 
  In CY 2006, hospitals were instructed to bill for the first hour (and any 
additional hours) by each type of infusion service (non-chemotherapy, 
chemotherapy by infusion, non-infusion chemotherapy).  Beginning in CY 2007, 
the first hour concept no longer exists. CPT codes in CY 2007 and beyond allow 
for only one initial service per encounter, for each vascular access site, no matter 
how many types of infusion services are provided; however, hospitals will receive 
an APC payment for the initial service and separate APC payment(s) for 
additional hours of infusion or other drug administration services provided that 
are separately payable. 
 
  In CY 2006, hospitals providing infusion services of different types (non-
chemotherapy, chemotherapy by infusion, non-infusion chemotherapy) received 
payment for the associated per-encounter infusion APC even if these infusions 
occurred during the same time period.  Beginning in CY 2007, hospitals should 
report only one initial drug administration service, including infusion services, per 
encounter for each distinct vascular access site, with other services through the 
same vascular access site being reported via the sequential, concurrent or 
additional hour codes.  Although new CPT guidance has been issued for reporting 
initial drug administration services, Medicare contractors shall continue to follow 
the guidance given in this manual. 
 
(NOTE:  This list above provides a brief overview of a limited number of 
the conceptual changes between CY 2006 OPPS drug administration codes 
and CY 2007 OPPS drug administration codes - this list is not comprehensive 
and does not include all items hospitals will need to consider during this 
transition) 
 
For APC payment rates, refer to the most current quarterly version of Addendum B on 
the CMS Web site at http://www.cms.hhs.gov/HospitalOutpatientPPS/. 
 
D.  Infusions Started Outside the Hospital 
 
Hospitals may receive Medicare beneficiaries for outpatient services who are in the 
process of receiving an infusion at their time of arrival at the hospital (e.g., a patient who 
arrives via ambulance with an ongoing intravenous infusion initiated by paramedics 
during transport).  Hospitals are reminded to bill for all services provided using the 
HCPCS code(s) that most accurately describe the service(s) they provided.  This includes 
hospitals reporting an initial hour of infusion, even if the hospital did not initiate the  infusion, and additional HCPCS codes for additional or sequential infusion services if 
needed. 
 
231 - Billing and Payment for Blood, Blood Products, and Stem Cells 
and Related Services Under the Hospital Outpatient Prospective 
Payment System (OPPS) 
(Rev. 1702, Issued: 03-13-09, Effective: 04-01-09, Implementation: 04-06-09) 
 
231.1 - When a Provider Paid Under the OPPS Does Not Purchase the 
Blood or Blood Products That It Procures from a Community Blood 
Bank, or When a Provider Paid Under the OPPS Does Not Assess a 
Charge for Blood or Blood Products Supplied by the Providers Own 
Blood Bank Other Than Blood Processing and Storage 
(Rev. 1702, Issued: 03-13-09, Effective: 04-01-09, Implementation: 04-06-09) 
 
When an OPPS provider furnishes blood or a blood product collected by its own blood 
bank for which only processing and storage costs are assessed, or when an OPPS 
provider procures blood or a blood product from a community blood bank for which it is 
charged only the processing and storage costs incurred by the community blood bank, the 
OPPS provider bills the processing and storage charges using Revenue Code 0390 (Blood 
Processing/Storage), 0392 (Blood Processing/Storage; Processing and Storage),  or 0399 
(Blood Processing /Storage; Other Processing and Storage), along with the appropriate 
blood HCPCS code, the number of units transfused, and the line item date of service 
(LIDOS).  Processing and storage costs may include blood product collection, safety 
testing, retyping, pooling, irradiating, leukocyte-reducing, freezing, and thawing blood 
products, along with the costs of blood delivery, monitoring, and storage.  In general, 
such categories of processing costs are not patient-specific.  There are specific blood 
HCPCS codes for blood products that have been processed in varying ways, and these 
codes are intended to make payment for the variable resource costs of blood products that 
have been processed differently. 
 
Most OPPS providers obtain blood or blood products from community blood banks that 
charge only for processing and storage, and not for the blood itself.  These hospitals 
should follow the instructions outlined in this section.  Those OPPS providers that incur a 
charge for the blood product itself, in addition to the charge for processing and storage, 
should follow the coding requirements outlined in 231.2. 
 
231.2 - When a Provider Paid Under the OPPS Purchases Blood or 
Blood Products from a Community Blood Bank or When a Provider 
Paid Under the OPPS Assesses a Charge for Blood or Blood Products 
Collected By Its Own Blood Bank That Reflects More Than Blood 
Processing and Storage 
(Rev. 1702, Issued: 03-13-09, Effective: 04-01-09, Implementation: 04-06-09) 
  If an OPPS provider pays for the actual blood or blood product itself, in addition to 
paying for processing and storage costs when blood or blood products are supplied by 
either a community blood bank or the OPPS providers own blood bank, the OPPS 
provider must separate the charge for the unit(s) of blood or blood product(s) from the 
charge for processing and storage services.  The OPPS provider reports charges for the 
blood or blood product itself using Revenue Code series 038X (excluding 0380, which is 
not a valid revenue code for Medicare billing) with the LIDOS, the number of units 
transfused, and the appropriate blood product HCPCS code and HCPCS modifier BL.  
The OPPS provider reports charges for processing and storage services on a separate line 
using Revenue Code 0390, 0392, or 0399 with the LIDOS, the number of units 
transfused, and the appropriate blood product HCPCS code and HCPCS modifier BL.  
The same LIDOS, the same number of units, the same HCPCS code, and HCPCS 
modifier BL must be reported on both lines.  This requirement applies to all OPPS 
providers that transfuse blood and incur charges for both the blood itself and processing 
and storage. 
 
Effective for services furnished on or after July 1, 2005, the I/OCE will return to 
providers any claim that reports a charge for blood or blood products using Revenue 
Code 038X without a separate line for processing and storage services using Revenue 
Code 0390, 0392, or 0399.  Moreover, in order to process to payment, both lines must 
report the same line item date of service, the same number of units, and the same HCPCS 
code accompanied by modifier BL.  Payment for blood and blood products is based on 
the Ambulatory Payment Classification (APC) Group to which its HCPCS code is 
assigned, multiplied by the number of units transfused. 
 
Units of whole blood or packed red cells for which only processing and storage charges 
are reported are not subject to the blood deductible.  The Medicare blood deductible is 
applicable only if the OPPS provider purchases whole blood or packed red cells from a 
community blood blank or if the OPPS provider assesses a charge that reflects more than 
blood processing and storage for whole blood or packed red cells collected by its owns 
blood bank.  If the beneficiary has not already fulfilled the annual blood deductible or 
replaced the blood, OPPS payment will be made for processing and storage costs only.  
The beneficiary is liable for the blood portion of the payment as the blood deductible.  In 
order to ensure correct application of the Medicare blood deductible, providers should 
report charges for whole units of packed red cells using Revenue Code 381 (Packed red 
cells), and should report charges for whole units of whole blood using Revenue Code 382 
(Whole blood).  Revenue Codes 381 and 382 should be used only to report charges for 
packed red cells and whole blood, respectively. 
 
Please note that most hospitals obtain blood or blood products from community blood 
banks that charge only for processing and storage, rather than for the blood itself.  The 
blood coding requirements discussed in this section do not apply to blood and blood 
products carrying only a processing and storage fee; when billing only for blood 
processing and storage, OPPS providers should follow the coding requirements outlined 
in 231.1. 
  EXAMPLE:  An OPPS provider purchases 2 units of leukocyte-reduced red blood cells 
from a community blood bank and incurs a charge for the red cells 
themselves, and a charge for the blood banks processing and storage of 
the red blood cell unit.  The OPPS provider further incurs costs related to 
additional processing and storage of the red blood cell units after the 
OPPS provider has received the 2 units.  A Medicare beneficiary is 
transfused the two units of leukocyte-reduced red blood cells. 
 
The OPPS provider should report the charges for 2 units of P9016 by separately billing 
the red blood cell charges and the total processing and storage charges incurred.  The 
charges for the red blood cell units are to be reported on one line with the date the blood 
was transfused, Revenue Code series 038X (excluding 380), 2 units, HCPCS code P9016, 
and modifier BL.  The total charges for processing and storage are to be reported on the 
same claim, on a separate line, showing the date the blood was transfused, Revenue Code 
390, 0392, or 399, 2 units, HCPCS code P9016, and modifier BL.  Note that HCPCS 
modifier BL is reported on both lines. 
 
231.3 - Billing for Autologous Blood (Including Salvaged Blood) and 
Directed Donor Blood 
(Rev. 496, Issued: 03-04-05, Effective: 07-01-05, Implementation: 07-05-05) 
 
In general, when autologous (predeposited or obtained through intra- or postoperative 
salvage) or directed-donor transfusion is performed, OPPS providers should bill for the 
transfusion service and the number of units of the appropriate HCPCS code that describes 
the blood product.  Payment for the product is intended to cover the costs associated with 
providing the autologous or directed donor blood product service (e.g., collection, 
processing, transportation, and storage).  OPPS providers should bill the transfusion 
service and the blood product HCPCS code on the date that the transfusion took place 
and not on the date when the autologous blood was collected. 
 
When an autologous blood product is collected but not transfused, OPPS providers 
should bill CPT 86890 (autologous blood or component, collection, processing, and 
storage; predeposited) or 86891(autologous blood or component, collection, processing, 
and storage; intra- or postoperative salvage) and the number of units collected but not 
transfused.  CPT 86890 and 86891 are intended to provide payment for the additional 
resources needed to provide these services, which are not captured when a blood product 
HCPCS code is not billed.  Because billing 86890 or 86891 is only indicated when 
autologous blood is collected but not transfused, the OPPS provider should bill 86890 or 
86891 on the date when the OPPS provider is certain the blood will not be transfused 
(i.e., date of a procedure or date of outpatient discharge), rather than on the date of the 
products collection or receipt from the supplier. 
 
When a directed donor blood product is collected but not transfused to the initial targeted 
recipient or to any other patient, refer to the section 231.7 titled Billing for Unused 
Blood. 
  231.4 - Billing for Split Unit of Blood 
(Rev. 1487, Issued: 04-08-08, Effective: 04-01-08, Implementation: 04-07-08) 
 
HCPCS code P9011 was created to identify situations where one unit of blood or a blood 
product is split and some portion of the unit is transfused to one patient and the other 
portions are transfused to other patients or to the same patient at other times.  When a 
patient receives a transfusion of a split unit of blood or blood product, OPPS providers 
should bill P9011 for the blood product transfused, as well as CPT 86985 (Splitting, 
blood products) for each splitting procedure performed to prepare the blood product for a 
specific patient. 
 
Providers should bill split units of packed red cells and whole blood using Revenue Code 
389 (Other blood), and should not use Revenue Codes 381 (Packed red cells) or 382 
(Whole blood).  Providers should bill split units of other blood products using the 
applicable revenue codes for the blood product type, such as 383 (Plasma) or 384 
(Platelets), rather than 389.  Reporting revenue codes according to these specifications 
will ensure the Medicare beneficiary's blood deductible is applied correctly. 
 
EXAMPLE:  OPPS provider splits off a 100cc aliquot from a 250 cc unit of leukocyte-
reduced red blood cells for a transfusion to Patient X.  The hospital then splits off an 80cc 
aliquot of the remaining unit for a transfusion to Patient Y. At a later time, the remaining 
70cc from the unit is transfused to Patient Z. 
 
In billing for the services for Patient X and Patient Y, the OPPS provider should report 
the charges by billing P9011 and 86985 in addition to the CPT code for the transfusion 
service, because a specific splitting service was required to prepare a split unit for 
transfusion to each of those patients. However, the OPPS provider should report only 
P9011 and the CPT code for the transfusion service for Patient Z because no additional 
splitting was necessary to prepare the split unit for transfusion to Patient Z.  The OPPS 
provider should bill Revenue Code 0389 for each split unit of the leukocyte-reduced red 
blood cells that was transfused. 
 
231.5 - Billing for Irradiation of Blood Products 
(Rev. 496, Issued: 03-04-05, Effective: 07-01-05, Implementation: 07-05-05) 
 
In situations where a beneficiary receives a medically reasonable and necessary 
transfusion of an irradiated blood product, an OPPS provider may bill the specific 
HCPCS code which describes the irradiated product, if a specific code exists, in addition 
to the CPT code for the transfusion.  If a specific HCPCS code for the irradiated blood 
product does not exist, then the OPPS provider should bill the appropriate HCPCS code 
for the blood product, along with CPT code 86945 (irradiation of blood product, each 
unit). 
 
EXAMPLE:  If an OPPS provider transfuses the product described by P9040 (red blood 
cells, leukocytes reduced, irradiated, each unit), it would not be appropriate to bill an  additional CPT code for irradiation of the blood product since charges for irradiation 
should be included in the charge for P9040. 
 
231.6 - Billing for Frozen and Thawed Blood and Blood Products 
(Rev. 1487, Issued: 04-08-08, Effective: 04-01-08, Implementation: 04-07-08) 
 
In situations where a beneficiary receives a transfusion of frozen blood or a blood product 
which has been frozen and thawed for the patient prior to the transfusion, an OPPS 
provider may bill the specific HCPCS code which describes the frozen and thawed 
product, if a specific code exists, in addition to the CPT code for the transfusion..  If a 
specific HCPCS code for the frozen and thawed blood or blood product does not exist, 
then the OPPS provider should bill the appropriate HCPCS code for the blood product, 
along with CPT codes for freezing and/or thawing services that are not reflected in the 
blood product HCPCS code. 
 
EXAMPLE: If an OPPS provider transfuses the product described by P9057 (red blood 
cells, frozen/deglycerolized/washed, leukocytes reduced, irradiated, each unit), it would 
not be appropriate to bill additional CPT codes for freezing and/or thawing since charges 
for freezing and thawing should be included in the charge for P9057. 
 
If a blood product has been frozen and/or thawed in preparation for a transfusion, but the 
patient does not receive the transfusion of the blood product, the OPPS provider may bill 
the patient for the CPT code that describes the freezing and/or thawing services 
specifically provided for the patient.  Similar to billing for autologous blood collection 
when blood is not transfused, the OPPS provider should bill the freezing and/or thawing 
services on the date when the OPPS provider is certain the blood product will not be 
transfused (e.g., date of a procedure or date of outpatient discharge), rather than on the 
date of the freezing and/or thawing services. 
 
The following chart of blood and blood products indicates whether providers should bill 
separately for freezing and thawing using the available CPT codes. 
 
HCPCS/CPT  Short Descriptor  Billing of Freezing/Thawing 
P9010  Whole blood for transfusion  Freezing and thawing are separately billable 
P9011  Blood split unit  Freezing and thawing are separately billable 
Freezing and thawing codes not 
P9012  Cryoprecipitate each unit  separately billable 
Alternative P-code for frozen/thawed 
P9016  RBC leukocytes reduced  product available 
Freezing and thawing codes not 
P9017  Plasma 1 donor frz w/in 8 hr  separately billable 
P9019  Platelets, each unit  Freezing and thawing are separately billable 
P9020  Plaelet rich plasma unit  Freezing and thawing are separately billable 
Alternative P-code for frozen/thawed 
P9021  Red blood cells unit  product available 
P9022  Washed red blood cells unit  Freezing and thawing are separately billable  HCPCS/CPT  Short Descriptor  Billing of Freezing/Thawing 
Freezing and thawing codes not 
P9023  Frozen plasma, pooled, sd  separately billable 
P9031  Platelets leukocytes reduced  Freezing and thawing are separately billable 
P9032  Platelets, irradiated  Freezing and thawing are separately billable 
P9033  Platelets leukoreduced irrad  Freezing and thawing are separately billable 
P9034  Platelets, pheresis  Freezing and thawing are separately billable 
P9035  Platelet pheres leukoreduced  Freezing and thawing are separately billable 
P9036  Platelet pheresis irradiated  Freezing and thawing are separately billable 
P9037  Plate pheres leukoredu irrad  Freezing and thawing are separately billable 
P9038  RBC irradiated  Freezing and thawing are separately billable 
Freezing and thawing codes not 
P9039  RBC deglycerolized  separately billable  
RBC leukoreduced  Alternative P-code for frozen/thawed 
P9040  irradiated  product available 
Plasma protein 
P9043  fract,5%,50ml  Concept not applicable 
Cryoprecipitate reduced  Freezing and thawing codes not 
P9044  plasma  separately billable  
Plasmaprotein 
P9048  fract,5%,250ml  Concept not applicable 
P9050  Granulocytes, pheresis unit  Concept not applicable 
P9051  Blood, l/r, cmv-neg  Freezing and thawing are separately billable 
P9052  Platelets, hla-m, l/r, unit  Freezing and thawing are separately billable 
P9053  Plt, pher, l/r cmv-neg, irr  Freezing and thawing are separately billable 
Freezing and thawing codes not 
P9054  Blood, l/r, froz/degly/wash  separately billable 
P9055  Plt, aph/pher, l/r, cmv-neg  Freezing and thawing are separately billable 
P9056  Blood, l/r, irradiated  Freezing and thawing are separately billable 
Freezing and thawing codes not 
P9057  RBC, frz/deg/wsh, l/r, irrad  separately billable 
P9058  RBC, l/r, cmv-neg, irrad  Freezing and thawing are separately billable 
Plasma, frz between 8- Freezing and thawing codes not 
P9059  24hour  separately billable 
Freezing and thawing codes not 
P9060  Fr frz plasma donor retested  separately billable 
 
231.7 - Billing for Unused Blood 
(Rev. 1487, Issued: 04-08-08, Effective: 04-01-08, Implementation: 04-07-08) 
 
When blood or blood products which the OPPS provider has collected in its own blood 
bank or received from a community blood bank are not used, processing and storage 
costs incurred by the community blood bank and the OPPS provider cannot be charged to 
the beneficiary.  However, certain patient-specific blood preparation costs incurred by the 
OPPS provider (e.g., blood typing and cross-matching) can be charged to the beneficiary 
under Revenue Code Series 30X or 31X.  Patient-specific preparation charges should be 
billed on the dates the services were provided.   
Processing and storage costs for unused blood products should be reported as costs under 
cost centers for blood on the OPPS providers Medicare Cost Report.  These are costs 
that are not considered patient-specific blood preparation services.  Costs for unused 
blood products which have been purchased also should be reported as costs under cost 
centers for blood on the Medicare Cost Report. 
 
Where blood or a blood product is split or irradiated specifically with the intent of 
transfusion to a beneficiary but is not then used, the hospital may bill for the services of 
splitting or irradiating the unit of blood, but may not bill for the HCPCS code for the 
blood product that was not transfused.  The date of service must be the date on which the 
decision not to use the blood was made and indicated in the patient's medical record.  
Where the unit of blood is split or irradiated and stored without specific intention to 
administer it to a Medicare beneficiary at the time of splitting or irradiation and is not 
subsequently transfused, there is no service to be reported. 
 
231.8 - Billing for Transfusion Services 
(Rev. 496, Issued: 03-04-05, Effective: 07-01-05, Implementation: 07-05-05) 
 
To report charges for transfusion services, OPPS providers should bill the appropriate 
CPT code for the specific transfusion service provided under Revenue Code 391 (Blood 
Administration).  Transfusion services codes are billed on a per service basis, and not by 
the number of units of blood product transfused.  For payment, a blood product HCPCS 
code is required when billing a transfusion service code.  A transfusion APC will be paid 
to the OPPS provider for transfusing blood products once per day, regardless of the 
number of units or different types of blood products transfused. 
 
231.9 - Billing for Pheresis and Apheresis Services 
(Rev. 496, Issued: 03-04-05, Effective: 07-01-05, Implementation: 07-05-05) 
 
Apheresis/pheresis services are billed on a per visit basis and not on a per unit basis.  
OPPS providers should report the charge for an Evaluation and Management (E&M) visit 
only if there is a separately identifiable E&M service performed which extends beyond 
the evaluation and management portion of a typical apheresis/pheresis service.  If the 
OPPS provider is billing an E&M visit code in addition to the apheresis/pheresis service, 
it may be appropriate to use the HCPCS modifier -25. 
 
231.10 - Billing for Autologous Stem Cell Transplants 
(Rev. 3556, Issued: 07-01-2016; Effective: 01-27-16; Implementation: 10-03-16) 
 
The hospital bills and shows all charges for autologous stem cell harvesting, 
processing, and transplant procedures based on the status of the patient (i.e., inpatient 
or outpatient) when the services are furnished.  It shows charges for the actual 
transplant, described by the appropriate ICD procedure or CPT codes in Revenue 
Center 0362 (Operating Room Services; Organ Transplant, Other than Kidney) or 
another appropriate cost center.   
The CPT codes describing autologous stem cell harvesting procedures may be billed and 
are separately payable under the Outpatient Prospective Payment System (OPPS) when 
provided in the hospital outpatient setting of care.  Autologous harvesting procedures are 
distinct from the acquisition services described in Pub. 100-04, Chapter 3, 90.3.1 and 
231.11 of this chapter for allogeneic stem cell transplants, which include services 
provided when stem cells are obtained from a donor and not from the patient undergoing 
the stem cell transplant. 
 
The CPT codes describing autologous stem cell processing procedures also may be billed 
and are separately payable under the OPPS when provided to hospital outpatients. 
 
231.11 - Billing for Allogeneic Stem Cell Transplants 
(Rev. 11150; Issued: 12-10-21; Effective: 01-01-22; Implementation: 01-03-22) 
 
1. Definition of Acquisition Charges for Allogeneic Stem Cell Transplants 
 
Acquisition charges for allogeneic stem cell transplants include, but are not limited to, 
charges for the costs of the following services: 
 
1.  National Marrow Donor Program fees, if applicable, for stem cells from 
an unrelated donor; 
 
2.  Tissue typing of donor and recipient; 
 
3.  Donor evaluation; 
 
4.  Physician pre-procedure donor evaluation services; 
 
5.  Costs associated with harvesting procedure (e.g., general routine and 
special care services, procedure/operating room and other ancillary 
services, apheresis services, etc.); 
 
6.  Post-operative/post-procedure evaluation of donor; and 
 
7.  Preparation and processing of stem cells. 
 
Payment for these acquisition services is included in the OPPS C-APC payment for the 
allogeneic stem cell transplant when the transplant occurs in the hospital outpatient 
setting.  The Medicare contractor does not make separate payment for these acquisition 
services, because hospitals may bill and receive payment only for services provided to the 
Medicare beneficiary who is the recipient of the stem cell transplant and whose illness is 
being treated with the stem cell transplant.  Recurring update notifications describing 
changes to and billing instructions for various payment policies implemented in the OPPS 
are issued annually. 
  Acquisition charges for stem cell transplants apply only to allogeneic transplants, for 
which stem cells are obtained from a donor (other than the recipient himself or herself).  
Acquisition charges do not apply to autologous transplants (transplanted stem cells are 
obtained from the recipient himself or herself), because autologous transplants involve 
services provided to the beneficiary only (and not to a donor), for which the hospital may 
bill and receive payment (see Pub. 100-04, chapter 3, 90.3.1 and 231.10 of this chapter 
for information regarding billing for autologous stem cell transplants). 
 
2. Billing for Acquisition Services 
 
The hospital bills and shows acquisition charges for allogeneic stem cell transplants 
based on the status of the patient (i.e., inpatient or outpatient) when the transplant is 
furnished.  See Pub. 100-04, chapter 3, 90.3.1 for instructions regarding billing for 
acquisition services for allogeneic stem cell transplants that are performed in the inpatient 
setting. 
 
Effective January 1, 2017, when the allogeneic stem cell transplant occurs in the 
outpatient setting, the hospital identifies stem cell acquisition charges for allogeneic bone 
marrow/stem cell transplants separately in FL 42 of Form CMS-1450 (or electronic 
equivalent) by using revenue code 0815 (Other Organ Acquisition).  Revenue code 0815 
charges should include all services required to acquire stem cells from a donor, as defined 
above, and should be reported on the same claim as the transplant procedure in order to 
be appropriately packaged for payment purposes.  Revenue code 0815 charges for 
allogeneic stem cell acquisition costs are reported on Worksheet D Part V, column 2, line 
77, cost center 0077 of the hospital Medicare cost report (Form CMS-2552-10). 
 
The transplant hospital keeps an itemized statement that identifies the services furnished, 
the charges, the person receiving the service (donor/recipient), and whether this is a 
potential transplant donor or recipient.  These charges will be reflected in the transplant 
hospital's stem cell/bone marrow acquisition cost center.  For allogeneic stem cell 
acquisition services in cases that do not result in transplant, due to death of the intended 
recipient or other causes, hospitals include the costs associated with the acquisition 
services on the Medicare cost report. 
 
In the case of an allogeneic transplant in the hospital outpatient setting, the hospital 
reports the transplant itself with the appropriate CPT code, and a charge under revenue 
center code 0362 or another appropriate cost center. Selection of the cost center is up to 
the hospital. 
 
231.12 - Correct Coding Initiative (CCI) Edits 
(Rev. 1882, Issued:  12-21-09; Effective Date:  01-01-10; Implementation Date:  01-
04-10) 
 
The OPPS providers should be aware that certain CCI edits may apply when billing for 
blood and blood product services.  The OPPS providers should consult the most current 
list of CCI edits to determine whether they apply to the services or HCPCS blood product  codes being reported.  A file with the most current list of CCI edits applicable to 
Medicare Part B services paid by A/B MACs (A) under the OPPS is available at:  
http://www.cms.hhs.gov/NationalCorrectCodInitEd/NCCIEHOPPS/list.asp 
 
240 - Inpatient Part B Hospital Services 
(Rev. 3106, Issued: 11-06-14, Effective: 10-01-13, Implementation: 02-10-15)  
 
Medicare pays for hospital (including CAH) inpatient Part B services in the 
circumstances provided in Pub. 100-02, Medicare Benefit Policy Manual, Chapter 6,  10 
(Medical and Other Health Services Furnished to Inpatients of Participating Hospitals).  
Hospitals must bill Part B inpatient services on a 12x Type of Bill.  This Part B inpatient 
claim is subject to the statutory time limit for filing Part B claims described in chapter 1, 
70 of this manual.   
 
Inpatient Part B services include inpatient ancillary services that do not require an 
outpatient status and are not strictly provided in an outpatient setting.  Services that 
require an outpatient status and are provided only in an outpatient setting are not payable 
inpatient Part B services, including Clinic Visits, Emergency Department Visits, and 
Observation Services (this is not a complete listing). 
 
Inpatient routine services in a hospital generally are those services included by the 
provider in a daily service charge--sometimes referred to as the "Room and Board" 
charge. They include the regular room, dietary and nursing services, minor medical and 
surgical supplies, medical social services, psychiatric social services, and the use of 
certain equipment and facilities for which a separate charge is not customarily made to 
Medicare Part A.  Many nursing services provided by the floor nurse (such as IV 
infusions and injections, blood administration, and nebulizer treatments, etc.) may or may 
not have a separate charge established depending upon the classification of an item or 
service as routine or ancillary among providers of the same class in the same State.  Some 
providers customary charging practice has established separate charges for these services 
following the PRM-1 instructions, however, in order for a providers customary charging 
practice to be recognized it must be consistently followed for all patients and this must 
not result in an inequitable apportionment of cost to the program.  If the PRM-1 
instructions have not been followed, a provider cannot bill these services as separate 
charges.  Additionally, it is important that the charges for service rendered and 
documentation meet the definition of the HCPCS in order to separately bill. 
 
240.1 - Editing Of Hospital Part B Inpatient Services: Reasonable and 
Necessary Part A Hospital Inpatient Denials 
(Rev.:11685, Issued:11-09-22, Effective: 07-01-22, Implementation: 12-12-22) 
 
When inpatient services are denied as not medically necessary or a provider submitted 
medical necessity denial utilizing occurrence span code M1, and the services are furnished 
by a participating hospital, Medicare pays under Part B for physician services and the non-
physician medical and other health services provided in Pub. 100-02, Medicare Benefit  Policy Manual, Chapter 6, 10.1, Reasonable and Necessary Part A Hospital Inpatient 
Claim Denials.  
A hospital may also be paid for Part B inpatient services if it determines under Medicare's 
utilization review requirements that a beneficiary should have received hospital outpatient 
rather than hospital inpatient services, and the beneficiary has already been discharged from 
the hospital (commonly referred to as hospital self-audit). If the hospital already submitted a 
claim to Medicare for payment under Part A, the hospital would be required to adjust its Part 
A claim (to make the provider liable) prior to submitting a claim for payment of Part B 
inpatient services. Whether or not the hospital had submitted a claim to Part A for payment, 
we require the hospital to submit a Part A claim indicating that the provider is liable under 
section 1879 of the Act for the cost of the Part A services. The hospital could then submit an 
inpatient claim for payment under Part B for all services that would have been reasonable and 
necessary if the beneficiary had been treated as a hospital outpatient rather than admitted as a 
hospital inpatient, except where those services specifically require an outpatient status. 
A hospital part B inpatient services claim billed when a reasonable and necessary part A 
hospital inpatient was denied must be billed with:  
  A condition code W2 attesting that this is a rebilling and no appeal is in process,  
  A/B REBILLING in the treatment authorization field, and  
  The original, denied inpatient claim (CCN/DCN/ICN) number. 
 
NOTE: Providers submitting an 837I are instructed to place the appropriate Prior 
Authorization code above into Loop 2300 REF02 (REF01 = G1) as follows: REF*G1*A/B 
REBILLING~ For DDE or paper Claims, "A/B Rebilling" will be added in FL 63. 
NOTE: Providers submitting an 837I are instructed to place the DCN in the Billing Notes 
loop 2300/NTE in the format: NTE*ADD*ABREBILL12345678901234~ For DDE or paper 
Claims, Providers are instructed to use the word "ABREBILL" plus the denied inpatient 
DCN/CCN/ICN shall be added to the Remarks Field (form locator #80) on the claim using 
the following format: "ABREBILL12345678901234". (The numeric string 
(12345678901234) is meant to represent original claim DCN/ICN numbers from the inpatient 
denial.) 
Not Allowed Revenue Codes 
The claims processing system shall set edits to prevent payment on Type of Bill 012x for 
claims containing the revenue codes listed in the table below. 
010x   011x   012x   013x   014x   015x   016x   017x  
018x   019x   020x   021x   022x   023x   029x  0390 
0399   045x  050x   051x   052x   054x   055x   056x 
057x   058x   059x   060x   0630   0631   0632   0633 
0637   064x   065x   066x   067x   068x   072x   0762 
082x   083x   084x   085x   088x   089x   0905   0906 
0907   0912   0913   093x   0941   0943   0944   0945 
0946   0947   0948   095x   0960   0961   0962   0963  0964*   0969   097x   098x   099x   100x   210x   310x 
               
 
* In the case of Revenue Code 0964, this is used by hospitals that have a CRNA exception.  
 
The contractor shall use the following remittance advice messages and associated codes when 
rejecting/denying claims under this policy. This CARC/RARC combination is compliant with 
CAQH CORE Business Scenario Three.  
 
Group Code: PR 
CARC: 96  
RARC: M28  
MSN: 21.21 
 
CWF shall edit to ensure that DSMT services are not billed on a 012x claim.  
 
Hospitals are required to report HCPCS codes that identify the services rendered. 
ort HCPCS codes that identify the services rendered. 
240.2 - Editing Of Hospital Part B Inpatient Services: Other 
Circumstances in Which Payment Cannot Be Made under Part A 
(Rev.:11685, Issued:11-09-22, Effective: 07-01-22, Implementation: 12-12-22) 
 
When Medicare pays under Part B for the limited set of non-physician medical and other 
health services provided in Pub. 100-02, Medicare Benefit Policy Manual, chapter 6, 10.2 
(that is, when furnished by a participating hospital to an inpatient of the hospital who is not 
entitled to benefits under Part A, has exhausted his or her Part A benefits, or receives services 
not covered under Part A), the contractor shall set revenue code edits to prevent payment on 
Type of Bill 012x for claims containing the revenue codes listed in the table below with 
exceptions as noted.  For the exceptions noted, contractors shall ensure that only the 
exceptions identified are allowed to process with the revenue code. 
Not Allowed Revenue Codes 
 
010x   011x   012x   013x   014x   015x   016x   017x  
018x   019x   020x   021x   022x   023x   0250  0251 
0252   0253   0256   0257   0258   0259   026x   0270 
0271  0272  0273   0277   0279   028x  029x   036x 
0370   0374   0379  038x  039x  041x  045x  0470 
0472   0479   0480  0481  0489  049x   050x   051x 
052x  053x   0541   0542   0543   0544   0546   0547 
0548   0549   055x   056x  057x   058x   059x  060x 
0620  0624  063x  064x  065x   066x   067x   068x 
069x  070x  071x  072x  075x  076x  079X  081x 
082x   083x   084x   085x  087x  088x  089x  090x  091x  093x  0940  0941  0942*  0943  0944  0945 
0946  0947  0948  0949  095x  0960  0961  0962 
0963  0964*  0969   097x   098x   099x   100x   210x 
310x               
 
* In the case of Revenue Code 0964, this is used by hospitals that have a CRNA exception.  
* In the case of Revenue Code 0942, this is used by rural hospitals for kidney disease 
education (KDE) services.  The actual geographic location, core based statistical area 
(CBSA) is used to identify facilities located in rural areas. In addition, KDE services are 
covered when claims are received from section 401 hospitals.  Additionally, models may 
allow this Revenue Code. 
 
The contractor shall use the following remittance advice messages and associated codes when 
rejecting/denying claims under this policy. This CARC/RARC combination is compliant with 
CAQH CORE Business Scenario Three.  
 
Group Code: PR  
CARC: 96  
RARC: M28  
MSN: 21.21  
 
Hospitals are required to report HCPCS codes that identify the services rendered. 
Allowed Revenue Codes  
0240  0274  0275  0276  0278  030x  031x  032x 
0333  034x  035x,  040x,  042x  043x  044x  046x 
0471  0482  0483  054x  061x  0623  073x  074x 
0771  078x*  080x  086x  092x  0942*  0964*   
 
*Billed prior to admission or on the day of discharge. 
* In the case of Revenue Code 0964, this is used by hospitals that have a CRNA exception.  
* In the case of Revenue Code 0942, this is used by rural hospitals for kidney disease 
education (KDE) services.  The actual geographic location, core based statistical area (CBSA) 
is used to identify facilities located in rural areas. In addition, KDE services are covered when 
claims are received from section 401 hospitals.  Additionally, models may allow this 
Revenue Code. 
 
Additional Allowed services that are be identified by HCPCS, not identified by Revenue Codes 
Other Diagnostic services: (A MAC maintained) 
Preventive services:  COVID-19, Influenza, pneumococcal pneumonia, and hepatitis B vaccines  
Colorectal screening  
Screening glaucoma services  
Bone mass measurements  
Prostate screening  
Covered drugs: 
Hemophilia clotting factors  
Immunosuppressive drugs  
Oral anti-cancer drugs  
Oral anti-emetic  
Non-ESRD Epoetin Alfa (EPO)  
 
240.3 - Implantable Prosthetic Devices 
(Rev. 2877, Issued: 02-07-14, Effective: 10-01-13, Implementation: 04-07-14) 
 
Under 42 CFR 419.2(b)(11), implantable prosthetic devices (other than dental) which 
replace all or part of an internal body organ (including colostomy bags and supplies 
directly related to colostomy care), including replacement of these devices, are paid under 
the OPPS, and are therefore packaged with the surgical  implantation procedure unless 
the device has pass-through payment status.  This payment provision applies when such a 
device is billed as a Part B outpatient service, or as a Part B inpatient service when the 
inpatient admission is determined not reasonable and necessary and the beneficiary 
should have been treated as a hospital outpatient (see Pub. 100-02, Medicare Benefit 
Policy Manual, chapter 6, 10.1).  In these circumstances, hospitals should submit the 
usual HCPCS code for Part B payment of the device. 
 
In the other circumstances in which a beneficiary does not have Part A coverage of 
inpatient services on the date that such a device is implanted (that is, when furnished by a 
participating hospital to an inpatient who is not entitled to benefits under Part A, has 
exhausted his or her Part A benefits, or receives services not covered under Part A), 
hospitals paid under the OPPS should report HCPCS code, C9899, Implanted Prosthetic 
Device, Payable Only for Inpatients who do not Have Inpatient Coverage, that is 
effective for services furnished on or after January 1, 2009.  This code allows an 
alternative Part B inpatient payment methodology for the device as discussed in this 
section, and may be reported only on claims with TOB 12X when the prosthetic device is 
implanted on a day on which the beneficiary does not have coverage under Part A 
because he or she is not entitled to Part A benefits, has exhausted his or her Part A 
benefits, or receives services not covered under Part A.  The line containing this new 
code will be rejected if it is reported on a claim that is not a TOB 12X or if it is reported  with a line item date of service on which the beneficiary has coverage of inpatient 
hospital services.  By reporting C9899, the hospital is reporting that the item is eligible 
for separate OPPS payment because the primary procedure is not a payable Part B 
inpatient service under Pub. 100-02, Medicare Benefit Policy Manual, Chapter 6, 10.2 
(Other Circumstances in Which Payment Cannot Be Made under Part A). 
 
If C9899 is a separately payable Part B inpatient service, the contractor shall determine 
the payment amount as follows.  If the device has pass through status under the OPPS, 
the contractor shall establish the payment amount for the device at the product of the 
charge for the device and the hospital specific cost to charge ratio.  Where the device 
does not have pass through status under the OPPS, the contractor shall establish the 
payment amount for the device at the amount for a comparable device in the DMEPOS 
fee schedule where there is such an amount.  Payment under the DMEPOS fee schedule 
is made at the lesser of charges or the fee schedule amount and therefore if there is a fee 
for the specific item on the DMEPOS fee schedule, the payment amount for the item will 
be set at the lesser of the actual charges or the DMEPOS fee schedule amount.  Where the 
item does not have pass through payment status and where there is no amount for a 
comparable device in the DMEPOS fee schedule, the contractor shall establish a payment 
amount that is specific to the particular implanted prosthetic device for the applicable 
calendar year.  This amount (less applicable unpaid deductible and coinsurance) will be 
paid for that specific device for services furnished in the applicable calendar year unless 
the actual charge for the item is less than the established amount). Where the actual 
charge is less than the established amount, the contractor will pay the actual charge for 
the item (less applicable unpaid deductible and coinsurance). 
 
In setting a contractor established payment rate for the specific device, the contractor 
takes into account the cost information available at the time the payment rate is 
established.  This information may include, but is not limited to, the amount of device 
cost that would be removed from an applicable APC payment for implantation of the 
device if the provider received a device without cost or a full credit for the cost of the 
device. 
 
If the contractor chooses to use this amount, see 
www.cms.hhs.gov/HospitalOutpatientPPS/ for the amount of reduction to the APC 
payment that would apply in these cases.  From the OPPS webpage, select Device, 
Radiolabeled Product, and Procedure Edits from the list on the left side of the page.  
Open the file Procedure to Device edits to determine the HCPCS code that best 
describes the procedure in which the device would be used.  Then identify the APC to 
which that procedure code maps from the most recent Addenda B on the OPPS webpage 
and open the file FB/FC Modifier Procedures and Devices.  Select the applicable years 
file of APCs subject to full and partial credit reductions (for example: CY 2008 APCs 
Subject to Full and Partial Credit Reduction Policy).  Select the Full offset reduction 
amount that pertains to the APC that is most applicable to the device described by 
C9899.  It would be reasonable to set this amount as payment for the device. 
  For example, if C9899 is reporting insertion of a single chamber pacemaker (C1786 or 
equivalent narrative description on the claim in remarks) the file of procedure to device 
edits shows that a single chamber pacemaker is the dominant device for APC 0090 (APC 
0089 is for insertion of both pacemaker and electrodes and therefore would not apply if 
electrodes are not also billed).  The table of offset reduction amounts for CY 2008 shows 
that the estimated cost of a single chamber pacemaker for APC 0090 is $4881.77.  It 
would therefore be reasonable for the contractor/MAC to set the payment rate for a single 
chamber pacemaker to $4881.77. In this case the coinsurance would be $936.75 (20 
percent of $4881.77, which is less than the inpatient deductible). 
 
The beneficiary coinsurance is 20 percent of the payment amount for the device (i.e. the 
pass through payment amount, the DMEPOS fee schedule amount, the contractor 
established amount, or the actual charge if less than the DMEPOS fee schedule amount or 
the contractor established amount for the specific device), not to exceed the Medicare 
inpatient deductible that is applicable to the year in which the implanted prosthetic device 
is furnished. 
 
When a hospital that is not paid under the OPPS furnishes an implantable prosthetic 
device other than dental), which replaces all or part of an internal body organ (including 
colostomy bags and supplies directly related to colostomy care), including replacement of 
such a device, to an inpatient who has coverage under Part B but does not have Part A 
coverage, and the primary procedure is not a payable Part B inpatient service under Pub. 
100-02, Medicare Benefit Policy Manual, chapter 6, 10.2 (Other Circumstances in 
Which Payment Cannot Be Made under Part A), payment for the implantable prosthetic 
device is made under the payment mechanism that applies to other hospital outpatient 
services (e.g., reasonable cost, all inclusive rate, waiver). 
 
240.4 - Indian Health Service/Tribal Hospital Inpatient Social 
Admissions 
(Rev. 2877, Issued: 02-07-14, Effective: 10-01-13, Implementation: 04-07-14) 
 
There may be situations when an American Indian/Alaskan Native (AI/AN) beneficiary 
is admitted to an IHS/Tribal facility for social reasons. These social admissions are for 
patient and family convenience and are not billable to Medicare.  There are also 
occasions where IHS/Tribal hospitals elect to admit patients prior to a scheduled day of 
surgery, or place a patient in a room after an inpatient discharge. These services are also 
considered to be social admissions as well. 
 
For patients in a social admission status requiring outpatient services at another facility, 
Medicare disallows payment for inpatient Part B ancillary services, Type of Bill (TOB) 
12X during a social admission stay when there is another bill from a different facility for 
an outpatient service, TOB 13X or 72X. The Common Working File (CWF) returns an 
A/B crossover edit and creates an unsolicited response (IUR) in this situation. 
 
The CWF also creates an IUR when a line item date of service on TOB 12X is equal to or 
one day following the discharge date on TOB 11X for the same provider.   
The CWF bypasses both of these edits when the beneficiary is not entitled to Medicare 
Part A at the time the services on TOB 12X are rendered. 
 
240.5 - Payment of Part B Services in the Payment Window for 
Outpatient Services Treated as Inpatient Services When Payment 
Cannot Be Made Under Part A 
(Rev. 2877, Issued: 02-07-14, Effective: 10-01-13, Implementation: 04-07-14) 
 
See Pub. 100-02, Medicare Benefit Policy Manual, Chapter 6, 10 (Medical and Other 
Health Services Furnished to Inpatients of Participating Hospitals) and Pub 100-04, 
Medicare Claims Processing Manual, Chapter 4, 10.12 (Payment Window for 
Outpatient Services Treated as Inpatient Services) regarding services bundled into the 
original Part A claim under the 3-day (1-day for non-IPPS hospitals) payment window 
prior to the inpatient admission, that may be billed to Part B when Part A payment cannot 
be made.  Hospitals should use the following type of bill to report these services: 
 
  13X TOB (85X for a CAH)- Hospital outpatient services included in the payment 
window for outpatient services treated as inpatient services 
 
  14X TOB- Laboratory tests that are paid under the clinical laboratory fee schedule 
(see chapter 16, 40.3 of this manual), and included in the payment window for 
outpatient services treated as inpatient services  
 
240.6 - Submitting Provider-Liable No-Pay Part A Claims and 
Beneficiary Liability 
(Rev. 2877, Issued: 02-07-14, Effective: 10-01-13, Implementation: 04-07-14) 
 
When Part A payment cannot be made for a hospital inpatient admission and the hospital, 
not the beneficiary, is liable under section 1879 of the Act for the cost of the Part A items 
and services, the hospital must submit a provider-liable no pay Part A claim (110 TOB) 
(see chapter 3 40.2.2, Charges to Beneficiaries for Part A Services of this manual).  
Submission of this claim cancels any claim that may have already been submitted by the 
hospital for payment under Part A.  When a Medicare review contractor denies a Part A 
claim for medical necessity, the claims system converts the originally submitted 11X 
claim to a 110 TOB on behalf of the hospital. 
 
When the hospital and not the beneficiary is liable for the cost of the Part A services 
(pursuant to the limitation on liability provision in Section 1879 of the Social Security 
Act), the beneficiary is not responsible for paying the deductible and coinsurance charges 
related to the denied Part A claim and the beneficiarys Medicare utilization record is not 
charged for the services and items furnished.  The hospital must refund any payments 
(including coinsurance and deductible) made by the beneficiary or third party for a 
denied Part A claim when the provider is held financially liable for that denial (see 
section 1879(b) of the Act; 42 CFR  411.402; and chapter 30  30.1.2, Beneficiary  Determined to Be Without Liability and 30.2.2, Provider/Practitioner/Supplier is 
Determined to Be Liable of this manual). 
 
Medicare beneficiaries are liable for their usual Part B financial liability for services 
covered under Part B when Part A payment cannot be made, including Part B 
copayments for each payable Part B inpatient or Part B outpatient service.  The 
beneficiary is also liable for the cost of services not covered under Part B. 
 
250 - Special Rules for Critical Access Hospital Outpatient Billing 
(Rev. 1111, Issued: 11-09-06, Effective: 04-01-07, Implementation: 04-02-07) 
 
For cost reporting periods beginning before October 1, 2000, a CAH will be paid for 
outpatient services under the method in 250.1.  The BIPA legislation on payment for 
professional services at 115 percent of what would otherwise be paid under the fee 
schedule is effective for services furnished on or after July 1, 2001.  This provision was 
implemented with respect to cost reporting periods starting on or after October 1, 2001. 
 
For cost reporting period beginning on or after October 1, 2001, the CAH will be paid 
under the method in item 1 below unless it elects to be paid under the method in 250.1 
of this manual. 
 
If a CAH elects payment under the elective method (cost-based facility payment plus fee 
schedule for professional services) for a cost reporting period, that election is effective 
for the entire cost reporting period to which it applies.  If the CAH wishes to make a new 
election or change a previous election, that election should be made in writing, made on 
an annual basis and delivered to the appropriate A/B MAC (A), at least 30 days in 
advance of the beginning of the affected cost reporting period. 
 
All outpatient CAH services, other than pneumococcal pneumonia vaccines, influenza 
vaccines, administration of the vaccines, screening mammograms, and clinical diagnostic 
laboratory tests are subject to Part B deductible and coinsurance.  Regardless of the 
payment method applicable for a period, payment for outpatient CAH services is not 
subject to the following payment principles:  
 
  Lesser of cost or charges,  
 
  Reasonable compensation equivalent (RCE) limits,  
 
  Any type of reduction to operating or capital costs under 42 CFR 413.124 or 
413.30(j)(7), or  
 
  Blended payment rates for ASC-type, radiology, and other diagnostic services. 
 
See 250.4 below regarding payment for screening mammography services. 
  250.1 - Standard Method - Cost-Based Facility Services, With Billing of 
A/B MAC (B) for Professional Services 
(Rev. 2581, Issued: 11-02-12, Effective: 04-01-13, Implementation: 04-01-13) 
 
Effective for cost reporting periods beginning on or after January 1, 2004, payment for 
outpatient CAH services under this method will be made for the lesser of: 1) 80 percent of 
101 percent of the reasonable cost of the CAH in furnishing those services, or 2) 101 percent 
of the reasonable cost of the CAH in furnishing those services, less applicable Part B 
deductible and coinsurance amounts.  
 
Payment for professional medical services furnished in a CAH to CAH outpatients is made 
by the A/B MAC (B) on a fee schedule, charge, or other fee basis, as would apply if the 
services had been furnished in a hospital outpatient department. For purposes of CAH 
payment, professional medical services are defined as services provided by a physician or 
other practitioner, e.g., a physician assistant that could be billed directly to a A/B MAC (B) 
under Part B of Medicare or a nurse practitioner that could be billed directly to a A/B MAC 
(B) under Part B of Medicare.  
 
In general, payment for professional medical services, under the cost-based CAH payment 
plus professional services billed to the A/B MAC (B) method should be made on the same 
basis as would apply if the services had been furnished in the outpatient department of a 
hospital.  
 
Bill type 85X is used for all outpatient services including services approved as ASC services. 
Non-patient laboratory specimens (those not meeting the criteria for reasonable cost payment 
in 250.6) will be billed on a 14X type of bill.  
 
(See Section 250.6 - Clinical Diagnostic Laboratory Tests Furnished by CAHs.) 
 
250.1.1 - Special Instructions for Non-covered Time Increments in 
Standard Method Critical Access Hospitals (CAHs) 
(Rev. 1921, Issued: 02-19-10, Effective: 04-01-10, Implementation: 04-05-10) 
 
CAHs sometimes bill outpatient therapy services using HCPCS that by definition give 
specific time increments like those discussed in Chapter 5, sections 20 and 40.  However, 
standard method CAHs are not subject to payment on a fee basis under the Medicare 
Physician Fee Schedule, therefore these CAHs should follow the instructions below if 
there is a need to bill non-covered increments. 
 
When HCPCS codes required for reporting do not specify an increment of billing in their 
definition (i.e., 15 minute intervals), the unit for the line item is 1, and CAHs should 
follow the general instructions given for billing non-covered charges in Chapter 1, 
section 60, either by the line item or on no payment claims. 
 
Several of the outpatient therapy HCPCS codes, however, are defined in specific time 
increments, and units reported on line items should be consistent with these definitions.  In such cases, when both covered and non-covered increments are provided in the same 
visit on the same date of service, CAHs should bill as follows: 
 
  Report covered and non-covered units in separate line items, even when part of the 
same visit, with one line item for all covered and non-covered increments in a visit, 
and another for all non-covered increments in that same visit; 
 
  Use ABN-related modifiers when appropriate to explain non-coverage and payment 
liability of specific lines (i.e., -GY, see Chapter 1, section 60 for details on these 
modifiers); 
 
  Do not report non-covered line items that are part of a partially covered service on a 
separate no payment claim (i.e., using condition code 21).  Instead, always report 
them on the same claim with the separate lines for the covered portion of the 
service. No payment claims received for the same date, same beneficiary, same 
provider and same therapy service as a for-payment claim will be rejected. A 
distinct reason code will make providers aware of the reason for the rejection, and 
they can correct their billing to have covered and non-covered portions of the same 
service on the same claim; 
 
  Do not report non-covered line items as part of the required reporting of value codes 
50, 51 and 52 for covered visits (i.e., where all increments are non-covered and 
there are no covered charges for the line item, since these line items are either part 
of an already counted partially covered visit, or an entirely non-covered visit); and 
 
  Never split a single increment into a covered and non-covered portion. 
 
250.2 - Optional Method for Outpatient Services:  Cost-Based Facility 
Services Plus 115 percent Fee Schedule Payment for Professional 
Services 
(Rev. 3019, Issued: 08-07-14, Effective: 01-01-12, ICD-10: Upon Implementation of 
ICD- 10, Implementation: 09-08-14, ICD-10: Upon Implementation of ICD- 10) 
 
The BIPA legislation on payment for professional services at 115 percent of what would 
otherwise be paid under the fee schedule is effective for services furnished on or after 
July 1, 2001.  A CAH may elect to be paid for outpatient services in any cost reporting 
period under this method by filing a written election with the A/B MAC (A) on an annual 
basis at least 30 days before start of the Cost Reporting period to which the election 
applies.  An election of this payment method, once made for a cost reporting period, 
remains in effect for all of that period for the CAH. 
 
Effective for cost reporting periods beginning on or after October 1, 2010 if a CAH 
elected the optional method for its most recent cost reporting period beginning before 
October 1, 2010 or chooses to elect the optional method on or after October 1, 2010, that 
election remains in place until it is terminated, an annual election is no longer required.  
If a CAH elects the optional method on or after October 1, 2010, it must submit its  request in writing to its A/B MAC (A) at least 30 days before the start of the first cost 
reporting period for which the election is effective.  That election will not terminate 
unless the CAH submits a termination request to its A/B MAC (A) at least 30 days before 
the start of its next cost reporting period. 
 
The Medicare Prescription Drugs, Improvement, and Modernization Act (MMA) of 
2003, changed the requirement that each practitioner rendering a service at a CAH that 
has elected the optional method, reassign their billing rights to that CAH.  This provision 
allows each practitioner to choose whether to reassign billing rights to the CAH or file 
claims for professional services through their A/B MAC (B).  The reassignment will 
remain in effect for that entire cost reporting period. 
 
The individual practitioner must certify, using the Form CMS-855R, if he/she wishes to 
reassign their billing rights.  The CAH must then forward a copy of Form CMS-855R to 
the A/B MAC (A), and the A/B MACs (B) must have the practitioner sign an attestation 
that clearly states that the practitioner will not bill the A/B MAC (A) or A/B MAC (B) 
for any services rendered at the CAH once the reassignment has been given to the CAH.  
This attestation will remain at the CAH. 
 
For CAHs that elected the optional method before November 1, 2003, the provision is 
effective beginning on or after July 1, 2001.  For CAHs electing the optional method on 
or after November 1, 2003, the provision is effective for cost reporting periods beginning 
on or after July 1, 2004.  Under this election, a CAH will receive payment from their A/B 
MAC (A) for professional services furnished in that CAHs outpatient department. 
Professional services are those furnished by all licensed professionals who otherwise 
would be entitled to bill the A/B MAC (B) under Part B. 
 
Payment to the CAH for each outpatient visit (reassigned billing) will be the sum of the 
following: 
 
  For facility services, not including physician or other practitioner services, payment 
will be based on 101 percent of the reasonable costs of the services.  List the facility 
service(s) rendered to outpatients using the appropriate revenue code.  The A/B 
MAC will pay 101 percent of the reasonable costs for the outpatient services less 
applicable Part B deductible and coinsurance amounts, plus: 
 
  Show the professional services separately, along with the appropriate HCPCS code 
(physician or other practitioner) in one of the following revenue codes - 096X, 
097X, or 098X. 
 
The A/B MAC (A) uses the Medicare Physician Fee Schedule (MPFS) amounts to pay 
for all the physician/nonphysician practitioner services rendered in a CAH that elected 
the optional method.  Payment is based on the lesser of the actual charge or the facility-
specific MPFS amount less deductible and coinsurance times 1.15; and 
 
  AK - Service rendered in a CAH by a non-participating physician   For a non-participating physician service, a CAH must place modifier AK on the 
claim.  Payment is based on the lesser of the actual charge or a reduced fee 
schedule amount of 95 percent. Payment is calculated as follows: 
 
  [(facility-specific MPFS amount times the non-participating physician 
reduction (0.95) minus (deductible and coinsurance] times 1.15. 
 
  GF - Services rendered by a nurse practitioner (NP), clinical nurse specialist 
(CNS), or physician assistant (PA)  
GF - Services rendered in a CAH by a nurse practitioner (NP), clinical nurse 
specialist (CNS), certified registered nurse (CRN) or physician assistant (PA).  (The 
GF modifier is not to be used for CRNA services.  If a claim is received and it has 
the GF modifier for certified registered nurse anesthetist (CRNA) services, the 
claim is returned to the provider.)  Also, while this national GF modifier includes 
CRNs, there is no benefit under Medicare law that authorizes payment to CRNs for 
their services.  Accordingly, if a claim is received and it has the GF modifier for 
CRN services, no Medicare payment should be made. 
 
Services billed with the GF modifier are paid based on the lesser of the actual 
charge or a reduced fee schedule amount of 85 percent.  Payment is calculated as 
follows: 
 
  [(facility-specific MPFS amount times the nonphysician practitioner 
services reduction (0.85) minus (deductible and coinsurance)] times 1.15. 
 
  SB - Services rendered in a CAH by a certified nurse-midwife 
For dates of service prior to January 1, 2011, certified nurse-midwife services 
billed with the SB modifier are paid based on the lesser of the actual charge or a 
reduced fee schedule amount of 65 percent.  Payment is calculated as follows: 
 
For dates of service on or after January 1, 2011, Medicare covers the services of a 
certified nurse-midwife.  The SB modifier is used to bill for the services and 
payment is based on the lesser of the actual charge or 100 percent of the MPFS.  
MPFS Payment is calculated as follows: 
 
  [(facility-specific MPFS amount) minus (deductible and coinsurance)] 
times 1.15. 
  AH - Services rendered in a CAH by a clinical psychologist 
Payment for the services of a clinical psychologist is based on the lesser of the 
actual charge or 100 percent of the MPFS.   Payment is calculated as follows: 
 
  [(facility-specific MPFS amount) minus (deductible and coinsurance)] 
times 1.15. 
    AE - Services rendered in a CAH by a nutrition professional/registered 
dietitian. 
Services billed with the AE modifier are paid based on the lesser of the actual 
charge or a reduced fee schedule amount of 85 percent. Payment is calculated as 
follows: 
 
  [(facility-specific MPFS amount times the registered dietitian reduction 
(0.85) minus (deductible and coinsurance)] times 1.15. 
Outpatient services, including ASC type services, rendered in an all-inclusive rate 
provider should be billed using the 85X type of bill (TOB).  Non-patient laboratory 
specimens are billed on TOB 14X. 
 
MPFS rates contained in the HHH abstract file are used for payment of all 
physician/professional services rendered in a CAH that has elected the optional method.  
If a HCPCS code has a facility rate and a non-facility rate, the facility rate is paid.  See 
Chapter 23 of Pub. 100-04, section 50.1 for the record layout for the HHH abstract file. 
 
Physician Fee Schedule Payment Policy Indicator File 
 
The information on the Physician Fee Schedule Payment Policy Indicator file is used to 
identify endoscopic base codes, payment policy indicators, global surgery indicators, 
diagnostic imaging family indicators, or the preoperative, intraoperative and 
postoperative percentages that are needed to determine if payment adjustment rules apply 
to a specific CPT code and the associated pricing modifier(s). See Chapter 12 of Pub. 
100-04 for more information on payment policy indicators and payment adjustment rules.  
See Chapter 23 of Pub. 100-04, section 50.6 for the record layout of the Payment Policy 
Indicator file.  
 
Health Professional Shortage Area (HPSA) Incentive Payments for Physicians 
 
Section 1833 (m) of the Social Security Act, provides incentive payments for physicians 
who furnish services in areas designated as HPSAs under section 332(a)(1)(A) of the 
Public Health Service (PHS) Act.  This statute recognizes geographic-based, primary 
medical care and mental health HPSAs, are areas for receiving a 10 percent bonus 
payment.  The Health Resources and Services Administration (HRSA), within the 
Department of Health & Human Services, is responsible for designating shortage areas. 
 
Physicians, including psychiatrists, who provide covered professional services in a 
primary medical care HPSA, are entitled to an incentive payment.  In addition, 
psychiatrists furnishing services in mental health HPSAs are eligible to receive bonus 
payments.  The bonus is payable for psychiatric services furnished in either a primary 
care HPSA, or a mental health HPSA.  Dental HPSAs remain ineligible for the bonus 
payment. 
  Physicians providing services in either rural or urban HPSAs are eligible for a 10 percent 
incentive payment.  It is not enough for the physician merely to have his/her office or 
primary service location in a HPSA, nor must the beneficiary reside in a HPSA, although, 
frequently, this will be the case.  The key to eligibility is where the service is actually 
provided (place of service).  For example, a physician providing a service in his/her 
office, the patients home, or in a hospital, qualifies for the incentive payment as long as 
the specific location of the service provision is within an area designed as a HPSA.  On 
the other hand, a physician may have an office in a HPSA, but go outside the office (and 
the designated HPSA area) to provide the service.  In this case, the physician would not 
be eligible for the incentive payment. 
 
If the CAH electing the Optional Method (Method II) is located within a primary medical 
care HPSA, and/or mental health HPSA, the physicians providing (outpatient) 
professional services in the CAH are eligible for HPSA physician incentive payments. 
Therefore, payments to such a CAH for professional services of physicians in the 
outpatient department will be 115 percent times the amount payable under fee schedule 
times 110 percent.  An approved Optional Method CAH that is located in a HPSA 
County should notify you of its HPSA designation in writing.  Once you receive the 
information, place an indicator on the provider file showing the effective date of the 
CAHs HPSA status. The CMS will furnish quarterly lists of mental health HPSAs to 
A/B MACs (A). 
 
The HPSA incentive payment is 10 percent of the amount actually paid, not the approved 
amount.  Do not include the incentive payment in each claim.  Create a utility file so that 
you can run your paid claims file for a quarterly log.  From this log you will send a 
quarterly report to the CAHs for each physician payment, one month following the end of 
each quarter.  The sum of the 10% of line Reimbursement column should equal the 
payment sent along with the report to the CAH.  If any of the claims included on the 
report are adjusted, be sure the adjustment also goes to the report.  If an adjustment 
request is received after the end of the quarter, any related adjustment by the A/B MACs 
(A) will be included on next quarters report.  The CAHs must be sure to keep adequate 
records to permit distribution of the HPSA bonus payment when received.  If an area is 
designated as both a mental health HPSA and a primary medical care HPSA, only one 10 
percent bonus payment shall be made for a single service. 
 
250.2.1 - Billing and Payment in a Physician Scarcity Area (PSA) 
(Rev. 3019, Issued: 08-07-14, Effective: 01-01-12, ICD-10: Upon Implementation of 
ICD- 10, Implementation: 09-08-14, ICD-10: Upon Implementation of ICD- 10) 
 
Section 413a of the MMA 2003 requires that a new 5 percent bonus payment be 
established for physicians in designated physician scarcity areas.  The payment should be 
made on a quarterly basis and placed on the quarterly report that is now being produced 
for the HPSA bonus payments. 
 
Section 1861(r)(1), of the Act, defines physicians as doctors of medicine or osteopathy.  
Therefore, dentists, chiropractors, podiatrists, and optometrists are not eligible for the  physician scarcity bonus as either primary care or specialty physicians.  Only the primary 
care designations of general practice, family practice, internal medicine, and 
obstetrics/gynecology, will be paid the bonus for the ZIP codes designated as primary 
care scarcity areas.  All physician provider specialties are eligible for the specialty 
physician scarcity bonus except the following:  oral surgery (dentist only); chiropractic; 
optometry; and podiatry.  The bonus is payable for dates of service January 1, 2005, 
through December 31, 2007.  The Medicare, Medicaid, and State Childrens Health 
Insurance Program (SCHIP) Extension Act of 2007 amended 1833(u)(1) of the Social 
Security Act and has extended payment of that bonus through June 30, 2008. 
 
One of the following modifier(s) must accompany the HCPCS code to indicate type of 
physician: 
 
AG - Primary Physician 
AF - Specialty Physician 
 
Modifiers AG and AF are not required for dates of service on or after January 1, 2005. 
Modifier AR, physician providing services in a physician scarcity area, may be required 
for claims with dates of service on or after January 1, 2005 to receive the PSA bonus. 
Refer to 250.2.2 of this chapter for more information on when modifier AR is required. 
 
There may be situations when a CAH is not located in a bonus area but its outpatient 
department is in a designated bonus area, or vice versa.  If a CAH has an off-site 
outpatient department/clinic the off-site departments complete address, including the ZIP 
code, must be placed on the claim as the service facility.  The FISS must look at the 
service facility ZIP code to determine if a bonus payment is due. 
 
For electronic claims, the service facility address should be in the 2310E loop of the ASC 
X12 837 institutional claim format.  On the hard copy Form CMS-1450  the address 
should be placed in Remarks; however, the ZIP code placement will be determined by 
the A/B MAC (A). 
 
250.2.2 - Zip Code Files 
(Rev. 2169, Issued: 03-03-11, Effective: 04-01-11, Implementation: 04-04-11) 
 
The CMS provided a file of ZIP Codes for the primary care and specialist care Physician 
Scarcity Area (PSA) bonus payment.  The file is effective for claims with dates of service 
January 1, 2005 through June 30, 2008. Prior to January 1, 2005, CMS posted on its Web 
site ZIP Codes that are eligible for the bonus payment.  Through regularly scheduled 
bulletins and list serves, A/B MACs (A) must notify the CAH to verify their ZIP Code 
eligibility via the CMS Web site. 
 
ZIP Code files for the automated payment of the Health Professional Shortage Area 
(HPSA) bonus payment will be developed and updated annually.  Effective for claims 
with dates of service on or after January 1, 2009, only services provided in areas that are 
designated as of December 31 of the prior year are eligible for the HPSA bonus payment.   Physicians providing services in areas that were designated as of December 31 of the 
prior year but not on the automated file may use the AQ modifier.  Only services 
provided in areas that were designated as of December 31 of the prior year but not on the 
automated file may use the modifier.  Services provided in areas that are designated 
throughout the year will not be eligible for the HPSA bonus payment until the following 
year, provided they are still designated on December 31.  Services provided in areas that 
are de-designated throughout the year will continue to be eligible for the HPSA bonus 
through the end of the calendar year. 
 
The contractors and standard systems will be provided with a file at the appropriate time 
prior to the beginning of the calendar year for which it is effective.  This file will contain 
ZIP Codes that fully and partially fall within a HPSA bonus area for both mental health 
and primary care services.  A recurring update notification will be issued for each annual 
update.  Contractors will be informed of the availability of the file and the file name via 
an email notice. 
 
Contractors will automatically pay bonuses for services rendered in ZIP Code areas that: 
1) fully fall within a designated primary care or mental health full county HPSA; 2) are 
considered to fully fall in the county based on a determination of dominance made by the 
United States Postal Service (USPS); or 3) are fully within a non-full county HPSA area.  
Should a ZIP Code fall within both a primary care and mental health HPSA, only one 
bonus will be paid on the service.  Bonuses for mental health HPSAs will only be paid 
when performed by psychiatrists. 
 
For services rendered in ZIP Code areas: 1) that do not fall within a designated full 
county HPSA; 2) are not considered to fall within the county based on a determination of 
dominance made by the USPS; or 3) are partially within a non-full county HPSA, the 
CAH must still submit a AQ modifier to receive payment for claims.  To determine 
whether a modifier is needed, the CAH must review the information provided on the 
CMS Web site for HPSA designations to determine if their location is, indeed, within a 
HPSA bonus area. 
 
For service rendered in ZIP Code areas that cannot automatically receive the bonus, it 
will be necessary to know the census tract of the area to determine if a bonus should be 
paid and a modifier submitted. Census tract data can be retrieved by visiting the U.S. 
Census Bureau Web site at www.Census.gov.  
 
Special Incentive Remittance for CAHS 
 
A Special Incentive Remittance for CAHs is generated on a quarterly basis that identifies 
beneficiary and claims information for which a HPSA, PSA, Primary Care Incentive 
Payment Program (PCIP) or HPSA Surgical Incentive Payment Program (HSIP) payment 
is being made. Since there is a possibility that more than one type of incentive payment 
may be paid for a single service, each type of incentive payment being made is identified 
on the remittance as follows: 
  1 = HPSA 
2 = PSA 
3 = HPSA and PSA 
4 = HSIP 
5 = HPSA and HSIP 
6 = PCIP 
7 = HPSA and PCIP 
Space = Not Applicable  
 
See sections 250.12 through 250.12.4 for more information on PCIP payments to CAHs 
paid under the optional method. 
 
Use the information in the Professional Component/Technical Component (PC/TC) 
indicator field of the CORF extract of the Medicare Physician Fee Schedule 
Supplementary File to identify professional services eligible for HPSA and physician 
scarcity bonus payments.  The following are the rules to apply in determining whether to 
pay the bonus on services furnished within a geographic HPSA billed with a QB or QU 
modifier for dates of service prior to January 01, 2006 or the AQ modifier for services on 
or after January 01, 2006, and/or whether to pay the bonus on services furnished within a 
Physician Scarcity Area with the AR modifier effective for dates of service January 01, 
2005, through June 30, 2008. 
 
(Field 20 on the full MPFS file layout) 
 
PC/TC Indicator   Bonus Payment Policy  
0  Physician services. The concept of PC/TC does not apply since physician 
services cannot be split into professional and technical components. 
 
ACTION: Pay the bonus 
1  Globally billed. Only the professional component of this service qualifies 
for the bonus payment.  The bonus cannot be paid on the technical 
component of globally billed services. 
 
ACTION: Return the service as unprocessable and notify the CAH that 
the professional component must be re-billed if it is performed within a 
qualifying bonus area. If the technical component is the only component 
of the service that was performed in the bonus area, there wouldnt be a 
qualifying service. 
1  Professional Component (modifier 26). 
 
ACTION: Pay the bonus.  PC/TC Indicator   Bonus Payment Policy  
1  Technical Component (modifier TC). 
 
ACTION: Do not pay the bonus. 
2  Professional Component only. 
 
ACTION: Pay the bonus. 
3  Technical Component only. 
 
ACTION: Do not pay the bonus. 
4  Global test only. Only the professional component of this service 
qualifies for the bonus payment. 
 
ACTION: Return the service as unprocessable. Instruct the provider to 
re-bill the service as separate professional and technical component 
procedure codes. 
5  Incident to codes. 
 
ACTION: Do not pay the bonus. 
6  Laboratory physician interpretation codes. 
 
ACTION: Pay the bonus 
7  Physical therapy service. 
 
ACTION: Do not pay the bonus. 
8  Physician interpretation codes. 
 
ACTION: Pay the bonus. 
9  Concept of PC/TC does not apply. 
 
ACTION: Do not pay the bonus. 
 
NOTE:  Codes that have a status of X on the CORF extract Medicare Physician Fee 
Schedule Database (MFSDB) have been assigned PC/TC indicator 9 and are not 
considered physician services for MFSDB payment purposes. Therefore, neither 
the HPSA bonus nor the physician bonus payment (5 percent) will be paid for 
these codes. 
 
250.3 - Payment for Anesthesia in a Critical Access Hospital (CAH) 
(Rev 41, 12-08-03) 
 
Payment for anesthesia services is based on the HCPCS FILE, the Anesthesia Conversion 
Factor File, and the CORF extract of the MPFS Summary File. 
  250.3.1 - Anesthesia File 
(Rev. 41, 12-08-03) 
Conversion Factor File = MU00.@BF12390.MPFS.CY04.ANES.V1023   
Record Layout for the Anesthesia Conversion Factor File 
Data Element Name  Picture  Location  Length 
A/B MAC (B) Number  X (5)  1-5  5 
Locality Number  X (2)  13-14  2 
Locality Name  X (30)  19-48  30 
Anesthesia CF 2002  99V99  74-77  4 
 
250.3.2 - Physician Rendering Anesthesia in a Hospital Outpatient 
Setting 
(Rev. 2452, Issued: 04-26-12, Effective: 01-10-12, Implementation: 10-01-12) 
 
When a medically necessary anesthesia service is furnished within a HPSA area by a 
physician, a HPSA bonus is payable. In addition to using the PC/TC indicator on the 
CORF extract of the MPFS Summary File to identify HPSA services, pay physicians the 
HPSA bonus when CPT codes 00100 through 01999 are billed with the following 
modifiers: QY, QK, AA, or GC and QB or QU in revenue code 963. Modifier QB or 
QU must be submitted to receive payment of the HPSA bonus for claims with dates of 
service prior to January 01, 2006. Effective for claims with dates of service on or after 
January 01, 2006, the modifier AQ, physician providing a service in a health professional 
shortage area, may be required to receive the HPSA bonus. Refer to 250.2.2 of this 
chapter for more information on when modifier AQ is required.  
 
The modifiers signify that a physician performed an anesthesia service.  Using the 
Anesthesia File (See Section above) the physician service will be 115 percent times the 
payment amount to be paid to a CAH on Method II payment plus 10 percent HPSA bonus 
payment.  
 
Anesthesiology modifiers:  
 
AA = anesthesia services performed personally by anesthesiologist.  
GC =service performed, in part, by a resident under the direction of a teaching physician.  
QK = medical direction of two, three, or four concurrent anesthesia procedures involving 
qualified individuals.  
QY = medical direction of one CRNA by an anesthesiologist.  
 
Modifiers AA and GC result in physician payment at 100% of the allowed amount. 
Modifiers QK and QY result in physician payment at 50% of the allowed amount.    
Data elements needed to calculate payment:  
 
  HCPCS plus Modifier,  
  Base Units,  
  Time units, based on standard 15 minute intervals, 
  Locality specific anesthesia Conversion factor, and  
  Allowed amount minus applicable deductions and coinsurance amount.  
 
Formula 1: Calculate payment for a physician performing anesthesia alone  
 
HCPCS = xxxxx  
Modifier = AA  
Base Units = 4  
Anesthesia Time is 60 minutes. Anesthesia time units = 4 (60/15)  
Sum of Base Units plus Time Units = 4 + 4 = 8  
Locality specific Anesthesia conversion factor = $17.00 (varies by localities)  
Coinsurance = 20%  
 
Example 1:  Physician personally performs the anesthesia case  
 
Base Units plus time units - 4+4=8  
Total units multiplied by the anesthesia conversion factor times .80  
8 x $17= ($136.00 - (deductible*) x .80 = $108.80  
Payment amount times 115 percent for the CAH method II payment.  
$108.80 x 1.15 = $125.12 (Payment amount)  
$125.12 x .10 = $12.51 (HPSA bonus payment)  
*Assume the Part B deductible has already been met for the calendar year  
 
Formula 2:  Calculate the payment for the physicians medical direction service when the 
physician directs two concurrent cases involving CRNAs. The medical direction 
allowance is 50% of the allowance for the anesthesia service personally performed by the 
physician.  
 
HCPCS = xxxxx  
Modifier = QK  
Base Units = 4  
Time Units 60/15=4  
Sum of base units plus time units = 8  
Locality specific anesthesia conversion factor = $17(varies by localities)  
Coinsurance = 20 %  
 
(Allowed amount adjusted for applicable deductions and coinsurance and to reflect 
payment percentage for medical direction).  
  Example 2:  Physician medically directs two concurrent cases involving CRNAs Base 
units plus time - 4+4=8  
Total units multiplied by the anesthesia conversion factor times. 50 equal allowed amount 
minus any remaining deductible  
8 x $17 = $136 x .50 = $68.00 -(deductible*) = $68.00  
Allowed amount Times 80 percent times 1.15  
$68.00 x .80 = $54.40 x 1.15 = 62.56 (Payment amount)  
$62.56 x .10 = $6.26 (HPSA bonus payment)  
*Assume the deductible has already been met for the calendar year.  
 
NOTE:  For specific guidance on payment for Anesthesia and Teaching Services please 
review the following sections: 
 
-   
 Payment for Anesthesiology Services Pub.100-04, Chapter 12, Section 50 
 
-  Teaching Physician Services Pub.100-04, Chapter 12, Section 100.1.2 (4) 
Anesthesia. 
 
250.3.3 - Anesthesia and CRNA Services in a Critical Access 
Hospital (CAH) 
(Rev. 616, Issued: 07-22-05, Effective: 10-01-02, Implementation: 01-03-06) 
 
250.3.3.1 - Payment for CRNA Pass-Through Services 
(Rev.4295, Issued: 05-03-19, Effective: 08-27-19, Implementation: 08-27-19) 
 
CAHs are eligible to receive CRNA pass-through payments (pass-through 
exemption) for both inpatient and outpatient services if they meet criteria discussed at 
42 CFR  412.113(c) of the regulations. CRNA pass-through payments and the 
Method II election for outpatient CAH services are applied as described below. Note 
that for CAHs that have a CRNA pass-through exemption, all CRNA services 
provided to CAH swing-bed patients must be included on the CAH swing-bed bill. 
(See MCPM, Ch. 3, 60 and 100.2 for more information) 
 
If a CAH meets the criteria for a pass-through exemption and is interested in selecting 
Method II for its physicians and/or other practitioners, it can choose Method II for all 
outpatient professionals except the CRNA, and still retain the approved CRNA pass-
through exemption for both inpatient and outpatient CRNA professional services. 
 
Alternatively, a CAH, with an approved pass-through exemption, can choose to give 
up its pass-through exemption for both inpatient and outpatient CRNA professional 
services in order to include its CRNA outpatient professional services under Method 
II. By choosing to include the CRNA under Method II for outpatient services, the 
CAH loses its CRNA pass-through exemption for not only the outpatient CRNA 
services, but also the inpatient CRNA services. In this case the CAH would have to  bill the A/B MAC (B) for the CRNA inpatient professional services. All A/B MAC 
(A) payments for CRNA services are subject to cost settlement. 
 
Provider Billing Requirements for CRNA Pass-Through 
 
TOBs = 11X and 18X 
 
Revenue Code 037X for 
CRNA technical services 
Revenue Code 0964 for 
Professional services  
Reimbursement 
Revenue Code 37X, CRNA technical service = Cost Reimbursement (101 
percent of reasonable cost) 
 
Revenue Code 0964, CRNA professional service = Cost Reimbursement (100 
percent of reasonable cost) for both inpatient (including swing-bed) and 
outpatient 
 
Deductible and coinsurance apply. 
 
Provider Billing Requirements for CRNA Pass-Through 
 
TOB = 85X  
 
Revenue Code 037X for 
CRNA technical services 
Revenue Code 0964 for 
Professional services  
Anesthesia HCPCS codes and for any HCPCS codes for services the CRNA is 
legally authorized to perform in the state in which the services are furnished.   
The appropriate HCPCS should be included when required for the applicable 
TOB and or revenue code.  
 
Reimbursement 
Revenue Code 37X, CRNA technical service = Cost Reimbursement (101 
percent of reasonable cost)   
Revenue Code 0964, CRNA professional service = Cost Reimbursement (100 
percent of reasonable cost) for both inpatient (including swing-bed) and 
outpatient 
 
Deductible and coinsurance apply. 
 
 
Note that effective January 1, 2013, qualifying rural hospitals and CAHs are eligible to 
receive CRNA pass- through payments for services that the CRNA is legally authorized 
to perform in the state in which the services are furnished.                         
.      
250.3.3.2 - Payment for Anesthesia Services by a CRNA (Method II 
CAH only) 
(Rev. 4157, Issued: 11-02-18, Effective: 04-01-19, Implementation: 04-01-19) 
 
Provider Billing Requirements for Method II CRNA - Gave up Pass-Through 
Exemption (or never had exemption) 
 
TOB = 85X 
 
Revenue Code = 037X for CRNA technical service 
 
Revenue Code = 0964 for CRNA professional service 
 
HCPCS Code for services the CRNA is legally authorized to perform in the state 
in which the services are furnished 
 
Reimbursement - For dates of service on or after July 1, 2007 
 
Revenue Code 037X for CRNA technical service = Cost Reimbursement (101 
percent of reasonable cost) 
 
Revenue Code 0964 for CRNA professional service = Based on 100 percent of 
the allowed amount when not medically directed or 50 percent of the allowed 
amount when medically directed. 
 
Providers bill a QZ modifier for non-medically directed CRNA services. 
Deductible and coinsurance apply. 
 
How to calculate payment for anesthesia claims based on the formula - For dates of 
service on or after July 1, 2007 
 
Identify anesthesia claims by HCPCS code range from 00100 through 01999 
Non-medically directed CRNA 
  (Sum of base units plus time (anesthesia time divided by 15)) times conversion 
factor minus (deductible and coinsurance) times 1.15 
 
Medically directed CRNA 
 
(Sum of base units plus time (anesthesia time divided by 15)) times conversion 
factor times medically directed reduction (50 %) minus (deductible and 
coinsurance) times 1.15 
 
Note that effective January 1, 2013, qualifying rural hospitals and CAHs are eligible to 
receive CRNA pass-through payments for services that the CRNA is legally authorized to 
perform in the state in which the services are furnished. 
 
Reimbursement - For dates of service prior to July 1, 2007 
 
Revenue Code 037X for CRNA technical service = cost reimbursement  
 
Revenue Code 0964 for CRNA professional service = 115% times 80% (not medically 
directed) or 115% times 50% (medically directed) of allowed amount (Use Anesthesia 
formula) for outpatient CRNA professional services.  
 
Providers a QZ modifier for non-medically directed CRNA services. Deductible and 
coinsurance apply. 
 
How to calculate payment for anesthesia claims based on the formula - For dates of 
service prior to July 1, 2007 
 
Add the anesthesia code base unit and time units. The time units are calculated by 
dividing actual anesthesia time (Units field on the UB92) by 15. Multiply the sum of base 
and time units by the locality specific anesthesia conversion factor (file name below). 
 
The Medicare program pays the CRNA 80% of this allowable charge when not medically 
directed. Deductible and coinsurance apply.  
 
If the CRNA is medically directed, pay 50% of the allowable charge. Deductible and 
coinsurance apply.  
 
Base Formula 
 
Number of minutes divided by 15, plus the base units = Sum of base units and 
time 
 
Sum of base units and time times the conversion factor = allowed amount 
 
Source 
  Number of minutes = Number of units on the claim (Units field of the UB04) 
Base Units = Anesthesia HCPCS 
 
Conversion Factor = File - MU00.@BF12390.MPFS.CYXX.ANES.V1023 
 
 
 
 
250.4 - CAH Outpatient Services Part B Deductible and Coinsurance 
(Rev. 1070, Issued: 09-29-06, Effective: 01-01-07, Implementation: 01-02-07) 
 
Payment for outpatient services of a CAH is subject to applicable Medicare Part B 
deductible and coinsurance amounts unless waived based on statute. 
 
For information on the application of deductible and coinsurance for screening and 
preventive services, see chapter 18 of Pub. 100-04, Medicare Claims Processing Manual. 
 
Payments for clinical diagnostic laboratory tests furnished to CAH outpatients on or after 
November 29, 1999, are made on a reasonable cost basis with no beneficiary cost-sharing 
- no coinsurance, deductible, copayment, or any other cost-sharing. 
 
 
250.5 - Medicare Payment for Ambulance Services Furnished by 
Certain CAHs 
(Rev. 4390, Issued: 10-07-19, Effective: 10-01-19, Implementation: 10-07-19) 
 
Medically necessary ambulance services furnished for dates of service on or after 
December 21, 2000 and prior to January 1, 2004, by a CAH or by an entity that is owned 
and operated by the CAH are paid based on 100 percent of the reasonable costs if the 35 
mile rule for reasonable cost-based payment is met. 
 
For dates of service on or after January 1, 2004, medically necessary ambulance services 
furnished by a CAH or by an entity that is owned and operated by the CAH are paid 
based on 101 percent of the reasonable costs if the 35 mile rule for reasonable cost-based 
payment is met. 
 
For dates of service on or after December 21, 2000 and prior to October 1, 2011, in order 
for the 35 mile rule to be met, the CAH or the entity that is owned and operated by the 
CAH, must be the only provider or supplier of ambulance services located within a 35 
mile drive of the CAH or the entity. 
 
For dates of service on or after October 1, 2011 and prior to October 1, 2019, in order for 
the 35 mile rule to be met, the CAH or the entity that is owned and operated by the CAH, 
must be the only provider or supplier of ambulance services located within a 35 mile 
drive of the CAH.  Additionally, if there is no provider or supplier of ambulance services  located within a 35 mile drive of the CAH but there is an entity owned and operated by 
the CAH located more than a 35 mile drive from the CAH, that CAH-owned and 
operated entity can only be paid 101 percent of reasonable costs for its ambulance 
services if it is the closest provider or supplier of ambulance services to the CAH. 
 
For dates of service on or after October 1, 2019, in order for the 35 mile rule to be met, 
the CAH or the entity that is owned and operated by the CAH, must be the only provider 
or supplier of ambulance services located within a 35 mile drive of the CAH, excluding 
ambulance providers or suppliers that are not legally authorized to furnish ambulance 
services to transport individuals either to or from the CAH. Additionally, if there is no 
provider or supplier of ambulance services located within a 35 mile drive of the CAH but 
there is an entity owned and operated by the CAH located more than a 35 mile drive from 
the CAH, that CAH-owned and operated entity can only be paid 101 percent of 
reasonable costs for its ambulance services if it is the closest provider or supplier of 
ambulance services to the CAH. 
 
Section 205 of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection 
Act (BIPA) of 2000 exempts certain CAHs from the current Medicare ambulance cost 
per trip payment limit as well as from the ambulance fee schedule. Section 205(a) of 
BIPA states: 
 
The Secretary shall pay the reasonable costs incurred in furnishing ambulance 
services if such services are furnished (A) by a CAH (as defined in 
1861(mm)(1)), or (B) by an entity that is owned and operated by a CAH, but 
only if the CAH or entity is the only provider or supplier of ambulance services 
that is located within a 35-mile drive of such CAH. 
 
Those CAHs and CAH-owned and operated entities that meet the 35 mile rule for 
reasonable cost-based payment shall report condition code B2 (CAH ambulance 
attestation) on their bills. 
 
When the 35 mile rule for reasonable cost-based payment is not met, the CAH ambulance 
service or the ambulance service furnished by the entity that is owned and operated by 
the CAH, is paid based on the ambulance fee schedule. 
 
250.6 - Clinical Diagnostic Laboratory Tests Furnished by CAHs 
(Rev. 1782; Issued:  07-30-09; Effective Date:  07-01-09; Implementation Date:  07-
06-09) 
 
Medicare beneficiaries are not liable for any coinsurance, deductible, copayment, or other 
cost sharing amount for clinical diagnostic laboratory services furnished as a CAH 
outpatient service. 
 
For dates of service prior to July 1, 2009, payment for clinical diagnostic laboratory tests 
furnished by a CAH is made at 101 percent of reasonable cost only if the patient is an  outpatient of the CAH and is physically present in the CAH at the time the specimen is 
collected - (Type of Bill (TOB), 85x). 
 
For dates of service on or after July 1, 2009, an individual is no longer required to be 
physically present in a CAH at the time the specimen is collected.  However, the 
individual must be an outpatient of the CAH, as defined at 42 CFR 410.2 and be 
receiving services directly from the CAH.  In order for the individual to be receiving 
services directly from the CAH, the individual must either be receiving outpatient 
services in the CAH on the same day the specimen is collected, or the specimen must be 
collected by an employee of the CAH. 
 
Tests for non-patients are billed on TOB 14x, and are paid under the lab fee schedule. 
 
250.7 - Payment for Outpatient Services Furnished by an Indian Health 
Service (IHS) or Tribal CAH 
(Rev. 231, Issued 07-23-04, Effective: 01-01-04/Implementation: 01-03-05) 
 
The IHS or Tribal CAHs are paid for outpatient services based on a facility specific visit 
rate that is established on a yearly basis from prior year cost report information. 
 
Payment for outpatient IHS or Tribal CAH services is paid at 80% of the facility specific 
outpatient visit rate for both facilities electing Standard Method (I) and Optional Method 
(II) billing.  IHS or Tribal CAHs will follow the billing methodology for the billing 
method that is chosen.  Standard Method (I) is found in 250.1 and Optional Method (II) 
is found in 250.2 of this chapter.  Facilities billing under the Optional Method (II) will 
follow the methodology for HPSA and Scarcity payments as outlined in 250.2 of this 
chapter.  Outpatient services provided at IHS or Tribal CAHs should be billed on an 85X 
type of bill. 
 
Effective for cost reporting periods beginning on or after January 1, 2004, payment for 
outpatient IHS or Tribal CAH outpatient services will be made at 101% of the facility 
specific outpatient visit rate less applicable Part B deductible and coinsurance amounts. 
 
250.8 - Coding for Administering Drugs in a Method II CAH 
(Rev. 803, Issued: 01-03-06, Effective: 04-03-06, Implementation: 04-03-06) 
 
This section provides billing guidance and payment instructions for hospitals when 
providing drugs and drug administration services in a Method II CAH. 
 
 
250.8.1 - Coding for Low Osmolar Contrast Material (LOCM) 
(Rev. 803, Issued: 01-03-06, Effective: 04-03-06, Implementation: 04-03-06) 
 
Method II CAHs bill the outpatient physician involvement (professional component) for 
the administration of Low Osmolar Contrast Material (LOCM) with revenue code 96X,  97X or 98X on type of bill (TOB) 85X.  Bills must include an appropriate outpatient 
hospital visit CPT code for evaluation and management (E & M). 
 
The technical component for LOCM may be billed by both Method I and Method II 
CAHs with revenue code 636 and one of the following HCPCS codes as appropriate: 
 
HCPCS  Descriptor 
Code 
Q9945  Low osmolar contrast material (up to 149 mg/ml iodine concentration, per 
ml) 
Q9946  Low osmolar contrast material (150 - 199 mg/ml iodine concentration, per 
ml) 
Q9947  Low osmolar contrast material (200 - 249 mg/ml iodine concentration, per 
ml) 
Q9948  Low osmolar contrast material (250 - 299 mg/ml iodine concentration, per 
ml) 
Q9949  Low osmolar contrast material (300 - 349 mg/ml iodine concentration, per 
ml) 
Q9950  Low osmolar contrast material (350 - 399 mg/ml iodine concentration, per 
ml) 
Q9951  Low osmolar contrast material (400 or greater mg/ml iodine concentration, 
per ml) 
 
250.8.2 - Coding for the Administration of Other Drugs and Biologicals 
(Rev. 803, Issued: 01-03-06, Effective: 04-03-06, Implementation: 04-03-06) 
 
Outpatient physician involvement for hydration; therapeutic or diagnostic injections and 
intravenous (IV) infusions (other than hydration); and chemotherapy administration in a 
Method II CAH is included in the physicians evaluation and management (E & M) 
services. Bills must include an appropriate outpatient hospital visit E & M CPT code with 
revenue code 96X, 97X or 98X on TOB 85X. 
 
See 250.2 for information on fee schedule payment for professional services. 
 
250.9 - Coding Assistant at Surgery Services Rendered in a Method II 
CAH 
(Rev. 1620; Issued:  10-24-08; Effective:  01-01-08; Implementation:  04-06-09) 
 
An assistant at surgery is a physician or non-physician practitioner who actively assists 
the physician in charge of the case in performing a surgical procedure. 
 
Medicare makes payment for an assistant at surgery when the procedure is authorized for 
an assistant and the person performing the service is a physician, physician assistant 
(PA), nurse practitioner (NP) or a clinical nurse specialist (CNS).   
Assistant at surgery services rendered by a physician or non-physician practitioner that 
has reassigned their billing rights to a Method II CAH are payable by Medicare when the 
procedure is billed on type of bill 85X with revenue code (RC) 96X, 97X or 98X and an 
appropriate assistant at surgery modifier. 
 
Under authority of 42 CFR 414.40, CMS establishes uniform national definitions of 
services, codes to represent services, and payment modifiers to the codes.  This includes 
the use of payment modifiers for assistant at surgery services. 
 
Modifier 80 (assistant surgeon), 81 (minimum assistant surgeon), or 82 (when qualified 
resident surgeon not available) is used to bill for assistant at surgery services.  When 
billed without modifier AS (PA, NP or CNS services for assistant at surgery) the use of 
these modifiers indicate that a physician served as an assistant at surgery. 
 
Modifier AS is billed to indicate that a PA, NP or CNS served as the assistant at surgery. 
Modifier 80, 81 or 82 must also be billed when modifier AS is billed.  Claims submitted 
with modifier AS and without modifier 80, 81 or 82 are returned to the provider (RTPd). 
 
250.9.1 - Use of Payment Policy Indicators for Determining Procedures 
Eligible for Payment of Assistants at Surgery 
(Rev. 1620; Issued:  10-24-08; Effective:  01-01-08; Implementation:  04-06-09) 
 
Medicare makes payment for an assistant at surgery when the procedure is authorized for 
an assistant and the person performing the service is a physician, PA, NP or a CNS. 
 
Section 1862 of the Act stipulates that no payment can be made for care that is not 
reasonable and necessary.  Specifically, Section 1862(15)(A) addresses services of an 
assistant at surgery and when those services are statutorily excluded. 
 
Medicare uses the payment policy indicators on the Medicare Physician Fee Schedule 
Database (MPFSDB) to determine if assistant at surgery services are reasonable and 
necessary for a specific HCPCS/CPT code.  The MPFSDB is located at 
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PFSlookup/.  Since all 
of the information housed on the MPFSDB is not needed to process Method II CAH 
claims, the payment policy indicators that are needed are extracted on a quarterly basis 
for use in processing these claims and sent to the fiscal A/B MACs (A) on the Physician 
Fee Schedule Payment Policy Indicator File. 
 
See the Physician Fee Schedule Payment Policy Record Layout in 250.2 for a 
description of the assistant at surgery payment policy indicators. 
 
250.9.2 - Payment of Assistant at Surgery Services Rendered in a 
Method II CAH 
(Rev. 1620; Issued:  10-24-08; Effective:  01-01-08; Implementation:  04-06-09) 
  Under Section 1834(g)(2)(B) of the Social Security Act (the Act) outpatient professional 
services performed in a Method II CAH are paid 115 percent of such amounts as would 
otherwise be paid under the Act if the services were not included in the outpatient CAH 
services. 
 
Section 1848(i)(2)(B) of the Act stipulates that in the case of a surgical service furnished 
by a physician, if payment is made separately under the Act for the services of a 
physician serving as an assistant at surgery, payment shall not exceed 16 percent of the 
MPFS amount. 
 
Payment for assistant at surgery services performed by a physician is calculated as 
follows: 
 
  ((facility specific MPFS amount times assistant at surgery reduction % (16%)) 
minus (deductible and coinsurance)) times 115% 
 
Section 1833(a)(1)(O)(ii) of the Act states that in the case of a PA, NP or CNS the 
amounts paid for serving as an assistant at surgery shall be the lesser of the actual charge 
or 85 percent of the amount that would otherwise be recognized if performed by a 
physician who is serving as an assistant at surgery.  The payment methodology for these 
services has been codified in regulations found at 42 CFR 414.52(d) and 414.56(c). 
 
Payment for assistant at surgery services performed by a PA, NP, or CNS is calculated as 
follows: 
 
((facility specific MPFS) amount times assistant at surgery reduction (16%) times non-
physician practitioner reduction % (85%)) minus (deductible and coinsurance)) 
times 115% 
 
250.9.3 - Assistant at Surgery Medicare Summary Notice (MSN) and 
Remittance Advice (RA) Messages 
(Rev. 3475, Issued: 03-04-16, Effective: 06-06-16, Implementation: 06-06-16) 
 
Contractors shall deny  medically unnecessary assistant at surgery services for 
HCPCS/CPT codes with a payment policy indicator of 0 or 2 when an Advance 
Beneficiary Notice (ABN) was issued. 
 
The contractor shall use the following remittance advice messages and associated codes 
when rejecting/denying claims under this policy.  This CARC/RARC combination is 
compliant with CAQH CORE Business Scenario Three. 
 
Group Code: PR 
CARC: 54 
RARC: N/A 
MSN: 36.1 
  Contractors shall deny medically unnecessary assistant at surgery services for 
HCPCS/CPT codes with a payment policy indicator of 0 or 2 when an ABN was not 
issued. 
 
The contractor shall use the following remittance advice messages and associated codes 
when rejecting/denying claims under this policy.  This CARC/RARC combination is 
compliant with CAQH CORE Business Scenario Three. 
 
Group Code: CO 
CARC: 54 
RARC: N/A 
MSN: 36.2 
 
Contractors shall deny assistant at surgery services for HCPCS/CPT codes with a 
payment policy indicator of 1. 
 
The contractor shall use the following remittance advice messages and associated codes 
when rejecting/denying claims under this policy.  This CARC/RARC combination is 
compliant with CAQH CORE Business Scenario Three. 
 
Group Code: CO 
CARC: 54 
RARC: N/A 
MSN: 15.11 
 
250.9.4 - Assistant at Surgery Services in a Method II CAH Teaching 
Hospital 
(Rev. 1620; Issued:  10-24-08; Effective:  01-01-08; Implementation:  04-06-09) 
 
Section 1842(b)(7)(D) stipulates that no payment shall be made for the services of 
assistant at surgery with respect to a surgical procedure if a hospital has a training 
program relating to the medical specialty required for the surgical procedure and a 
qualified individual on the staff of the hospital is available to provide such services. 
 
A/B MACs (A) process assistant at surgery claims for services furnished in a teaching 
hospital through the use of modifier 82 which indicates that a qualified resident was not 
available.  Modifier 82 is for use only when the basis for payment is the unavailability of 
qualified residents. 
 
Payment may be made for the services of assistants at surgery in teaching hospitals not 
withstanding the availability of a qualified resident to furnish the services. There may be 
exceptional medical circumstances (emergency, life threatening situations such as 
multiple traumatic injuries) which require immediate treatment. There may be situations 
in which the medical staff may find that exceptional medical circumstances justify the 
services of a physician assistant at surgery even though a qualified resident is available. 
  Payment may also be made for the services of assistants at surgery in teaching hospitals, 
if the primary surgeon has an across-the-board policy of never involving residents in the 
preoperative, operative, or postoperative care of his or her patients. 
 
Claims submitted by a Method II CAH teaching hospital on type of bill 85X with RC 
96X, 97X or 98X and modifier AS, 80 or 81 are suspended for review by the A/B MAC 
(A) when the HCPCS/CPT code has a payment policy indicator of 0 or 2. 
 
NOTE:  Teaching hospitals are identified by an intern to bed ratio greater than 0 
(zero), this field is located on the Provider Specific File. 
 
250.9.5 - Review of Supporting Documentation for Assistant at Surgery 
Services in a Method II CAH 
(Rev. 1620; Issued:  10-24-08; Effective:  01-01-08; Implementation:  04-06-09) 
 
Given the absence of national policy on this provision, A/B MACs (A) have the authority 
to establish procedures to define the appropriate supporting documentation needed to 
establish medical necessity, the existence of exceptional medical circumstances or to 
determine if the primary surgeon has an across-the-board policy of never involving 
residents in the preoperative, operative or postoperative care of his patients for assistant 
at surgery services.  The A/B MACs (A) shall also determine if a clinician or non-
clinician medical reviewer shall review assistant at surgery services. 
 
250.10 - Coding Co-surgeon Services Rendered in a Method II CAH 
(Rev. 1781, Issued: 07-29-09; Effective:  01-01-08; Implementation:  07-06-09) 
 
Under some circumstances, the skills of two surgeons (each in a different specialty) are 
required to perform surgery on the same patient during the same operative session. This 
may be required because of the complex nature of the procedure(s) and/or the patients 
condition. 
 
Co-surgery refers to a single surgical procedure which requires the skill of two surgeons, 
each in a different specialty, performing parts of the same procedure simultaneously. It is 
not always co-surgery when two doctors perform surgery on the same patient during the 
same operative session. Co-surgery has been performed if the procedure(s) performed is 
part of and would be billed under a single surgical procedure code. 
 
When two surgeons work together as primary surgeons performing distinct part(s) of a 
single reportable procedure, each surgeon shall report his/her distinct operative work by 
reporting the same surgical procedure code and the 62 modifier (two surgeons). 
 
The potential exists that there may only be one line billed on a Method II CAH claim 
with modifier 62. This occurs when one of the co-surgeons reassigns their billing rights 
to the CAH and the other co-surgeon does not reassign their billing rights to the CAH. 
The claim for the co-surgeon that reassigned their billing rights would be processed by 
the A/B MAC (A).  The claim for the co-surgeon that did not reassign their billing rights  to the CAH would be processed by the A/B MAC (B).  The A/B MAC (A) standard 
system (FISS) will accept and process claims with one line with a surgical procedure 
code and modifier 62 or two lines with the same surgical procedure code, line item date 
of service (LIDOS) and modifier 62.  The FISS shall deny line items without the 62 
modifier on claims with the same surgical procedure code and LIDOS when only one line 
has the 62 modifier. 
 
Co-surgeon services rendered by a physician that has reassigned their billing rights to a 
Method II CAH are payable by Medicare when the procedure is authorized for co-
surgeons and is billed on type of bill 85X with revenue code (RC) 96X, 97X or 98X and 
the 62 modifier. 
 
Under authority of 42 CFR 414.40, CMS establishes uniform national definitions of 
services, codes to represent services, and payment modifiers to the codes. This includes 
the use of payment modifiers for co-surgeon services. 
 
250.10.1 - Use of Payment Policy Indicators for Determining Procedures 
Eligible for Payment of Co-surgeons 
(Rev. 1781, Issued: 07-29-09; Effective:  01-01-08; Implementation:  07-06-09) 
 
Section 1862 of the Social Security Act (the Act) stipulates that no payment can be made 
for care that is not reasonable and necessary for the diagnosis and treatment of illness or 
injury. 
 
Medicare uses the payment policy indicators on the Medicare Physician Fee Schedule 
Database (MPFSDB) to determine if co-surgeon services are reasonable and necessary 
for a specific HCPCS/CPT code. The MPFSDB is located at 
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PFSlookup/.  The A/B 
MACs (A) have access to the payment policy indicators via the Physician Fee Schedule 
Payment Policy Indicator File in the FISS. 
 
See the Physician Fee Schedule Payment Policy Record Layout in 250.2 for a 
description of the co-surgeon payment policy indicators. 
 
250.10.2 - Payment of Co-surgeon Services Rendered in a Method II 
CAH 
(Rev. 1781, Issued: 07-29-09; Effective:  01-01-08; Implementation:  07-06-09) 
 
Under Section 1834(g)(2)(B) of the Act outpatient professional services performed in a 
Method II CAH are paid 115 percent of such amounts as would otherwise be paid under 
the Act if the services were not included in the outpatient CAH services. 
 
Payment for co-surgeon services performed by a physician is based on the lesser of the 
actual charges or the reduced fee schedule amount (62.5%) and is calculated as follows: 
((facility specific MPFS amount times co-surgery reduction % (62.5%)) minus 
(deductible and coinsurance)) times 115%.   
250.10.3 - Co-surgeon Services Medicare Summary Notice (MSN) and 
Remittance Advice (RA) Messages 
(Rev. 3475, Issued: 03-04-16, Effective: 06-06-16, Implementation: 06-06-16) 
 
Contractors shall deny co-surgeon services for HCPCS/CPT codes with a payment policy 
indicator of 0. 
 
The contractor shall use the following remittance advice messages and associated codes 
when rejecting/denying claims under this policy.  This CARC/RARC combination is 
compliant with CAQH CORE Business Scenario Three. 
 
Group Code: CO 
CARC: 54 
RARC: N/A 
MSN: 15.12 
 
Contractors shall deny medically unnecessary co-surgeon services for HCPCS/CPT codes 
with a payment policy indicator of 1 when an Advance Beneficiary Notice (ABN) was 
issued. 
 
The contractor shall use the following remittance advice messages and associated codes 
when rejecting/denying claims under this policy.  This CARC/RARC combination is 
compliant with CAQH CORE Business Scenario Three. 
 
Group Code: PR 
CARC: 54 
RARC: N/A 
MSN: 36.1 
 
Contractors shall deny medically unnecessary co-surgeon services for HCPCS/CPT codes 
with a payment policy indicator of 1 when an Advance Beneficiary Notice (ABN) was 
not issued. 
 
The contractor shall use the following remittance advice messages and associated codes 
when rejecting/denying claims under this policy.  This CARC/RARC combination is 
compliant with CAQH CORE Business Scenario Three. 
 
Group Code: CO 
CARC: 54 
RARC: N/A 
MSN: 36.2 
 
Contractors shall deny co-surgeon services for HCPCS/CPT codes with a payment policy 
indicator of 2 when the co-surgeons each have the same specialty. 
  The contractor shall use the following remittance advice messages and associated codes 
when rejecting/denying claims under this policy.  This CARC/RARC combination is 
compliant with CAQH CORE Business Scenario Three. 
 
Group Code: CO 
CARC: 54 
RARC: N/A 
MSN: 21.21 
 
Contractors shall deny line items for co-surgeon services without the 62 modifier on 
claims with the same surgical procedure code and line item date of service on more than 
one line when only one line has the 62 modifier. 
 
The contractor shall use the following remittance advice messages and associated codes 
when rejecting/denying claims under this policy.  This CARC/RARC combination is 
compliant with CAQH CORE Business Scenario Two. 
 
Group Code: CO 
CARC: 4 
RARC: N/A 
MSN: 16.10 
 
250.10.4 - Review of Supporting Documentation for Co-surgeon 
Services in a Method II CAH 
(Rev. 1781, Issued: 07-29-09; Effective:  01-01-08; Implementation:  07-06-09) 
 
Given the absence of national policy on this provision, A/B MACs (A) have the authority 
to establish procedures to define the appropriate supporting documentation needed to 
establish medical necessity.  The A/B MACs (A) shall also determine if a clinician or 
non-clinician medical reviewer shall review co-surgeon services. 
 
250.11 - Coding Bilateral Procedures Performed in a Method II CAH 
(Rev. 1777; Issued:  07-24-09; Effective Date:  01-01-08; Implementation Date:  01-
04-10) 
 
Under authority of 42 CFR 414.40, CMS establishes uniform national definitions of 
services, codes to represent services, and payment modifiers to the codes. This includes 
the use of payment modifiers for bilateral procedures. 
 
Bilateral procedures rendered by a physician that has reassigned their billing rights to a 
Method II CAH are payable by Medicare when the procedure is authorized as a bilateral 
procedure and is billed on type of bill 85X with revenue code (RC) 96X, 97X or 98X and 
the 50 modifier (bilateral procedure). 
  Modifier 50 applies to a bilateral procedure performed on both sides of the body during 
the same operative session. When a procedure is identified by the terminology as bilateral 
or unilateral, the 50 modifier is not reported. 
 
If a procedure is authorized for the 150 percent payment adjustment for bilateral 
procedures (payment policy indicator 1), the procedure shall be reported on a single line 
item with the 50 modifier and one service unit.  Modifiers LT (left side) and RT (right 
side) shall not be reported when the 50 modifier applies. See 20.6 in this chapter for 
more information on the use of the 50, LT and RT modifiers. See the Physician Fee 
Schedule Payment Policy Record Layout in 250.2 for a description of the bilateral 
procedure payment policy indicators. 
 
If a procedure can be billed as bilateral, but is not authorized for the 150 percent bilateral 
adjustment (payment policy indicator 3), the procedure shall be reported on a single line 
item with the 50 modifier and one service unit. 
 
250.11.1 - Use of Payment Policy Indicators for Determining Bilateral 
Procedures Eligible for 150 Percent Payment Adjustment 
(Rev. 1777; Issued:  07-24-09; Effective Date:  01-01-08; Implementation Date:  01-
04-10) 
 
Medicare uses the payment policy indicators on the Medicare Physician Fee Schedule 
Database (MPFSDB) to determine if a bilateral procedure is authorized for a specific 
HCPCS/CPT code. The MPFSDB is located at http://www.cms.gov/Medicare/Medicare-
Fee-for-Service-Payment/PhysicianFeeSched/index.html.  The A/B MACs (A) have 
access to the payment policy indicators via the Physician Fee Schedule Payment Policy 
Indicator File in the FISS. 
 
See the Physician Fee Schedule Payment Policy Record Layout in 250.2 for a 
description of the bilateral procedure payment policy indicators. 
 
250.11.2 - Payment of Bilateral Procedures Rendered in a Method II 
CAH 
(Rev. 1777; Issued:  07-24-09; Effective Date:  01-01-08; Implementation Date:  01-
04-10) 
 
Under Section 1834(g)(2)(B) of the Act, outpatient professional services performed in a 
Method II CAH are paid 115 percent of such amounts as would otherwise be paid under 
the Act if the services were not included in the outpatient CAH services. 
 
Payment for bilateral procedures with a payment policy indicator of 1 and the 50 
modifier is based on the lesser of the actual charges or the 150 percent payment 
adjustment for bilateral procedures and is calculated as follows: 
 
  (facility specific MPFS amount times payment adjustment for bilateral procedures 
(150%) minus (deductible and coinsurance)) times 115%   
Payment for bilateral procedures with the 50 modifier and a payment policy indicator of 
3 is based on the lesser of the actual charges or 100% of the MPFS for each side of the 
body (200%) and is calculated as follows: 
 
(facility specific MPFS amount times 200% minus (deductible and coinsurance)) times 
115% 
 
250.12 - Primary Care Incentive Payment Program (PCIP) Payments to 
Critical Access Hospitals (CAHs) Paid Under the Optional Method 
(Rev. 2169, Issued: 03-03-11, Effective: 04-01-11, Implementation: 04-04-11) 
 
Section 5501(a) of the Affordable Care Act revises section 1833 of the Social Security 
Act by adding a new paragraph, (x), Incentive Payments for Primary Care Services.  
Section 1833(x) of the Act states that in the case of primary care services furnished on or 
after January 1, 2011, and before January 1, 2016, there shall be a 10 percent incentive 
payment for such services under Part B when furnished by a primary care practitioner. 
 
250.12.1 - Definition of Primary Care Practitioners and Primary Care 
Services 
(Rev. 2169, Issued: 03-03-11, Effective: 04-01-11, Implementation: 04-04-11) 
 
Primary care practitioners are defined as: 
 
(1)  A physician who has a primary specialty designation of family medicine, 
internal medicine, geriatric medicine, or pediatric medicine for whom primary 
care services accounted for at least 60 percent of the allowed charges under the 
PFS (excluding hospital inpatient care and emergency department visits) for the 
practitioner in a prior period as determined appropriate by the Secretary; or  
 
(2)  A nurse practitioner, clinical nurse specialist, or physician assistant for whom 
primary care services accounted for at least 60 percent of the allowed charges 
under the PFS (excluding hospital inpatient care and emergency department 
visits) for the practitioner in a prior period as determined appropriate by the 
Secretary. 
 
Primary care services are defined as CPT Codes: 
 
(1)  99201 through 99215 for new and established patient office or outpatient 
evaluation and management (E/M) visits; 
 
(2)  99304 through 99340 for initial, subsequent, discharge, and other nursing 
facility E/M services; new and established patient domiciliary, rest home or 
custodial care E/M services; and domiciliary, rest home or home care plan 
oversight services; and 
  (3)  99341 through 99350 for new and established patient home E/M visits. 
 
250.12.2 - Identifying Primary Care Services Eligible for the PCIP 
(Rev. 3019, Issued: 08-07-14, Effective: 01-01-12,  ICD-10: Upon Implementation of 
ICD- 10, Implementation: 09-08-14, ICD-10: Upon Implementation of ICD- 10) 
 
CAHs paid under the optional method billing on TOB 85X for professional primary care 
services (revenue code 96X, 97X or 98X) furnished by primary care physicians and 
nonphysician practitioners who have reassigned their billing rights to the CAH are 
eligible for PCIP payments. 
 
The National Provider Identifier (NPIs) of  primary care practitioners eligible for PCIP 
payment in a given calendar year (CY) are posted on Medicare contractor Web sites in 
the Primary Care Incentive Payment Program Eligibility File by January 31 of  the 
applicable incentive payment CY.   Eligible practitioners for PCIP payment in a given 
calendar year who were newly enrolled in Medicare in the year immediately preceding 
the PCIP payment year will be identified later in the payment year and posted on their 
Medicare contractors Web site at that point in time.  CAHs paid under the optional 
method should contact their contractor with any questions regarding the eligibility of 
physician and nonphysician practitioners for PCIP payments. 
 
Primary care practitioners furnishing primary care services will be identified on CAH 
claims by the NPI of the rendering practitioner as follows:  
 
  Line level Rendering Provider field when populated or, 
 
  Claim level Rendering Provider field where a line level Rendering Provider 
field is blank or, 
 
  Claim level Attending Provider field if the claim level Rendering Provider 
field is blank. 
 
In order for a primary care service to be eligible for PCIP payment, the CAH paid under 
the optional method must be billing for the professional services of physicians under their 
NPIs or of physician assistants, clinical nurse specialists, or nurse practitioners  under 
their own NPIs because they are not furnishing services incident to physicians services. 
 
Multiple primary care services rendered by different physicians may be present on a 
single claim.  Providers shall ensure they identify each physician on the claim form per 
the ASC X12 837 Institutional Claim Implementation Guide. 
 
250.12.3 - Coordination with Other Payments 
(Rev. 2169, Issued: 03-03-11, Effective: 04-01-11, Implementation: 04-04-11) 
 
Section 5501(a)(3) of the ACA authorizes payment under the PCIP as an additional 
payment amount for specified primary care services without regard to any additional  payment for the service under Section 1833(m) of the Social Security Act, the established 
Health Professional Shortage Area (HPSA) Medicare physician bonus program.  
Therefore, a CAH paid under the optional method and billing for the professional 
services of an eligible primary care physician or nonphysician practitioner furnishing a 
primary care service in a health professional shortage area (HPSA) may receive both a 
HPSA physician bonus payment (as described in the Medicare Claims Processing 
Manual, Pub. 100-04, Chapter 4, Section 250.2) under the HPSA physician bonus 
program and a PCIP incentive payment under the new program beginning in CY 2011. 
 
250.12.4 - Claims Processing and Payment for Critical Access Hospitals 
Paid Under the Optional Method 
(Rev. 2169, Issued: 03-03-11, Effective: 04-01-11, Implementation: 04-04-11) 
 
A. General Overview 
 
Incentive payments will be made on a quarterly basis and shall be equal to 10 percent of 
the amount paid for such services under the Medicare Physician Fee Schedule (PFS) 
times 1.15 percent for those services furnished during the incentive payment year.  PCIP 
payments for newly enrolled practitioners may be delayed due to the lag in claims data 
processing.  PCIP payments for services by a newly enrolled primary care practitioner 
will be paid in the quarter following eligibility determination, and then quarterly for all 
subsequent incentive payments. Retroactive payments will be provided from the 
beginning of the PCIP year once these primary care practitioners are deemed eligible. 
 
On an annual basis Medicare contractors shall receive a Primary Care Incentive Payment 
Program Eligibility File that they shall post to their websites.  The file will list the NPIs 
of all physicians and nonphysician practitioners who are eligible to receive PCIP 
payments for the upcoming CY.  The NPIs of eligible newly enrolled primary care 
practitioners will be posted to the contractors websites later in the payment year. 
 
On an annual basis Medicare contractors shall receive a Physician/Practitioner Specialty 
File. This file it to be used by contractors to answer provider inquiries regarding 
eligibility for the PCIP. 
 
The PCIP payments will be calculated by Medicare contractors and made quarterly to 
CAHs  paid under the optional method on behalf of the  eligible primary care physician 
or nonphysician practitioner for the  primary care services furnished by the practitioner in 
that quarter.  The PCIP payments will be based on 10 percent of 115 percent of the PFS 
amount that the CAH was paid for the professional service. 
 
B. Method of Payment 
Calculate and pay a CAH paid under the optional method based on primary care services 
furnished by qualifying primary care physicians and nonphysician practitioners an 
additional 10 percent incentive payment; 
    Calculate the payment based on 115 percent of the PFS amounts that were paid to 
the CAH for the services; not the Medicare approved amounts; 
 
  Combine the PCIP incentive payments, when appropriate, with other incentive 
payments, including the physician HPSA bonus payment and the HPSA Surgical 
Incentive Payment Program (HSIP) payment; 
 
  Provide a special remittance for CAHs form that is forwarded with the incentive 
payment so that CAHs paid under the optional method can identify which type of 
incentive payment was paid for which services. 
 
  CAHs paid under the optional method should contact their contractor with any 
questions regarding PCIP payments. 
 
C.  Changes for Contractor Systems 
 
The Fiscal Intermediary Standard System (FISS), Common Working File (CWF) and 
National Claims History (NCH) shall be modified to accept a new PCIP indicator on the 
claim line. Once the type of incentive payment has been identified by the shared systems, 
the shared system shall modify their systems to set the indicator on the claim line as 
follows: 
 
1 = HPSA 
2 = PSA 
3 = HPSA and PSA 
4 = HSIP 
5 = HPSA and HSIP 
6 = PCIP 
7 = HPSA and PCIP 
Space = Not Applicable 
 
The FISS shall send the HIGLAS 810 invoice for incentive payment invoices, including 
the new PCIP payment.  The contractor shall also combine the CAHs HPSA bonus, 
physician scarcity (PSA) bonus (if it should become available at a later date), HSIP 
payment and/or PCIP payment invoice per CAH.  The contractor shall receive the 
HIGLAS 835 payment file from HIGLAS showing a single incentive payment per CAH. 
 
250.13 - Health Professional Shortage Areas (HPSA) Surgical Incentive 
Payment Program (HSIP) for Surgical Services Rendered in Critical 
Access Hospitals (CAHs) Paid under the Optional Method 
(Rev. 2078, Issued: 10-28-10, Effective: 04-01-11, Implementation: 04-04-11) 
 
There are two methods of payment for outpatient services furnished by Critical Access 
Hospitals (CAHs).  The amount of payment for outpatient services furnished by a CAH 
under the traditional method is equal to 101 percent of the reasonable cost of the facility 
service and payment to the physician/practitioner under the Physician Fee Schedule(PFS)  for the professional service or a CAH may elect to receive amounts that are equal to 101 
percent of the reasonable cost of the facility service plus, with respect to the professional 
service, 115 percent of the amount otherwise paid for the professional service under the 
PFS.  This election is sometimes referred to as "method II" or "the optional method." 
 
Section 5501(b) (2) of the ACA is a conforming amendment, which refers to payments to 
the CAH for professional services under the optional method.  As such, section 
5501(b)(2) requires that, under the optional method, the 115 percent adjusted payment to 
the CAH for professional services does apply to the incentive payment for major surgical 
services furnished by general surgeons in HPSAs. 
 
For major surgical services furnished by general surgeons on or after January 1, 2011 and 
before January 1, 2016, the additional incentive amount specified is to be included in the 
determination of payment for professional services made to CAHs  paid under the 
optional method, but will be provided as a separate incentive payment to the CAH, on 
behalf of the qualified general surgeon, when they furnish a 10 - or 90 - day global 
surgical procedure in an identified HPSA.  Therefore, the 10 percent incentive payment 
will be made based on 115 percent of the amount that would be paid for the surgeons 
professional services under the PFS. 
 
250.13.1 Overview of the HSIP 
(Rev. 2078, Issued: 10-28-10, Effective: 04-01-11, Implementation: 04-04-11) 
 
The incentive payment applies to major surgical procedures, defined as 10 - and 90 - day 
global procedures under the PFS and furnished on or after January 1, 2011 and before 
January 1, 2016, furnished by an 02-general surgeon in an area designated under section 
332(a)(1)(A) of the Public Health Service Act as a HPSA. 
 
To be consistent with the Medicare HPSA physician program (Publication 100-04, 
Chapter 12, Section 90.4), HSIP payments will be calculated by Medicare contractors on 
a quarterly basis, on behalf of the qualifying 02-general surgeon for the qualifying 
surgical procedures. 
 
250.13.2 - HPSA Identification 
(Rev. 2078, Issued: 10-28-10, Effective: 04-01-11, Implementation: 04-04-11) 
 
For HSIP payments to be applicable, the 10 - or 90 - day global surgical procedure must 
be furnished in an area designated by the Secretary as of December 31 of the prior year as 
a HPSA. 
 
Each year, a list of ZIP codes eligible for automatic payment of the HPSA physician 
bonus is published.  This list is also utilized for automatic payments of the incentive for 
eligible services furnished by general surgeons.  Modifier AQ is used to identify 
circumstances when general surgeons furnish services in areas that are designated as 
HPSAs as of December 31 of the prior year, but that are not on the list of ZIP codes 
eligible for automatic payment.  Modifier AQ should be appended to the major surgical  procedure on claims submitted for payment for professional services furnished in a HPSA 
that is not recognized as such for the purpose of automatic payment. 
 
250.13.3 - Coordination with Other Payments 
(Rev. 2078, Issued: 10-28-10, Effective: 04-01-11, Implementation: 04-04-11) 
 
Section 5501(b)(4) of the ACA provides payment under the HSIP as an additional 
payment amount for specified surgical services without regard to any additional payment 
for the service under section 1833(m) of the Act.  Therefore, a general surgeon may 
receive both a HPSA physician bonus payment under the established program and an 
HSIP payment under the new program beginning in CY 2011. 
 
250.13.4 - General Surgeon and Surgical Procedure Identification for 
Professional Services Paid under the Physician Fee Schedule (PFS) 
(Rev. 2078, Issued: 10-28-10, Effective: 04-01-11, Implementation: 04-04-11) 
 
Qualifying general surgeons will be identified on a claim for a 10 - or 90 - day global 
surgical procedure based on the NPI listed in the operating provider field on the claim 
and the associated primary enrolled specialty of the operating physician of 02 - general 
surgery. 
 
Major surgical procedures are those procedures for which a 10 - or 90 - day global period 
is used for payment under the PFS.  The specific procedure codes eligible for the HSIP 
are identified in column U (global period) of the Physician Fee Schedule Relative Value 
Update (RVU) file located at:  http://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/PhysicianFeeSched/PFS-Relative-Value-Files.html, with a global period 
designation of 10 - or 90 day. 
 
250.13.5 - Claims Processing and Payment 
(Rev. 2078, Issued: 10-28-10, Effective: 04-01-11, Implementation: 04-04-11) 
 
A. General Overview 
 
The HPSA physician bonus program guidelines are contained in Publication 100-04, 
Chapter 12, and Section 90.4.  Refer to that manual for payment and claims processing 
guidance for the HPSA physician bonus program that was established in 2005. 
 
The following guidelines pertain only to qualifying 02- general surgeons  who have 
reassigned their billing rights to CAHs paid under the optional method, and who are 
eligible to receive the additional 10 percent HSIP payment for major surgical procedures 
furnished  in HPSAs from January 1, 2011 through December 31, 2015. 
 
Contractors shall only identify eligible services with a 10 - or 90 - day global period 
rendered in eligible zip code areas based on the HPSA physician bonus program ZIP code 
file for the appropriate date of service. 
  Providers may report modifier AQ when submitting claims for major surgical procedures 
that were furnished in approved HPSAs, where those HPSAs are not recognized for 
automatic payment.  The modifier must be appended to the major surgical procedure 
HCPCS code in order for the CAH paid under the optional method to be paid the 10 
percent additional incentive payment for the surgical procedure on behalf of the general 
surgeon. 
 
B. Method of Payment: 
 
  Calculate and pay CAHs paid under the optional method on behalf of  02- general 
surgeons furnishing  10 - and 90 - day global surgical procedures in a recognized 
HPSA an additional 10 percent incentive payment based on 115 percent of the 
amount that would be paid for the surgeons professional services under the PFS; 
 
  Calculate the payment based on the amount actually paid for the service, not the 
Medicare approved amount; 
 
  Combine the additional payment with the HPSA physician bonus payment; 
 
  Accept and pay services submitted with modifier AQ and; 
 
  Revise the special incentive remittance for CAHs that is forwarded with the 
incentive check so that physicians can identify which type of incentive payment 
(HPSA physician, HSIP, or PCIP) was paid for which service. 
 
C. Changes for Contractor Systems 
 
The Medicare Carrier System, (MCS), Common Working File (CWF,) and National 
Claims History (NCH) shall be modified to accept a new HSIP and a new PCIP indicator 
on the claim line. 
 
Once the type of incentive payment has been identified by the shared systems, the shared 
system shall modify their systems to set the indicator on the claim line as follows: 
 
1 = HPSA; 
2 = PSA; 
3 = HPSA and PSA; 
4 = HSIP; 
5 = HPSA and HSIP 
6 = PCIP;  
7 = HPSA and PCIP; 
Space = Not Applicable. 
 
The contractor shared system shall send the HIGLAS 810 invoice for incentive payment 
invoices, including the new HSIP payment.  The contractor shall also combine the 
practitioners HPSA physician bonus, Physician Scarcity (PSA) bonus (if it should  become available at a later date), and HSIP payment invoice per practitioner.  The 
contractor shall receive the HIGLAS 835 payment file from HIGLAS showing a single 
incentive payment per practitioner. 
 
250.14 - Payment of Licensed Clinical Social Workers (LCSWs) in a 
Method II CAH 
(Rev. 2202, Issued: 04-27-11, Effective: 10-01-11, Implementation: 10-03-11) 
 
The services of a LCSW that has reassigned their billing rights to a Method II CAH are 
payable by Medicare when the procedure is billed on type of bill 85X with revenue code 
(RC) 96X, 97X, and/or 98X and the AJ modifier (clinical social worker). 
 
Under Section 1834(g)(2)(B) of the Act, outpatient professional services performed in a 
Method II CAH are paid 115 percent of such amounts as would otherwise be paid under 
the Act if the services were not included in the outpatient CAH services. 
 
Section 1833 (a)(1)(F) of the Act stipulates that payment for services performed by a 
LCSW shall be 80 percent of the lesser of the actual charges for the services or 75 
percent of the amount determined for the payment of a psychologist. 
 
Payment is calculated as follows: 
 
((Facility specific MPFS amount times the LCSW reduction (75%)) minus (deductible 
and coinsurance)) times 115%. 
 
250.15 - Coding and Payment of Multiple Surgeries Performed in a 
Method II CAH 
(Rev. 2333, Issued: 10-28-11, Effective: 04-01-12, Implementation: 04-02-12) 
 
Multiple surgeries rendered by a physician that has reassigned their billing rights to a 
Method II CAH are payable by Medicare when the procedures are eligible and billed on 
type of bill 85x with revenue code (RC) 096x, 097x and/or 098x. 
 
Multiple surgeries are separate procedures performed by a single physician or physicians 
in the same group practice on the same patient at the same operative session or on the 
same day for which separate payment may be allowed. Co-surgeons, surgical teams, or 
assistants-at-surgery may participate in performing multiple surgeries on the same patient 
on the same day. 
 
Medicare pays for multiple surgeries by ranking from the highest MPFS amount to the 
lowest MPFS amount. When the same physician performs more than one surgical service 
at the same session, the allowed amount is 100% for the surgical code with the highest 
MPFS amount. The allowed amount for the subsequent surgical codes is based on 50% of 
the MPFS amount.  In addition, special endoscopic pricing rules are applied prior to the 
multiple surgery rules, if applicable. CAH Method II providers may review the multiple 
surgery and special endoscopic pricing rules in Pub. 100-04, Chapter 12, Section 40.6.  In  addition, section 40.6.D addresses rare situations where the above payment rules may be 
bypassed using modifier 22. Providers shall be aware that CAH claims billed with 
Modifier 22 may be subject to medical review. 
 
250.16 - Multiple Procedure Payment Reduction (MPPR) on Certain 
Diagnostic Imaging Procedures Rendered by Physicians 
(Rev. 3578, Issued:  08-05 Effective:  01-01-17, Implementation:  01-03-17) 
 
Diagnostic imaging procedures rendered by a physician that has reassigned their billing 
rights to a Method II CAH are payable by Medicare when the procedures are eligible and 
billed on type of bill 85x with revenue code (RC) 096x, 097x and/or 098x. 
 
The MPPR on diagnostic imaging applies when multiple services are furnished by the 
same physician to the same patient in the same session on the same day. Full payment is 
made for each service with the highest payment under the MPFS.  Effective for dates of 
services on or after January 1, 2012, payment is made at 75 percent for each subsequent 
service; and effective for dates of services on or after January 1, 2017, payment is made 
at 95 percent for each subsequent service. 
 
250.17 - Payment of Global Surgical Split Care in a Method II CAH 
Submitted with Modifier 54 and/or 55 
(Rev. 2574, Issued: 10-26-12 , Effective:01-01-13 , Implementation:01-07-13) 
 
Global surgical procedures rendered by a physician that has reassigned their billing rights 
to a CAH Method II provider is payable by Medicare only when billed on an 85x type of 
bill (TOB) with revenue code (RC) 096x, 97x, and/or 98x and modifier 54 (surgical care 
only) and/or 55 (postoperative management only). 
 
There are occasions when more than one physician provides services included in the 
global surgical period, i.e., when the physician who performs the surgical procedure does 
not furnish the follow-up care. If this occurs, payment for the postoperative or post-
discharge care should be split between the physicians when they agree on the transfer of 
care. 
 
When more than one physician furnishes services that are included in the global surgical 
package, the sum of the amount approved for all physicians may not exceed what would 
have been paid if a single physician provides all services (except where stated policies, 
e.g., the surgeon performs only the surgery and a physician other than the surgeon 
provides preoperative and postoperative care, result in payment that is higher than the 
global allowed amount). 
 
CAH Method II providers may review the Global Surgical pricing rules in Pub. 100-04, 
Chapter 12, sections 40.1-40.5. 
 
260 - Outpatient Partial Hospitalization Services 
(Rev. 1, 10-03-03)   
A3-3661, A-01-93 
 
Medicare Part B coverage is available for outpatient partial hospitalization services 
provided by hospitals, CAHs, and CMHCs. 
 
260.1 - Special Partial Hospitalization Billing Requirements for 
Hospitals, Community Mental Health Centers, and Critical Access 
Hospitals 
(Rev. 4204, Issued: 01-17-19, Effective: 01-01-19, Implementation: 01-07-19)  
 
Medicare  Part  B  coverage  is  available  for  hospital  outpatient  partial  hospitalization 
services. 
 
A. Billing Requirement 
 
Section 1861 (http://www.socialsecurity.gov/OP_Home/ssact/title18/1800.htm) of the 
Act defines the services under the partial hospitalization benefit in a hospital. 
 
Section 1866(e)(2) of the Act 
(http://www.socialsecurity.gov/OP_Home/ssact/title18/1800.htm)recognizes CMHCs as 
providers of services but only for furnishing partial hospitalization services.  See 
261.1.1 of this chapter for CMHC partial hospitalization bill review directions. 
 
Hospitals and CAHs report condition code 41 in FLs 18-28 (or electronic equivalent) to 
indicate the claim is for partial hospitalization services.  They must also report a revenue 
code and the charge for each individual covered service furnished.  In addition, hospital 
outpatient departments are required to report HCPCS codes.  CAHs are not required to 
report HCPCS code for this benefit. 
 
Under component billing, hospitals are required to report a revenue code and the charge 
for each individual covered service furnished under a partial hospitalization program.  In 
addition, hospital outpatient departments are required to report HCPCS codes.  
Component billing assures that only those partial hospitalization services covered under 
1861(ff) of the Act are paid by the Medicare program. 
 
Effective January 1, 2017, non-excepted off-campus provider-based departments of a 
hospital are required to report a PN modifier on each claim line for non-excepted items  and services.  The use of modifier PN will trigger a payment rate under the Medicare 
Physician Fee Schedule.  We expect the PN modifier to be reported with each non-
excepted item and service including those for which payment will not be adjusted, such 
as separately payable drugs, clinical laboratory tests, and therapy services. 
 
Excepted off-campus provider-based departments of a hospital must continue to report 
existing modifier PO (Services, procedures and/or surgeries provided at off-campus 
provider-based outpatient departments) for all excepted items and services furnished. Use 
of the off-campus PBD modifier became mandatory beginning January 1, 2016. 
 
All hospitals are required to report condition code 41 in FLs 18-28 to indicate the claim is 
for partial hospitalization services.  Hospitals use bill type 13X and CAHs use bill type 
85X.  The following special procedures apply. 
 
Bills must contain an acceptable revenue code.  They are as follows: 
 
Revenue Code  Description 
0250  Drugs and Biologicals 
043X  Occupational Therapy 
0900  Behavioral Health Treatment/Services 
0904  Activity Therapy 
0910  Psychiatric/Psychological Services (Dates of Service prior to 
October 16, 2003) 
0914  Individual Therapy 
0915  Group Therapy 
0916  Family Therapy 
0918  Behavioral Health/Testing 
0942  Education/Training 
 
Hospitals other than CAHs are also required to report appropriate HCPCS codes as  follows: 
 
Revenue Code  Description  HCPCS Code 
043X  Occupational Therapy  *G0129 (Partial 
Hospitalization) 
0900  Behavioral Health  ****90791 or ***** 90792 
Treatment/Services 
0904  Activity Therapy   **G0176 (Partial 
Hospitalization) 
0914  Individual Psychotherapy  90785, 90832, 90833, 90834, 
90836, 90837, 90838, 90845, 
90865, or 90880  
0915  Group Therapy  G0410 or G0411  
0916  Family Psychotherapy  90846 or 90847 
0918   Behavioral Health/Testing  96116, 96130, 96131, 96132, 
96133, 96136, 96137, 96138. 
96139, 96146 
0942  Education/Training  ***G0177 
 
The A/B MAC (A) will edit to assure that HCPCS are present when the above revenue 
codes are billed and that they are valid HCPCS codes.  The A/B MAC (A) will not edit 
for matching the revenue code to HCPCS. 
 
*The definition of code G0129 is as follows: 
 
Occupational therapy services requiring skills of a qualified occupational 
therapist, furnished as a component of a partial hospitalization treatment program, 
per session (45 minutes or more). 
 
**The definition of code G0176 is as follows: 
  Activity therapy, such as music, dance, art or play therapies not for recreation, 
related to care and treatment of patients disabling mental problems, per session 
(45 minutes or more). 
 
***The definition of code G0177 is as follows: 
 
Training and educational services related to the care and treatment of patients 
disabling mental health problems, per session (45 minutes or more). 
 
****The definition of code 90791 is as follows: 
 
Psychiatric diagnostic evaluation (no medical services) completed by a non-
physician. 
 
*****The definition of code 90792 is as follows: 
 
Psychiatric diagnostic evaluation (with medical services) completed by a 
physician. 
 
Codes G0129 and G0176 are used only for partial hospitalization programs. 
 
Code G0177 may be used in both partial hospitalization program and outpatient mental 
health settings. 
 
Revenue code 250 does not require HCPCS coding.  However, Medicare does not cover 
drugs that can be self-administered. 
 
Edit to assure that HCPCS are present when the above revenue codes are billed and that 
they are valid HCPCS codes.  Do not edit for the matching of revenue code to HCPCS. 
 
B. Professional Services 
 
The professional services listed below when provided in all hospital outpatient  departments are separately covered and paid as the professional services of physicians 
and other practitioners.  These professional services are unbundled and these practitioners 
(other than physician assistants (PA) bill the Medicare A/B MAC (B) directly for the 
professional services furnished to hospital outpatient partial hospitalization patients.  The 
hospital can also serve as a billing agent for these professionals by billing the A/B MAC 
(B) on their behalf under their billing number for their professional services.  The 
professional services of a PA can be billed to the A/B MAC (B) only by the PAs 
employer.  The employer of a PA may be such entities or individuals as a physician, 
medical group, professional corporation, hospital, SNF, or nursing facility.  For example, 
if a physician is the employer of the PA and the PA renders services in the hospital, the 
physician and not the hospital would be responsible for billing the A/B MAC (B) on 
Form CMS-1500 for the services of the PA.  The following direct professional services 
are unbundled and not paid as partial hospitalization services. 
 
  Physician services that meet the criteria of 42 CFR 415.102, for payment on a fee 
schedule basis; 
 
  Physician assistant (PA) services as defined in 1861(s)(2)(K)(i) of the Act; 
 
  Nurse practitioner and clinical nurse specialist services, as defined in 
1861(s)(2)(K)(ii) of the Act; and 
 
  Clinical psychologist services as defined in 1861(ii) of the Act. 
 
The services of other practitioners (including clinical social workers and occupational 
therapists), are bundled when furnished to hospital patients, including partial 
hospitalization patients.  The hospital must bill the contractor for such nonphysician 
practitioner services as partial hospitalization services.  Make payment for the services to 
the hospital. 
 
C. Outpatient Mental Health Treatment Limitation 
 
The outpatient mental health treatment limitation may apply to services to treat mental, 
psychoneurotic, and personality disorders when furnished by physicians, clinical 
psychologists, NPs, CNSs, and PAs to partial hospitalization patients.  However, the 
outpatient mental health treatment limitation does not apply to such mental health 
treatment services billed to the A/B MAC (A) by a CMHC or hospital outpatient  department as partial hospitalization services. 
 
D. Reporting of Service Units 
 
Hospitals report the number of times the service or procedure, as defined by the HCPCS 
code, was performed. CAHs report the number of times the revenue code visit was 
performed. 
 
NOTE:  Service units are not required to be reported for drugs and biologicals (Revenue 
Code 250). 
 
E. Line Item Date of Service Reporting 
 
Hospitals other than CAHs are required to report line item dates of service per revenue 
code line for partial hospitalization claims.  This means each service (revenue code) 
provided must be repeated on a separate line item along with the specific date the service 
was provided for every occurrence.  Line item dates of service are reported in FL 45 
Service Date (MMDDYY).  See 260.5 for a detailed explanation. 
 
F. Payment 
 
Starting in CY 2017 and subsequent years, the payment structure for partial 
hospitalization services provided in hospital outpatient departments and CMHCs has 
been reduced from four APCs (two for CMHCs and two for hospital-based PHPs) to a 
single APC by provider type.  Effective January 2, 2017, we are replacing existing 
CMHC APCs 5851 (Level 1 Partial Hospitalization (3 services)) and 5852 (Level 2 
Partial Hospitalization (4 or more services)) with a new CMHC APC 5853 (Partial 
Hospitalization (3 or More Services Per Day)), and replacing existing hospital-based 
PHP APCs 5861 (Level 1 Partial Hospitalization (3 services)) and 5862 (Level 2 
Partial Hospitalization (4 or more services)) with a new hospital-based PHP APC 5863 
(Partial Hospitalization (3 or More Services Per Day)).  The following chart displays 
the CMHC and hospital-based PHP APCs: 
 
Hospital-Based and Community Mental Health Center PHP APCs  CY 2017  Group Title 
APC 
5853  Partial Hospitalization (3 or more services per day) for CMHCs 
5863  Partial Hospitalization (3 or more services per day) for hospital-
based PHPs 
  Apply Part B deductible, if any, and coinsurance. 
 
G. Data for CWF and PS&R 
 
Include revenue codes, HCPCS/CPT codes, units, and covered charges in the financial 
data section (fields 65a - 65j), as appropriate.  Report the billed charges in field 65h, 
"Charges," of the CWF record. 
 
Include in the financial data portion of the PS&R UNIBILL, revenue codes, HCPCS/CPT 
codes, units, and charges, as appropriate. 
 
Future updates will be issued in a Recurring Update Notification. 
 
260.1.1 - Bill Review for Partial Hospitalization Services Provided in 
Community Mental Health Centers (CMHC) 
(Rev. 4204, Issued: 01-17-19, Effective: 01-01-19, Implementation: 01-07-19)  
 
A. General 
 
Medicare Part B coverage for partial hospitalization services provided by CMHCs is 
available effective for services provided on or after October 1, 1991. 
 
B. Special Requirements 
 
Section 1866(e)(2) (http://www.socialsecurity.gov/OP_Home/ssact/title18/1800.htm) of 
the Act recognizes CMHCs as providers of services but only for furnishing partial 
hospitalization services.  Applicable provider ranges are 1400-1499, 4600-4799, and 
4900-4999. 
 
C. Billing Requirements 
  The CMHCs bill for partial hospitalization services under bill type 76X.  The A/B MACs 
(A) follow bill review instructions in chapter 25 of this manual, except for those listed 
below. 
 
The acceptable revenue codes are as follows: 
 
Revenue  Description 
Code 
0250  Drugs and Biologicals 
043X  Occupational Therapy 
0900  Behavioral Health Treatments/Services 
0904  Activity Therapy 
0910  Psychiatric/Psychological Services (Dates of Service prior to 
October 16, 2003) 
0914  Individual Therapy 
0915  Group Therapy 
0916  Family Therapy 
0918  Behavioral Health/Testing 
0942  Education/Training 
 
The CMHCs are also required to report appropriate HCPCS codes as follows: 
 
Revenue Codes  Description  HCPCS Code 
043X  Occupational Therapy   *G0129 (Partial Hospitalization) 
0900  Behavioral Health  ****90791 or *****90792 
Treatments/Services   
0904  Activity Therapy   **G0176 (Partial Hospitalization) 
     
0914  Individual Psychotherapy  90785, 90832, 90833, 90834, 90836, 
90837, 90838, 90845, 90865, or 
90880 
0915  Group Psychotherapy  G0410 or G0411  
0916  Family Psychotherapy  90846 or 90847 
0918  Behavioral Health/Testing  96116, 96130, 96131, 96132, 96133, 
96136, 96137, 96138. 96139, 96146 
0942  Education/Training  ***G0177 
 
The A/B MAC(s) (A) edit to assure that HCPCS are present when the above revenue 
codes are billed and that they are valid HCPCS codes.  They do not edit for the matching 
of revenue codes to HCPCS. 
 
Definitions each of the asterisked HCPCS codes follows: 
  *The definition of code G0129 is as follows: 
Occupational therapy services requiring the skills of a qualified occupational therapist, 
furnished as a component of a partial hospitalization treatment program, per session (45 
minutes or more). 
 
**The definition of code G0176 is as follows: 
Activity therapy, such as music, dance, art or play therapies not for recreation, related to 
the care and treatment of patients disabling mental health problems, per session (45 
minutes or more). 
 
***The definition of code G0177 is as follows: 
Training and educational services related to the care and treatment of patients disabling 
mental health problems, per session (45 minutes or more). 
 
****The definition of code 90791 is as follows: 
Psychiatric diagnostic evaluation (no medical services) completed by a non-physician. 
 
*****The definition of code 90792 is as follows: 
Psychiatric diagnostic evaluation (with medical services) completed by a physician. 
 
Codes G0129 and G0176 are used only for partial hospitalization programs. 
 
Code G0177 may be used in both partial hospitalization program and outpatient mental 
health settings. 
 
Revenue code 0250 does not require HCPCS coding.  However, drugs that can be self-
administered are not covered by Medicare. 
 
HCPCS includes CPT-4 codes.  See the ASC X12 837 institutional claim guide for how 
to report HCPCS electronically.  CMHCs report HCPCS codes on Form CMS-1450 in 
FL44, HCPCS/Rates.  HCPCS code reporting is effective for claims with dates of 
service on or after April 1, 2000. 
 
The A/B MACs (A) are to advise their CMHCs of these requirements.  CMHCs should 
complete the remaining items on the claim in accordance with the ASC X12 837 
Institutional Claim implementation guide and the Form CMS-1450 instructions in 
Chapter 25 of this manual. 
 
The professional services listed below are separately covered and are paid as the 
professional services of physicians and other practitioners.  These professional services 
are unbundled and these practitioners (other than physician assistants (PAs)) bill the A/B 
MAC (B) directly for the professional services furnished to CMHC partial hospitalization 
patients.  The ASC X12 837 professional claim format or the paper form 1500 is used.   The CMHC can also serve as a billing agent for these professionals by billing the A/B 
MAC (B) on their behalf for their professional services.  The professional services of a 
PA can be billed to the A/B MAC (B) only by the PAs employer.  The employer of a PA 
may be such entities or individuals as a physician, medical group, professional 
corporation, hospital, SNF, or nursing facility.  For example, if a physician is the 
employer of the PA and the PA renders services in the CMHC, the physician and not the 
CMHC would be responsible for billing the A/B MAC (B) for the services of the PA. 
 
The following professional services are unbundled and not paid as partial hospitalization 
services: 
 
  Physician services that meet the criteria of 42 CFR 415.102, for payment on a fee 
schedule basis; 
 
  PA services, as defined in 1861(s)(2)(K)(i) 
(http://www.socialsecurity.gov/OP_Home/ssact/title18/1800.htm) of the Act; 
 
  Nurse practitioner and clinical nurse specialist services, as defined in 
1861(s)(2)(K)(ii) 
(http://www.socialsecurity.gov/OP_Home/ssact/title18/1800.htm) of the Act; and, 
 
  Clinical psychologist services, as defined in 1861(ii) 
(http://www.socialsecurity.gov/OP_Home/ssact/title18/1800.htm) of the Act. 
 
The services of other practitioners (including clinical social workers and occupational 
therapists) are bundled when furnished to CMHC patients.  The CMHC must bill the A/B 
MAC (A) for such nonphysician practitioner services as partial hospitalization services.  
The A/B MAC (A) makes payment for the services to the CMHC. 
 
D. Outpatient Mental Health Treatment Limitation 
 
The outpatient mental health treatment limitation may apply to services to treat mental, 
psychoneurotic, and personality disorders when furnished by physicians, clinical 
psychologists, NPs, CNSs, and PAs to partial hospitalization patients.  However, the 
outpatient mental health treatment limitation does not apply to such mental health 
treatment services billed to the A/B MAC (A) as partial hospitalization services. 
 
E. Reporting of Service Units 
 
Visits should no longer be reported as units.  Instead, CMHCs report in the field, Service 
Units, the number of times the service or procedure, as defined by the HCPCS code, was 
performed when billing for partial hospitalization services identified by revenue code in 
subsection C.   
EXAMPLE:  A beneficiary received psychological testing performed by a physician for 
a total of 3 hours during one day (HCPCS code 96130, first hour; HCPCS code 96131 for 
2 additional hours).  The CMHC reports revenue code 0918, HCPCS code 96130, and 1 
unit; and a second line on the claim showing revenue code 918, HCPCS code 96131, and 
2 units. 
 
When reporting service units for HCPCS codes where the definition of the procedure 
does not include any reference to time (either minutes, hours or days), CMHCs should 
not bill for sessions of less than 45 minutes. 
 
The CMHC need not report service units for drugs and biologicals (Revenue Code 0250) 
 
NOTE:  Information regarding the Form CMS-1450 form locators that correspond with 
these fields is found in Chapter 25 of this manual.  See the ASC X12 837 Institutional 
Claim implementation guide for related guidelines for the electronic claim. 
 
F. Line Item Date of Service Reporting 
 
Dates of service per revenue code line for partial hospitalization claims that span two or 
more dates.  This means each service (revenue code) provided must be repeated on a 
separate line item along with the specific date the service was provided for every 
occurrence.  Line item dates of service are reported in Service Date.  See examples 
below of reporting line item dates of service.  These examples are for group therapy 
services provided twice during a billing period. 
 
For claims, report as follows: 
 
Revenue  HCPCS  Dates of  Units  Total 
Code  Service  Charges 
0915  G0176  20090505  1  $80 
0915  G0176  20090529  2  $160 
 
NOTE:  Information regarding the Form CMS-1450 form locators that correspond with 
these fields is found in Chapter 25 of this manual.  See the ASC X12 837 Institutional 
Claim Implementation Guide for related guidelines for the electronic claim. 
 
The A/B MACs (A) return to provider claims that span two or more dates if a line item 
date of service is not entered for each HCPCS code reported or if the line item dates of 
service reported are outside of the statement covers period.  Line item date of service 
reporting is effective for claims with dates of service on or after June 5, 2000. 
 
G. Payment   
Section 1833(a)(2)(B) (http://www.socialsecurity.gov/OP_Home/ssact/title18/1800.htm)  
of the Act provides the statutory authority governing payment for partial hospitalization 
services provided by a CMHC.  A/B MAC(s) (A) made payment on a reasonable cost 
basis until OPPS was implemented.  The Part B deductible and coinsurance applied. 
 
Payment principles applicable to partial hospitalization services furnished in CMHCs are 
contained in 2400 of the Medicare Provider Reimbursement Manual. 
 
The A/B MACs (A) make payment on a per diem basis under the hospital outpatient 
prospective payment system for partial hospitalization services.  CMHCs must continue 
to maintain documentation to support medical necessity of each service provided, 
including the beginning and ending time. 
 
Effective January 1, 2011, there were four separate APC payment rates for PHP:  two for 
CMHCs (for Level I and Level II services based on only CMHC data) and two for 
hospital-based PHPs (for Level I and Level II services based on only hospital-based PHP 
data).   
 
The two CMHC APCS for providing partial hospitalization services were:  APC 5851 
(Level 1 Partial Hospitalization (3 services)) and APC 5852 (Level 2 Partial 
Hospitalization (4 or more services)).  Effective January 1, 2017, we are combining APCs 
5851 and 5852 into one new APC 5853 (Partial Hospitalization (3 or more services) for 
CMHCs). 
 
Community Mental Health Center PHP APC 
APC  Group Title 
5853  Partial Hospitalization (3 or more services per day) for CMHCs 
 
NOTE:  Occupational therapy services provided to partial hospitalization patients are 
not subject to the prospective payment system for outpatient rehabilitation services, and 
therefore the financial limitation required under 4541 of the Balanced Budget Act 
(BBA) does not apply. 
 
H. Medical Review 
 
The A/B MACs (A) follow medical review guidelines in Pub. 100-08, Medicare Program 
Integrity Manual. 
 
I. Coordination with CWF 
 
See chapter 27 of this manual.  All edits for bill type 74X apply, except provider number 
ranges 4600-4799 are acceptable only for services provided on or after October 1, 1991.  260.2 - Professional Services Related to Partial Hospitalization 
(Rev. 1, 10-03-03) 
A3-3661 
 
The professional services listed below when provided in a hospital or CAH outpatient 
department are separately covered and paid as the professional services of physicians and 
other practitioners.  These professional services are unbundled and these practitioners 
(other than physician assistants (PA)) bill the Medicare A/B MAC (B) directly for the 
professional services furnished to hospital outpatient partial hospitalization patients.  The 
hospitals or CAHs can also serve as a billing agent for these professionals by billing the 
A/B MAC (B) on their behalf under their billing number for their professional services.  
Only a PAs employer can bill the A/B MAC (B) for professional services of a PA. 
 
The following direct professional services are unbundled and not paid as partial 
hospitalization services: 
 
  Physician services that meet the criteria of 42 CFR 415.102, for payment on a fee 
schedule basis; 
 
  Physician assistant (PA) services as defined in 1861(s)(2)(K)(i) of the Act; 
 
  Nurse practitioner and clinical nurse specialist services, as defined in 
1861(s)(2)(K)(ii) of the Act; and  
 
  Clinical psychologist services as defined in 1861(ii) of the Act. 
 
The services of other practitioners (including clinical social workers and occupational 
therapists), are bundled when furnished to hospital or CAH patients, including partial 
hospitalization patients.  The hospital or CAH must bill their A/B MAC (A) for such 
nonphysician practitioner services as partial hospitalization services.  Payment is made to 
the provider for these services. 
 
Only the actual employer of the PA can bill for these services.  The employer of a PA 
may be such entities or individuals such as a physician, medical group, professional 
corporation, hospital, SNF, or nursing facility.  For example, if a physician is the 
employer of the PA and the PA renders services in the hospital or CAH, the physician 
and not the hospital or CAH is responsible for billing the A/B MAC (B) on the Form 
CMS-1500 for the services of the PA. 
 
260.3 - Outpatient Mental Health Treatment Limitation for Partial 
Hospitalization Services 
(Rev. 1, 10-03-03) 
A-01-93 
 
The outpatient mental health treatment limitation applies to services to partial 
hospitalization patients to treat mental, psychoneurotic, and personality disorders when  furnished by physicians, clinical psychologists, NPs, CAHs, and PAs.  It does not apply 
to such mental health treatment services billed to the A/B MAC (A) by a CMHC, hospital 
or CAH as partial hospitalization services. 
 
260.4 - Reporting Service Units for Partial Hospitalization 
(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) 
 
Hospitals report number of times the service or procedure, as defined by the HCPCS 
code, was performed.  CAHs report the number of times the revenue code visit was 
performed. 
 
EXAMPLE:  A beneficiary received psychological testing (HCPCS code 96100 which is 
defined in one-hour intervals) for a total of three hours during one day.  The hospital 
reports revenue code 0918 in FL 42, HCPCS code 96100 in FL 44, and three units in FL 
46.  The CAH would report revenue code 0918, leave HCPCS blanks, and report 1 unit in 
FL 46. 
 
When reporting service units for HCPCS codes where the definition of the procedure 
does not include any reference to time (either in minutes, hours, or days), hospital 
outpatient departments do not bill for sessions of less than 45 minutes. 
 
The A/B MAC (A) must return to the provider claims other than CAH claims that do not 
contain service units for each HCPCS code. 
 
NOTE:  Service units do not need to be reported for drugs and biologicals (Revenue 
Code 0250). 
 
Hospitals must retain documentation to support the medical necessity of each service 
provided, including beginning and ending time. 
 
260.5 - Line Item Date of Service Reporting for Partial Hospitalization 
(Rev. 3019, Issued: 08-07-14, Effective: 01-01-12, ICD-10: Upon Implementation of 
ICD- 10, Implementation: 09-08-14, ICD-10: Upon Implementation of ICD- 10) 
 
Hospitals other than CAHs are required to report line item dates of service per revenue 
code line for partial hospitalization claims.  Where services are provided on more than 
one day included in the billing period, the date of service must be identified.  Each 
service (revenue code) provided must be repeated on a separate line item along with the 
specific date the service was provided for every occurrence.  See examples below of 
reporting line item dates of service.  These examples are for group therapy services 
provided twice during a billing period. 
 
For the claims, report as follows: 
  Revenue  Dates of  Total 
Code  HCPCS  Service  Units  Charges 
0915  G0176  20090505  1  $80.00 
0915  G0176  20090529  2  $160.00 
 
NOTE:  Information regarding the Form CMS-1450 form locators that correspond with 
these fields is found in Chapter 25 of this manual.  See the ASC X12 837 Institutional 
Claim Implementation Guide for related guidelines for the electronic claim. 
 
The A/B MAC (A) must return to the hospital (RTP) claims where a line item date of 
service is not entered for each HCPCS code reported, or if the line item dates of service 
reported are outside of the statement covers period.  Line item date of service reporting is 
effective for claims with dates of service on or after June 5, 2000. 
 
 
260.6 - Payment for Partial Hospitalization Services 
(Rev. 3685, Issued: 12-22-16, Effective: 01-01-17, Implementation: 01-03-17) 
 
For hospital outpatient departments, the A/B MAC (A) makes payments on a reasonable 
cost basis until August 1, 2000 for partial hospitalization services.  The Part B deductible 
and coinsurance apply.  During the year, the A/B MAC (A) will make payment at an 
interim rate based on a percentage of the billed charges.  At the end of the year, the 
hospital will be paid at the reasonable cost incurred in furnishing partial hospitalization 
services, based upon the Medicare cost report filed with the A/B MAC (A). 
 
Beginning with services provided on or after August 1, 2000, payment is made under the 
hospital outpatient prospective payment system for partial hospitalization services. 
 
For CAHs, payment is made on a reasonable cost basis regardless of the date of service. 
 
In CY 2017, payment for non-excepted off-campus hospital-based PHPs will be made 
under the MPFS, paying the CMHC per diem rate for APC 5853, for providing 3 or more 
PHP services per day. 
 
The Part B deductible, if any, and coinsurance apply. 
 
270 - Billing for Hospital Outpatient Services Furnished by Clinical 
Social Workers (CSW) 
(Rev. 1, 10-03-03) 
A3-3662 
 
Payment may be made for covered diagnostic and therapeutic services furnished by 
CSWs in a hospital outpatient setting.  CSW services furnished under a partial 
hospitalization program are included in the partial hospitalization rate.  Other CSW 
services must be billed to the A/B MAC (B) on Form CMS-1500 or the electronic 
equivalent.   
See chapters 13 and 15, of the Medicare Benefit Policy Manual, for a discussion of the 
coverage requirements for CSW. 
 
270.1 - Fee Schedule to be Used for Payment for CSW Services 
(Rev. 1, 10-03-03) 
 
The fee schedule for CSW services is set at 75 percent of the fee schedule for comparable 
services furnished by clinical psychologists, except for services under a CAH partial 
hospitalization program.  These are paid on a reasonable cost basis. 
 
270.2 - Outpatient Mental Health Payment Limitation for CSW Services 
(Rev. 1, 10-03-03) 
 
The CSW services are subject to the outpatient mental health services limitation in 1833 
of the Act.  The imitation of 62.5 percent is applied to the lesser of the actual charge or 
fee schedule amount.  Diagnostic services are not subject to the limitation. 
 
270.3 - Coinsurance and Deductible for CSW Services 
(Rev. 1, 10-03-03) 
 
The annual Part B deductible and the 20 percent coinsurance apply to CSW services. 
 
280 - Hospital-Based Rural Health Clinics (RHCs) and Federally 
Qualified Health Centers (FQHCs) Billing for Non RHC/FQHC 
Services 
(Rev. 3941; Issued: 12-22-17; Effective: 01- 01-18; Implementation: 01-02-18) 
 
A-01-93, A-03-066 
 
Hospitals sometimes operate hospital based RHCs or FQHCs.  Prior to implementation of 
outpatient PPS, hospital based RHCs/FQHCs were permitted to include both RHC/FQHC 
and non-RHC/FQHC services on the same claim, under the RHC/FQHC bill type, with 
appropriate revenue codes. 
 
Beginning with the implementation of OPPS, non-RHC/FQHC services provided by the 
hospital based RHC/FQHC, including RHCs/FQHCs that are parts of CAHs or other 
exempted or excluded (from OPPS) hospitals, must be billed under the host hospitals 
provider number, using hospital billing procedures and bill types.  These services are not 
covered or paid as RHC/FQHC services but instead may be covered hospital outpatient 
services and paid under the applicable methodology for the hospital. 
  The RHC/FQHC services remain subject to the encounter rate payment methodology and 
are billed using the RHC/FQHC provider number, bill type and revenue codes. 
See the Medicare Benefit Policy Manual for a description of covered RHC/FQHC 
services. 
 
See chapter 9, in this manual for billing instructions for provider based and independent 
RHC/FQHC services. 
 
290 - Outpatient Observation Services 
(Rev. 1, 10-03-03) 
A3-3663, A3-3112.8.D, A-01-91 
 
290.1 - Observation Services Overview 
(Rev. 1760, Issued:  06-23-09; Effective Date:  07-01-09; Implementation Date:  07-
06-09) 
 
Observation care is a well-defined set of specific, clinically appropriate services, which 
include ongoing short term treatment, assessment, and reassessment, that are furnished 
while a decision is being made regarding whether patients will require further treatment 
as hospital inpatients or if they are able to be discharged from the hospital. Observation 
services are commonly ordered for patients who present to the emergency department and 
who then require a significant period of treatment or monitoring in order to make a 
decision concerning their admission or discharge.  Observation services are covered only 
when provided by the order of a physician or another individual authorized by State 
licensure law and hospital staff bylaws to admit patients to the hospital or to order 
outpatient services. 
 
Observation services must also be reasonable and necessary to be covered by Medicare. 
In only rare and exceptional cases do reasonable and necessary outpatient observation 
services span more than 48 hours.  In the majority of cases, the decision whether to 
discharge a patient from the hospital following resolution of the reason for the 
observation care or to admit the patient as an inpatient can be made in less than 48 hours, 
usually in less than 24 hours. 
 
290.2 - General Billing Requirements for Observation Services 
(Rev. 787, Issued: 12-16-05, Effective: 01-01-06, Implementation: 01-03-06) 
 
290.2.1 - Revenue Code Reporting 
(Rev. 1760, Issued:  06-23-09; Effective Date:  07-01-09; Implementation Date:  07-
06-09) 
 
Hospitals are required to report observation charges under the following revenue codes: 
  Revenue Code  Subcategory 
0760  General Classification category 
0762  Observation Room 
 
Other ancillary services performed while the patient receives observation services are 
reported using appropriate revenue codes and HCPCS codes as applicable. 
 
290.2.2 - Reporting Hours of Observation 
(Rev. 2234, Issued: 05-27-11, Effective: 07-01-11, Implementation: 07-05-11) 
 
Observation time begins at the clock time documented in the patients medical record, 
which coincides with the time that observation care is initiated in accordance with a 
physicians order.  Hospitals should round to the nearest hour.  For example, a patient 
who began receiving observation services at 3:03 p.m. according to the nurses notes and 
was discharged to home at 9:45 p.m. when observation care and other outpatient services 
were completed, should have a 7 placed in the units field of the reported observation 
HCPCS code. 
 
General standing orders for observation services following all outpatient surgery are not 
recognized.  Hospitals should not report as observation care, services that are part of 
another Part B service, such as postoperative monitoring during a standard recovery 
period (e.g., 4-6 hours), which should be billed as recovery room services.  Similarly, in 
the case of patients who undergo diagnostic testing in a hospital outpatient department, 
routine preparation services furnished prior to the testing and recovery afterwards are 
included in the payments for those diagnostic services. 
 
Observation services should not be billed concurrently with diagnostic or therapeutic 
services for which active monitoring is a part of the procedure (e.g., colonoscopy, 
chemotherapy).  In situations where such a procedure interrupts observation services, 
hospitals may determine the most appropriate way to account for this time. For example, 
a hospital may record for each period of observation services the beginning and ending 
times during the hospital outpatient encounter and add the length of time for the periods 
of observation services together to reach the total number of units reported on the claim 
for the hourly observation services HCPCS code G0378 (Hospital observation service, 
per hour).  A hospital may also deduct the average length of time of the interrupting 
procedure, from the total duration of time that the patient receives observation services. 
 
Observation time ends when all medically necessary services related to observation care 
are completed.  For example, this could be before discharge when the need for 
observation has ended, but other medically necessary services not meeting the definition 
of observation care are provided (in which case, the additional medically necessary 
services would be billed separately or included as part of the emergency department or 
clinic visit).  Alternatively, the end time of observation services may coincide with the 
time the patient is actually discharged from the hospital or admitted as an inpatient.   Observation time may include medically necessary services and follow-up care provided 
after the time that the physician writes the discharge order, but before the patient is 
discharged.  However, reported observation time would not include the time patients 
remain in the hospital after treatment is finished for reasons such as waiting for 
transportation home. 
 
If a period of observation spans more than 1 calendar day, all of the hours for the entire 
period of observation must be included on a single line and the date of service for that 
line is the date that observation care begins. 
 
290.3 - Reserved 
(Rev. 1882, Issued:  12-21-09; Effective Date:  01-01-10; Implementation Date:  01-
04-10) 
 
290.4 - Billing and Payment for Observation Services Furnished 
Between January 1, 2006 and December 31, 2007 
(Rev. 1445, Issued:  02-08-08; Effective:  01-01-08; Implementation:  03-10-08) 
 
290.4.1 - Billing and Payment for All Hospital Observation Services 
Furnished Between January 1, 2006 and December 31, 2007 
(Rev. 1760, Issued:  06-23-09; Effective Date:  07-01-09; Implementation Date:  07-
06-09) 
 
Since January 1, 2006, two G-codes have been used to report observation services and 
direct referral for observation care.  For claims for dates of service January 1, 2006 
through December 31, 2007, the Integrated Outpatient Code Editor (I/OCE) determines 
whether the observation care or direct referral services are packaged or separately 
payable.  Thus, hospitals provide consistent coding and billing under all circumstances in 
which they deliver observation care. 
 
Beginning January 1, 2006, hospitals should not report CPT codes 99217-99220 or 
99234-99236 for observation services.  In addition, the following HCPCS codes were 
discontinued as of January 1, 2006:  G0244 (Observation care by facility to patient), 
G0263 (Direct Admission with congestive heart failure, chest pain or asthma), and G0264 
(Assessment other than congestive heart failure, chest pain, or asthma). 
 
The three discontinued G-codes and the CPT codes that were no longer recognized were 
replaced by two new G-codes to be used by hospitals to report all observation services, 
whether separately payable or packaged, and direct referral for observation care, whether 
separately payable or packaged: 
 
  G0378- Hospital observation service, per hour; and  
  G0379- Direct admission of patient for hospital observation care. 
  The I/OCE determines whether observation services billed as units of G0378 are 
separately payable under APC 0339 (Observation) or whether payment for observation 
services will be packaged into the payment for other services provided by the hospital in 
the same encounter.  Therefore, hospitals should bill HCPCS code G0378 when 
observation services are ordered and provided to any patient regardless of the patients 
condition. The units of service should equal the number of hours the patient receives 
observation services. 
 
Hospitals should report G0379 when observation services are the result of a direct 
referral for observation care without an associated emergency room visit, hospital 
outpatient clinic visit, critical care service, or hospital outpatient surgical procedure 
(status indicator T procedure) on the day of initiation of observation services.  Hospitals 
should only report HCPCS code G0379 when a patient is referred directly for observation 
care after being seen by a physician in the community (see 290.4.2 below) 
 
Some non-repetitive OPPS services provided on the same day by a hospital may be billed 
on different claims, provided that all charges associated with each procedure or service 
being reported are billed on the same claim with the HCPCS code which describes that 
service.  See chapter 1, section 50.2.2 of this manual.  It is vitally important that all of the 
charges that pertain to a non-repetitive, separately paid procedure or service be reported 
on the same claim with that procedure or service. It should also be emphasized that this 
relaxation of same day billing requirements for some non-repetitive services does not 
apply to non-repetitive services provided on the same day as either direct referral to 
observation care or observation services because the OCE claim-by-claim logic cannot 
function properly unless all services related to the episode of observation care, including 
diagnostic tests, lab services, hospital clinic visits, emergency department visits, critical 
care services, and status indicator T procedures, are reported on the same claim.  
Additional guidance can be found in chapter 1, section 50.2.2 of this manual. 
 
290.4.2 - Separate and Packaged Payment for Direct Referral for 
Observation Services Furnished Between January 1, 2006 and 
December 31, 2007 
(Rev. 1760, Issued:  06-23-09; Effective Date:  07-01-09; Implementation Date:  07-
06-09) 
 
In order to receive separate payment for a direct referral for observation care (APC 
0604), the claim must show: 
 
1. Both HCPCS codes G0378 (Hourly Observation) and G0379 (Direct Admit to 
Observation) with the same date of service; 
 
2. That no services with a status indicator T or V or  
Critical care (APC 0617) were provided on the same day of service as HCPCS 
code G0379; and  
 
3. The observation care does not qualify for separate payment under APC 0339.   
Only a direct referral for observation services billed on a 13X bill type may be considered 
for a separate APC payment. 
 
Separate payment is not allowed for HCPCS code G0379, direct admission to observation 
care, when billed with the same date of service as a hospital clinic visit, emergency room 
visit, critical care service, or T status procedure. 
 
If a bill for the direct referral for observation services does not meet the three 
requirements listed above, then payment for the direct referral service will be packaged 
into payments for other separately payable services provided to the beneficiary in the 
same encounter. 
 
290.4.3 - Separate and Packaged Payment for Observation Services 
Furnished Between January 1, 2006 and December 31, 2007 
(Rev. 1760, Issued:  06-23-09; Effective Date:  07-01-09; Implementation Date:  07-
06-09) 
 
Separate payment may be made for observation services provided to a patient with 
congestive heart failure, chest pain, or asthma.  The list of ICD-9-CM diagnosis codes 
eligible for separate payment is reviewed annually.  Any changes in applicable ICD-9-
CM diagnosis codes are included in the October quarterly update of the OPPS and also 
published in the annual OPPS Final Rule.  The list of qualifying ICD-9-CM diagnosis 
codes is also published on the OPPS Web page. 
 
All of the following requirements must be met in order for a hospital to receive a separate 
APC payment for observation services through APC 0339: 
 
1. Diagnosis Requirements 
 
a.  The beneficiary must have one of three medical conditions: congestive heart 
failure, chest pain, or asthma. 
 
b.  Qualifying ICD-9-CM diagnosis codes must be reported in Form Locator (FL) 76, 
Patient Reason for Visit, or FL 67, principal diagnosis, or both in order for the 
hospital to receive separate payment for APC 0339. If a qualifying ICD-9-CM 
diagnosis code(s) is reported in the secondary diagnosis field, but is not reported 
in either the Patient Reason for Visit field (FL 76) or in the principal diagnosis 
field (FL 67), separate payment for APC 0339 is not allowed. 
 
2. Observation Time 
 
a.  Observation time must be documented in the medical record. 
 
b.  Hospital billing for observation services begins at the clock time documented in 
the patients medical record, which coincides with the time that observation  services are initiated in accordance with a physicians order for observation 
services. 
 
c.  A beneficiary's time receiving observation services (and hospital billing) ends 
when all clinical or medical interventions have been completed, including follow-
up care furnished by hospital staff and physicians that may take place after a 
physician has ordered the patient be released or admitted as an inpatient. 
 
d.  The number of units reported with HCPCS code G0378 must equal or exceed 8 
hours. 
 
3. Additional Hospital Services 
 
a.  The claim for observation services must include one of the following services in 
addition to the reported observation services.  The additional services listed below 
must have a line item date of service on the same day or the day before the date 
reported for observation: 
 
  An emergency department visit (APC 0609, 0613, 0614, 0615, 0616) or 
  A clinic visit (APC 0604, 0605, 0606, 0607, 0608); or 
  Critical care (APC 0617); or 
  Direct referral for observation care reported with HCPCS code G0379 (APC 
0604); must be reported on the same date of service as the date reported for 
observation services. 
 
b.  No procedure with a T status indicator can be reported on the same day or day 
before observation care is provided. 
 
4. Physician Evaluation 
 
a.  The beneficiary must be in the care of a physician during the period of 
observation, as documented in the medical record by outpatient registration, 
discharge, and other appropriate progress notes that are timed, written, and signed 
by the physician. 
 
b.  The medical record must include documentation that the physician explicitly 
assessed patient risk to determine that the beneficiary would benefit from 
observation care. 
 
Only observation services that are billed on a 13X bill type may be considered for a 
separate APC payment. 
 
Hospitals should bill all of the other services associated with the observation care, 
including direct referral for observation, hospital clinic visits, emergency room visits, 
critical care services, and T status procedures, on the same claim so that the claims  processing logic may appropriately determine the payment status (either packaged or 
separately payable) of HCPCS codes G0378 and G0379. 
 
If a bill for observation care does not meet all of the requirements listed above, then 
payment for the observation care will be packaged into payments for other separately 
payable services provided to the beneficiary in the same encounter. 
 
290.5 - Billing and Payment for Observation Services Furnished on or 
After January 1, 2008 
(Rev. 1445, Issued:  02-08-08; Effective:  01-01-08; Implementation:  03-10-08) 
 
290.5.1 - Billing and Payment for Observation Services Furnished 
Between January 1, 2008 and December 31, 2015 
(Rev. 3425, Issued: 12-18-15, Effective: 01-01-16, Implementation: 01-04-16) 
 
Observation services are reported using HCPCS code G0378 (Hospital observation 
service, per hour).  Beginning January 1, 2008, HCPCS code G0378 for hourly 
observation services is assigned status indicator N, signifying that its payment is always 
packaged.  No separate payment is made for observation services reported with HCPCS 
code G0378, and APC 0339 is deleted as of January 1, 2008.  In most circumstances, 
observation services are supportive and ancillary to the other services provided to a 
patient.  From January 1, 2014 through December 31, 2015, in certain circumstances 
when observation care was billed in conjunction with a clinic visit, high level Type A 
emergency department visit (Level 4 or 5), high level Type B emergency department visit 
(Level 5), critical care services, or a direct referral as an integral part of a patients 
extended encounter of care, payment may be made for the entire extended care encounter 
through APC 8009 (Extended Assessment and Management Composite) when certain 
criteria are met.  Prior to January 1, 2014, in certain circumstances when observation care 
was billed in conjunction with a high level clinic visit (Level 5), high level Type A 
emergency department visit (Level 4 or 5), high level Type B emergency department visit 
(Level 5), critical care services, or a direct referral as an integral part of a patients 
extended encounter of care, payment could be made for the entire extended care 
encounter through one of two composite APCs (APCs 8002 and 8003) when certain 
criteria were met. APCs 8002 and 8003 are deleted as of January 1, 2014 and APC 8009 
is deleted as of January 1, 2016. For information about payment for extended assessment 
and management composite APC, see 10.2.1 (Composite APCs) of this chapter. 
 
There is no limitation on diagnosis for payment of APC 8009; however, composite APC 
payment will not be made when observation services are reported in association with a 
surgical procedure (T status procedure) or the hours of observation care reported are less 
than 8.  The I/OCE evaluates every claim received to determine if payment through a 
composite APC is appropriate.  If payment through a composite APC is inappropriate, the 
I/OCE, in conjunction with the Pricer, determines the appropriate status indicator, APC, 
and payment for every code on a claim. 
  All of the following requirements must be met in order for a hospital to receive an APC 
payment for an extended assessment and management composite APC: 
 
1.  Observation Time 
 
a.  Observation time must be documented in the medical record. 
 
b.  Hospital billing for observation services begins at the clock time documented in 
the patients medical record, which coincides with the time that observation 
services are initiated in accordance with a physicians order for observation 
services. 
 
c.  A beneficiary's time receiving observation services (and hospital billing) ends 
when all clinical or medical interventions have been completed, including follow-
up care furnished by hospital staff and physicians that may take place after a 
physician has ordered the patient be released or admitted as an inpatient. 
 
d.  The number of units reported with HCPCS code G0378 must equal or exceed 8 
hours. 
 
2.  Additional Hospital Services 
 
a.  The claim for observation services must include one of the following services in 
addition to the reported observation services.  The additional services listed below 
must have a line item date of service on the same day or the day before the date 
reported for observation: 
 
  A Type A or B emergency department visit (CPT codes 99284 or 99285 or 
HCPCS code G0384); or 
 
  A clinic visit (HCPCS code G0463 beginning January 1, 2014; CPT code 99205 
or 99215 prior to January 1, 2014); or 
 
  Critical care (CPT code 99291); or 
 
  Direct referral for observation care reported with HCPCS code G0379 (APC 
0633) must be reported on the same date of service as the date reported for 
observation services. 
 
b.  No procedure with a T status indicator can be reported on the same day or day 
before observation care is provided. 
 
3.  Physician Evaluation 
 
a.  The beneficiary must be in the care of a physician during the period of 
observation, as documented in the medical record by outpatient registration,  discharge, and other appropriate progress notes that are timed, written, and signed 
by the physician. 
 
b.  The medical record must include documentation that the physician explicitly 
assessed patient risk to determine that the beneficiary would benefit from 
observation care. 
 
Criteria 1 and 3 related to observation care beginning and ending time and physician 
evaluation apply regardless of whether the hospital believes that the criteria will be met 
for payment of the extended encounter through extended assessment and management 
composite payment. 
 
Only visits, critical care and observation services that are billed on a 13X bill type may 
be considered for a composite APC payment. 
 
Non-repetitive services provided on the same day as either direct referral for observation 
care or observation services must be reported on the same claim because the OCE claim-
by-claim logic cannot function properly unless all services related to the episode of 
observation care, including hospital clinic visits, emergency department visits, critical 
care services, and T status procedures, are reported on the same claim.  Additional 
guidance can be found in chapter 1, section 50.2.2 of this manual. 
 
If a claim for services provided during an extended assessment and management 
encounter including observation care does not meet all of the requirements listed above, 
then the usual APC logic will apply to separately payable items and services on the 
claim; the special logic for direct admission will apply, and payment for the observation 
care will be packaged into payments for other separately payable services provided to the 
beneficiary in the same encounter. 
 
290.5.2 - Billing and Payment for Direct Referral for Observation Care 
Furnished Beginning January 1, 2008 
(Rev. 3425, Issued: 12-18-15, Effective: 01-01-16, Implementation: 01-04-16) 
 
Direct referral for observation is reported using HCPCS code G0379 (Direct referral for 
hospital observation care). Prior to January 1, 2010, the code descriptor for HCPCS code 
G0379 was (Direct admission of patient for hospital observation care).  Hospitals should 
report G0379 when observation services are the result of a direct referral for observation 
care without an associated emergency room visit, hospital outpatient clinic visit, or 
critical care service on the day of initiation of observation services. Hospitals should only 
report HCPCS code G0379 when a patient is referred directly to observation care after 
being seen by a physician in the community.  
 
Payment for direct referral for observation care will be made either separately as a 
hospital visit under APC 5013 (Level 3 Examinations & Related Services) or packaged 
into payment for comprehensive APC 8011 (Comprehensive Observation Services) or 
packaged into the payment for other separately payable services provided in the same  encounter. For information about comprehensive APCs, see 10.2.3 (Comprehensive 
APCs) of this chapter.  
 
The criteria for payment of HCPCS code G0379 under either APC 5013 or APC 8011 
include:  
 
1.  Both HCPCS codes G0378 (Hospital observation services, per hr.) and G0379 
(Direct referral for hospital observation care) are reported with the same date of 
service. 
 
2.  No service with a status indicator of T or V or Critical Care (APC 5041) is 
provided on the same day of service as HCPCS code G0379. 
 
If either of the above criteria is not met, HCPCS code G0379 will be assigned status 
indicator N and will be packaged into payment for other separately payable services 
provided in the same encounter. 
 
Only a direct referral for observation services billed on a 13X bill type may be considered 
for a comprehensive APC payment through the Comprehensive Observation Services 
APC (APC 8011). 
 
290.5.3 - Billing and Payment for Observation Services Furnished 
Beginning January 1, 2016 
(Rev. 3425, Issued: 12-18-15, Effective: 01-01-16, Implementation: 01-04-16) 
 
Observation services are reported using HCPCS code G0378 (Hospital observation 
service, per hour).  Beginning January 1, 2008, HCPCS code G0378 for hourly 
observation services is assigned status indicator N, signifying that its payment is always 
packaged.  No separate payment is made for observation services reported with HCPCS 
code G0378, and APC 0339 is deleted as of January 1, 2008.  In most circumstances, 
observation services are supportive and ancillary to the other services provided to a 
patient.  Beginning January 1, 2016, in certain circumstances when observation services 
are billed in conjunction with a clinic visit, Type A emergency department visit (Level 1 
through 5), Type B emergency department visit (Level 1 through 5), critical care services, 
or a direct referral as an integral part of a patients extended encounter of care, 
comprehensive payment may be made for all services on the claim including, the entire 
extended care encounter through comprehensive APC 8011 (Comprehensive Observation 
Services) when certain criteria are met. For information about comprehensive APCs, see 
10.2.3 (Comprehensive APCs) of this chapter. 
 
There is no limitation on diagnosis for payment of APC 8011; however, comprehensive 
APC payment will not be made when observation services are reported in association 
with a surgical procedure (T status procedure) or the hours of observation care reported 
are less than 8.  The I/OCE evaluates every claim received to determine if payment 
through a comprehensive APC is appropriate.  If payment through a comprehensive APC  is inappropriate, the I/OCE, in conjunction with the Pricer, determines the appropriate 
status indicator, APC, and payment for every code on a claim. 
 
All of the following requirements must be met in order for a hospital to receive a 
comprehensive APC payment through the Comprehensive Observation Services APC 
(APC 8011): 
 
1.  Observation Time 
 
a.  Observation time must be documented in the medical record. 
 
b.  Hospital billing for observation services begins at the clock time documented in 
the patients medical record, which coincides with the time that observation 
services are initiated in accordance with a physicians order for observation 
services. 
 
c.  A beneficiary's time receiving observation services (and hospital billing) ends 
when all clinical or medical interventions have been completed, including follow-
up care furnished by hospital staff and physicians that may take place after a 
physician has ordered the patient be released or admitted as an inpatient. 
 
d.  The number of units reported with HCPCS code G0378 must equal or exceed 8 
hours. 
 
2.  Additional Hospital Services 
 
a.  The claim for observation services must include one of the following services in 
addition to the reported observation services.  The additional services listed below 
must have a line item date of service on the same day or the day before the date 
reported for observation: 
 
  A Type A or B emergency department visit (CPT codes 99281 through 99285 or 
HCPCS codes G0380 through G0384); or 
 
  A clinic visit (HCPCS code G0463); or 
 
  Critical care (CPT code 99291); or 
 
  Direct referral for observation care reported with HCPCS code G0379 (APC 
5013) must be reported on the same date of service as the date reported for 
observation services. 
 
b.  No procedure with a T status indicator or a J1 status indicator can be reported on 
the claim. 
 
3.  Physician Evaluation   
a.  The beneficiary must be in the care of a physician during the period of 
observation, as documented in the medical record by outpatient registration, 
discharge, and other appropriate progress notes that are timed, written, and signed 
by the physician. 
 
b.  The medical record must include documentation that the physician explicitly 
assessed patient risk to determine that the beneficiary would benefit from 
observation care. 
 
Criteria 1 and 3 related to observation care beginning and ending time and physician 
evaluation apply regardless of whether the hospital believes that the criteria will be met 
for payment of the extended encounter through the Comprehensive Observation Services 
APC (APC 8011). 
 
Only visits, critical care and observation services that are billed on a 13X bill type may 
be considered for a comprehensive APC payment through the Comprehensive 
Observation Services APC (APC 8011). 
 
Non-repetitive services provided on the same day as either direct referral for observation 
care or observation services must be reported on the same claim because the OCE claim-
by-claim logic cannot function properly unless all services related to the episode of 
observation care, including hospital clinic visits, emergency department visits, critical 
care services, and T status procedures, are reported on the same claim.  Additional 
guidance can be found in chapter 1, section 50.2.2 of this manual. 
 
If a claim for services provided during an extended assessment and management 
encounter including observation care does not meet all of the requirements listed above, 
then the usual APC logic will apply to separately payable items and services on the 
claim; the special logic for direct admission will apply, and payment for the observation 
care will be packaged into payments for other separately payable services provided to the 
beneficiary in the same encounter. 
 
290.6 - Services Not Covered as Observation Services 
(Rev. 1445, Issued:  02-08-08; Effective:  01-01-08; Implementation:  03-10-08) 
 
Hospitals must not bill beneficiaries directly for reasonable and necessary observation 
services for which the OPPS packages payment for observation as part of the payment for 
the separately payable items and services on the claim.  Hospitals should not confuse 
packaged payment with non-coverage or nonpayment.  See the Medicare Benefit Policy 
Manual, Pub 100-02, chapter 6, section 20.6 for further explanation of non-covered 
services and notification of the beneficiary in relation to observation care. 
 
 
 
  300 - Medical Nutrition Therapy (MNT) Services 
((Rev. 11426; Issued: 05-20-22; Effective: 01-01-22; Implementation: 07-05-22) 
 
Section 105 of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection 
Act of 2000 (BIPA) permits Medicare coverage of Medical Nutrition Therapy (MNT) 
services when furnished by a registered dietitian or nutrition professional meeting certain 
requirements. The benefit is available for beneficiaries with diabetes or renal disease, 
when referral is made by a physician as defined in 1861(r)(l) of the Social Security Act 
(the Act). It also allows registered dietitians and nutrition professionals to receive direct 
Medicare reimbursement for the first time. The effective date of this provision is January 
1, 2002. 
 
The benefit consists of an initial visit for an assessment; follow-up visits for 
interventions; and reassessments as necessary during the 12-month period beginning with 
the initial assessment (episode of care) to assure compliance with the dietary plan. 
Effective October 1, 2002, basic coverage of MNT for the first year a beneficiary 
receives MNT with either a diagnosis of renal disease or diabetes as defined at 42 CFR, 
410.130 is 3 hours. Also effective October 1, 2002, basic coverage in subsequent years 
for renal disease is 2 hours.  
 
For the purposes of this benefit, renal disease means chronic renal insufficiency or the 
medical condition of a beneficiary who has been discharged from the hospital after a 
successful renal transplant within the last 36 months. Chronic renal insufficiency means a 
reduction in renal function not severe enough to require dialysis or transplantation 
(glomerular filtration rate (GFR) 1559 ml/min/1.73m2). Effective January 1, 2004, the 
Centers for Medicare & Medicaid Services (CMS) updated the definition of diabetes to 
be as follows: Diabetes is defined as diabetes mellitus, a condition of abnormal glucose 
metabolism diagnosed using the following criteria: a fasting blood sugar  126 mg/dL on 
two different occasions; a 2-hour post-glucose challenge  200 mg/dL on 2 different 
occasions; or a random glucose test over 200 mg/dL for a person with symptoms of 
uncontrolled diabetes.  
 
The MNT benefit is a completely separate benefit from the diabetes self-management 
training (DSMT) benefit. CMS had originally planned to limit how much of both benefits 
a beneficiary might receive in the same time period. However, the national coverage 
determination, published May 1, 2002, allows a beneficiary to receive the full amount of 
both benefits in the same period. Therefore, a beneficiary can receive the full 10 hours of 
initial DSMT and the full 3 hours of MNT. However, providers are not allowed to bill for 
both DSMT and MNT on the same date of service for the same beneficiary.  
 
 
300.1 - General Conditions and Limitations on Coverage 
(Rev. 11426; Issued: 05-20-22; Effective: 01-01-22; Implementation: 07-05-22) 
 
A. General Conditions of Coverage    
The following are the general conditions of coverage:  
 
 A physician must make a referral and indicate a diagnosis of diabetes or renal disease. 
Physician is defined in 1861(r)(l) of the Act.    
 The number of hours covered in an episode of care may not be exceeded unless a 
second referral is received from the physician;  
 
 Services may be provided either on an individual or group basis without restrictions 
and;  
 
 For a beneficiary with a diagnosis of diabetes, DSMT and MNT services can be 
provided within the same time period, and the maximum number of hours allowed under 
each benefit are covered. The only exception is that DSMT and MNT may not be 
provided on the same day to the same beneficiary. For a beneficiary with a diagnosis of 
diabetes who has received DSMT and is also diagnosed with renal disease in the same 
episode of care, the beneficiary may receive MNT services based on a change in medical 
condition, diagnosis, or treatment as stated in 42 CFR 410.132(b)(5).  
 
B. Limitations on Coverage  
 
The following limitations apply:  
 
 MNT services are not covered for beneficiaries receiving maintenance dialysis for 
which payment is made under section 1881 of the Act.  
 A beneficiary may not receive MNT and DSMT on the same day.  
 
300.2 - Referrals for MNT Services 
(Rev. 11426; Issued: 05-20-22; Effective: 01-01-22; Implementation: 07-05-22) 
 
Medicare covers 3 hours of MNT in the beneficiarys initial calendar year. No initial hours 
can be carried over to the next calendar year. For example, if a physician gives a referral to a 
beneficiary for 3 hours of MNT but a beneficiary only uses 2 hours in November, the 
calendar year ends in December and if the third hour is not used, it cannot be carried over 
into the following year. The following year a beneficiary is eligible for 2 follow-up hours 
(with a physician referral). Every calendar year a beneficiary must have a new referral for 
follow-up hours.  
 
Referral may only be made by a physician when the beneficiary has been diagnosed with 
diabetes or renal disease.  
 
Documentation must be noted by the referring physician in the beneficiarys medical record. 
Referrals must be made for each episode of care and reassessments prescribed during an 
episode of care as a result of a change in medical condition or diagnosis. The National 
Provider Identifier (NPI) number of the referring physician must be on the Form CMS-1500 
claim submitted by a registered dietitian or nutrition professional. The A/B MAC (B) or A/B 
MAC (A) shall return claims that do not contain the referring NPI of the referring physician.  
 
NOTE: Additional covered hours of MNT services may be covered beyond the number of 
hours typically covered under an episode of care when the physician determines there is a 
change of diagnosis or medical condition within such episode of care that makes a change in  diet necessary. Appropriate medical review for this provision should only be done on a post 
payment basis. Outliers may be judged against nationally accepted dietary or nutritional 
protocols in accordance with 42 CFR 410.132 (a).  
 
300.3 - Dietitians and Nutritionists Performing MNT Services 
(Rev. 11426; Issued: 05-20-22; Effective: 01-01-22; Implementation: 07-05-22) 
 
 
A. Professional Standards for Dietitians and Nutritionists  
 
For Medicare Part B coverage of MNT, only a registered dietitian or nutrition 
professional may provide the services. Registered dietitian or nutrition professional 
means a dietitian or nutritionist licensed or certified in a state as of December 21, 2000 
(they are not required to meet any other requirements); or an individual whom, on or after 
December 22, 2000:  
 
 Holds a bachelors or higher degree granted by a regionally accredited college or 
university in the United States (or an equivalent foreign degree) with completion of the 
academic requirements of a program in nutrition or dietetics, as accredited by an 
appropriate national accreditation organization recognized for this purpose. The academic 
requirements of a nutrition or dietetics program may be completed after the completion of 
the degree;  
 
 Has completed at least 900 hours of supervised dietetics practice under the supervision 
of a registered dietitian or nutrition professional. Documentation of the supervised 
dietetics practice may be in the form of a signed document by the professional/facility 
that supervised the individual; and,  
 
 Is licensed or certified as a dietitian or nutrition professional by the state in which the 
services are performed. In a state that does not provide for licensure or certification, the 
individual will be deemed to have met this requirement if he or she is recognized as a 
registered dietitian by the Commission on Dietetic Registration or its successor 
organization, or meets the requirements stated above.  
 
B. Enrollment of Dietitians and Nutritionists  
 
 In order to file claims for MNT, a registered dietitian/nutrition professional must be 
enrolled as a provider in the Medicare program and meet the requirements outlined 
above. MNT services can be billed with the effective date of the providers license and 
the establishment of the practice location.  
 
 The A/B MAC (B) shall establish a permanent NPI for any new registered dietitian or 
nutrition professional who is applying to become a Medicare provider for MNT.  
 
 Registered dietitians and nutrition professionals must accept assignment. Since these 
new providers must accept assignment, the limiting charge does not apply.  
  300.4 - Payment for MNT Services 
(Rev. 11426; Issued: 05-20-22; Effective: 01-01-22; Implementation: 07-05-22) 
 
The contractor shall pay for MNT services under the physician fee schedule for dates of 
service on or after January 1, 2002, to a registered dietitian or nutrition professional that 
meets the above requirements. Deductible and coinsurance apply. As with the DSMT benefit, 
payment is only made for MNT services actually attended by the beneficiary and documented 
by the provider, and for beneficiaries that are not inpatients of a hospital or skilled nursing 
facility.  
 
The contractor shall pay the lesser of the actual charge, or 85% of the physician fee 
schedule amount when rendered by a registered dietitian or nutrition professional. As 
required by statute, use this same methodology for services provided in the hospital 
outpatient department.  
 
A. Payable Codes for MNT with Applicable Instructions  
 
 97802 - Medical nutrition therapy; initial assessment and intervention, individual, face-
to-face with the patient, each 15 minutes. (NOTE: This HCPCS code must only be used 
for the initial visit.)  
 
This code is to be used only once for the initial assessment of a new patient. The provider 
shall bill all subsequent individual visits (including reassessments and interventions) as 
97803. The provider shall bill all subsequent group visits as 97804.  
 
 97803 - Re-assessment and intervention, individual, face-to-face with the patient, each 
15 minutes  
 
The provider shall bill this code for all reassessments and all interventions after the initial 
visit (see 97802). This code should also be used when there is a change in the patients 
medical condition that affects the nutritional status of the patient (see the heading, 
Additional Covered Hours for Reassessments and Interventions).    
 97804 - Group (2 or more individual(s)), each 30 minutes  
 
The provider shall bill this code for group visits, initial and subsequent. This code can 
also be used when there is a change in a patients condition that affects the nutritional 
status of the patient and the patient is attending in a group.  
 
NOTE: The above codes can be paid if submitted by a registered dietitian or nutrition 
professional who meet the specified requirements; or a hospital that has received 
reassigned benefits from a registered dietitian or nutritionist. These services cannot be 
paid incident to physician services.  
 
B. Healthcare Common Procedure Coding System (HCPCS) Codes for MNT When 
There is a Change in the Beneficiaries Condition (for services effective on or after 
January 1, 2003)  
 
The following HCPCS codes shall be used when there is a change in the beneficiary's 
condition:  
 
 G0270 - Medical Nutrition Therapy; reassessment and subsequent intervention(s) 
following second referral in same year for change in diagnosis, medical condition or 
treatment regimen (including additional hours needed for renal disease), individual, face 
to face with the patient, each 15 minutes.  
 
 G0271 - Medical Nutrition Therapy; reassessment and subsequent intervention(s) 
following second referral in same year for change in diagnosis, medical condition, or 
treatment regimen (including additional hours needed for renal disease) group (2 or more 
individuals), each 30 minutes.  
 
NOTE: These G codes should be used when additional hours of MNT services are 
performed beyond the number of hours typically covered, (3 hours in the initial calendar 
year, and 2 follow-up hours in subsequent years with a physician referral) when the 
physician determines there is a change of diagnosis or medical condition that makes a 
change in diet necessary. Appropriate medical review for this provision should only be 
done on a post payment basis. Outliers may be judged against nationally accepted dietary 
or nutritional protocols in accordance with 42 CFR 410.132(a).  
 
300.5 - General Claims Processing Information 
(Rev.11504, Issued 07-21-22; Effective:01-10-23; Implementation: 01-03-23) 
 
This benefit is payable for beneficiaries who have diabetes or renal disease.  Contractors 
are urged to perform data analysis of these services in your jurisdiction.  If you determine 
that a potential problem exists, you should verify the cause of the potential error by 
conducting an error validation review as described in the Program Integrity Manual 
(PIM), Chapter 3, Section 2A.  Where errors are verified, initiate appropriate corrective 
actions found in the PIM, Chapter 3, Sections 3 through 6.  If no diagnosis is on the  claim, return the claim as unprocessable.  If the claim does not contain a diagnosis of 
diabetes or renal disease, then deny the claim under Section 1862(a)(1)(A) of the Act. 
 
A. Special Requirements for A/B MACs (B) 
 
  Registered dietitians and nutrition professionals can be part of a group practice in 
which case the provider identification number of the registered dietitian or 
nutrition professional that performed the service must be entered in on the claim 
form. 
 
  The specialty code for dietitians/nutritionists is 71. 
 
B. Medicare Summary Notices (MSNs) 
 
  Use the following MNT messages where appropriate.  If you locate a more 
appropriate message, then you should use it. 
 
  If a claim for MNT is submitted with dates of service before January 1, 
2002, use MSN 21.11 (This service was not covered by Medicare at the 
time you received it).  The Spanish version is Este servicio no estaba 
cubierto por Medicare cuando usted lo recibio. 
 
  If a claim for MNT is submitted by a provider that does not meet the 
criteria use MSN 21.18 (This item or service is not covered when 
performed or ordered by this provider).  The Spanish version is Este 
servicio no esta cubierto cuando es ordenado o rendido por este 
proveedor. 
 
C. A/B MAC (A) Special Billing Instructions 
 
MNT Services can be billed to A/B MACs (A) when performed in an outpatient hospital 
setting.  The Hospital outpatient departments can bill for the MNT services through the 
A/B MAC (A) if the nutritionists or registered dietitians reassign their benefits to the 
hospital.  If the hospitals do not get the reassignments the nutritionists and the registered 
dietitians will have to bill the Medicare A/B MAC (B) under their own provider number 
or the hospital will have to bill the Medicare A/B MAC (B). 
 
NOTE:  Nutritionists and registered dietitians must obtain a Medicare provider number 
before they can reassign their benefits. 
 
The only applicable bill types are 13X, 23X, 32X, and 85X. 
 
 
 
  300.5.1 - Rural Health Centers (RHCs)/Federally Qualified Health 
Centers (FQHCs) Special Billing Instructions  
(Rev. 11426; Issued: 05-20-22; Effective: 01-01-22; Implementation: 07-05-22) 
 
Detailed billing instructions for MNT services provided in Rural Health Clinics and 
Federally Qualified Health Centers can be found in Chapter 9, section 182 of this manual.  
 
300.6 - Common Working File (CWF) Edits 
(Rev. 11426; Issued: 05-20-22; Effective: 01-01-22; Implementation: 07-05-22) 
 
The Common Working File (CWF) edit will allow 3 hours of therapy for MNT in the 
initial calendar year. The edit will allow more than 3 hours of therapy if there is a change 
in the beneficiarys medical condition, diagnosis, or treatment regimen and this change 
must be documented in the beneficiarys medical record. Two new G codes have been 
created for use when a beneficiary receives a second referral in a calendar year that 
allows the beneficiary to receive more than 3 hours of therapy. Another edit will allow 2 
hours of follow up MNT with another referral in subsequent years.  
 
Advance Beneficiary Notice (ABN)  
 
The beneficiary is liable for services denied over the limited number of hours with 
referrals for MNT. An Advance Beneficiary Notice (ABN) should be issued in these 
situations. In absence of evidence of a valid ABN, the provider will be held liable.  
 
An ABN should not be issued for Medicare-covered services such as those provided by 
hospital dietitians or nutrition professionals who are qualified to render the service in 
their state but who have not obtained Medicare provider numbers.  
 
Duplicate Edits  
 
Although beneficiaries are allowed to receive training and therapy during the same time 
period DSMT and MNT services may not be provided on the same day to the same 
beneficiary. Effective April 1, 2010 CWF shall implement a new duplicate crossover edit 
to identify and prevent claims for DSMT/MNT services from being billed with the same 
dates of services for the same beneficiaries submitted from institutional providers and 
from a professional provider. 
 
310 - Lung Volume Reduction Surgery 
(Rev. 768, Issued:  12-01-05; Effective:  11-17-05; Implementation:  03-02 06) 
 
Lung Volume Reduction Surgery (LVRS) (also known as reduction pneumoplasty, lung 
shaving, or lung contouring) is an invasive surgical procedure to reduce the volume of a 
hyperinflated lung in order to allow the underlying compressed lung to expand, and thus, 
establish improved respiratory function. 
  Effective for 'from' dates of service on or after January 1, 2004, Medicare will cover 
LVRS under certain conditions as described in 240 of the Pub. 100-03, National 
Coverage Determinations. 
 
LVRS can only be performed in the facilities listed on the following website:  
http://www.cms.gov/Medicare/Medicare-General-
Information/MedicareApprovedFacilitie/Lung-Volume-Reduction-Surgery-LVRS.html.  
 
LVRS is an inpatient procedure.  However pre- and post- operative services are 
performed on an outpatient basis and must be performed at one of the facilities certified 
to do so.  These procedures are paid under the Outpatient Prospective Payment System 
(OPPS), except for hospitals located in Maryland. 
 
Medicare previously only covered LVRS as part of the National Emphysema Treatment 
Trial (NETT).  The study was limited to 18 hospitals, and patients were randomized into 
two arms, either medical management and LVRS or medical management.  The study 
was conducted by The National Heart, Lung, and Blood Institute of the National 
Institutes of Health and coordinated by Johns Hopkins University (JHU).  Hospital claims 
for patients in the NETT were identified by the presence of Condition Code EY.  The 
JHU instructed hospitals of the correct billing procedures for billing claims under the 
NETT. 
 
320 - Outpatient Intravenous Insulin Treatment (OIVIT) 
(Rev. 1930, Issued:  03-09-10, Effective Date:  12-23-09; Implementation Date:  04-
05-10) 
 
Effective for claims with dates of service on and after December 23, 2009, the Centers 
for Medicare and Medicaid Services (CMS) determines that the evidence does not 
support a conclusion that OIVIT improves health outcomes in Medicare beneficiaries.  
Therefore, CMS has determined that OIVIT is not reasonable and necessary for any 
indication under section 1862(a)(1)(A) of the Social Security Act.  Services comprising 
an OIVIT regimen are nationally non-covered under Medicare when furnished pursuant 
to an OIVIT regimen. 
 
See Pub. 100-03, Medicare National Coverage Determinations Manual, Section 40.7, 
Outpatient Intravenous Insulin Treatment (Effective December 23, 2009), for general 
information and coverage indications. 
 
320.1 - HCPCS Coding for OIVIT 
(Rev. 1930, Issued:  03-09-10, Effective Date:  12-23-09; Implementation Date:  04-
05-10) 
 
HCPCS code G9147, effective with the April IOCE and MPFSDB updates, is to be used 
on claims with dates of service on and after December 23, 2009, billing for non-covered 
OIVIT and any services comprising an OIVIT regimen. 
  NOTE: HCPCS codes 99199 or 94681(with or without diabetes related conditions 
250.00-250.93) are not to be used on claims billing for non-covered OIVIT and any 
services comprising an OIVIT regimen when furnished pursuant to an OIVIT regimen. 
Claims billing for HCPCS codes 99199 and 94681 for non-covered OIVIT are to be 
returned to provider/returned as unprocessable. 
 
320.2 - Medicare Summary Notices (MSN), Reason Codes, and Remark 
Codes 
(Rev. 3475, Issued: 03-04-16, Effective: 06-06-16, Implementation: 06-06-16) 
 
Contractors shall return non-covered OIVIT claims billed with HCPCS 99199 to 
provider/return as unprocessable. 
 
The contractor shall use the following remittance advice messages and associated codes 
when rejecting/denying claims under this policy.  This CARC/RARC combination is 
compliant with CAQH CORE Business Scenario Two. 
 
Group Code: CO 
CARC: 16 
RARC: MA66, N56 
MSN: N/A 
 
Contractors shall return non-covered OIVIT claims billed with HCPCS 94681 with or 
without diabetes-related conditions 250-00-250.93 to provider/return as unprocessable. 
 
The contractor shall use the following remittance advice messages and associated codes 
when rejecting/denying claims under this policy.  This CARC/RARC combination is 
compliant with CAQH CORE Business Scenario Three. 
 
Group Code: CO 
CARC: 16 
RARC: MA66, N56 
MSN: N/A 
 
Contractors shall deny claims for non-covered OIVIT and any services comprising an 
OIVIT regimen billed with HCPCS code G9147. 
 
The contractor shall use the following remittance advice messages and associated codes 
when rejecting/denying claims under this policy.  This CARC/RARC combination is 
compliant with CAQH CORE Business Scenario Three. 
 
Group Code: CO 
CARC: 96 
RARC: N386 
MSN: 16.10 Transmittals Issued for this Chapter 
Rev #  Issue Date  Subject  Impl Date  CR# 
January 2024 Update of the Hospital 
R12421CP  12/21/2023  01/02/2024  13488 
Outpatient Prospective Payment 
System (OPPS) 
 
Implementation of Rural Emergency 
R12369CP  11/17/2023  01/03/2023    12820 
Hospital (REH) Provider Type 
 
Implementation of Rural Emergency 
R12321CP  10/18/2023  01/03/2023  12820 
Hospital (REH) Provider Type- 
Rescinded and replaced by Transmittal 
12369 
 
R11941CP  04/05/2023  Correction to Manual for Outlier  05/05/2023  13142 
Calculations 
April 2023 Update of the Hospital 
R11937CP  03/31/2023  04/03/2023  13136 
Outpatient Prospective Payment 
System (OPPS) 
 
Implementation of Rural Emergency 
R11900CP  03/13/2023  01/03/2023  12820 
Hospital (REH) Provider Type-- 
Rescinded and replaced by Transmittal 
12321 
 
April 2023 Update of the Hospital 
R11897CP  03/10/2023  04/03/2023  13136 
Outpatient Prospective Payment 
System (OPPS)- Rescinded and replaced 
by Transmittal 11937 
R11801CP  01/20/203  January 2023 Update of the Hospital  01/03/2023  13031 
Outpatient Prospective Payment 
System (OPPS) 
 
R11737CP  12/08/2022  January 2023 Update of the Hospital  01/03/2023  13031 
Outpatient Prospective Payment 
System (OPPS) - Rescinded and 
replaced by transmittal 11801 
R11729CP  12/06/2022  Implementation of Rural Emergency  01/03/2023  12820 
Hospital (REH) Provider Type- 
Rescinded and replaced by transmittal 
11900  Rev #  Issue Date  Subject  Impl Date  CR# 
         
R11685CP  11/09/2022  Billing for Hospital Part B Inpatient  12/12/2022  11685 
Services 
  07/28/2022  Implementation of Rural Emergency  01/03/2023  12820 
Hospital (REH) Provider Type 
SENSITIVE/CONTROVERSIAL  
Rescinded and replaced by transmittal 
11729 
R11504CP  07/21/2022  Modification of Existing Common  01/03/2023  12792 
Working File (CWF) Editing for 
 
Preventive Services  
R11457CP  06/15/2022  July 2022 Update of the Hospital  07/05/2022  12761 
Outpatient Prospective Payment 
System (OPPS) 
R11435CP  05/26/2022  July 2022 Update of the Hospital  07/05/2022  12761 
Outpatient Prospective Payment 
System (OPPS) -Rescinded and 
Replaced by Transmittal #11457 
R11426CP  05/20/2022  An Omnibus CR Covering: (1)  07/05/2022  12613 
Removal of Two National Coverage 
 
Determination (NCDs), (2) Updates to 
the Medical Nutrition Therapy (MNT) 
Policy, and (3) Updates to the 
Pulmonary Rehabilitation (PR), 
Cardiac Rehabilitation (CR), and 
Intensive Cardiac Rehabilitation (ICR) 
Conditions of Coverage 
Update to Chapters 3, 4, 27 and 37 of 
R11396CP  05/04/2022  10/03/2022  12715 
Publication (Pub.) 100-04 Medicare 
Claims Processing Manual to Remove 
Reference to the Term "OSCAR" 
R11272CP  02/18/2022  An Omnibus CR Covering: (1)  07/05/2022  12613 
Removal of Two National Coverage 
Determination (NCDs), (2) Updates to 
the Medical Nutrition Therapy (MNT) 
Policy, and (3) Updates to the 
Pulmonary Rehabilitation (PR), 
Cardiac Rehabilitation (CR), and  Rev #  Issue Date  Subject  Impl Date  CR# 
Intensive Cardiac Rehabilitation (ICR) 
Conditions of Coverage -Rescinded 
and Replaced by Transmittal #11426 
 
R11305CP  03/24/2022  April 2022 Update of the Hospital  04/04/2022  12666 
Outpatient Prospective Payment 
System (OPPS) 
R11150CP  12/10/2021  January 2022 Update of the Hospital  01/03/2021  12552 
Outpatient Prospective Payment 
System (OPPS) 
R10869CP  07/14/2021  Updates to Chapter 4, Section 10.11.9 -  08/13/2021  12332 
Methodology for Calculation of the 
Cost-to-Charge Ratio [CCR] for 
Community Mental Health Centers 
[CMHCs] in the Medicare Claims 
Processing Manual 
R10541CP  12/31/2020  January 2021 Update of the Hospital  01/04/2021  12120 
Outpatient Prospective Payment 
System (OPPS) 
R4513CP  02/04/2020  January 2020 Update of the Hospital  01/06/2020  11605 
Outpatient Prospective Payment 
System (OPPS)  
R4494CP  01/15/2020  January 2020 Update of the Hospital  01/06/2020  11605 
Outpatient Prospective Payment 
System (OPPS)- No Longer Sensitive 
Rescinded and Replaced by Transmittal 
#4513 
  12/20/2019  January 2020 Update of the Hospital  01/06/2020  11605 
Outpatient Prospective Payment 
System (OPPS)- 
Sensitive/Controversial Rescinded and 
Replaced by Transmittal # 4494  
R4394CP  09/13/2019  Billing for Hospital Part B Inpatient  10/15/2019  11413 
Services 
Fiscal Year (FY) 2020 Inpatient 
R4390CP   09/06/2019  10/07/2019  11361 
Prospective Payment System (IPPS) 
and Long Term Care Hospital (LTCH)  Rev #  Issue Date  Subject  Impl Date  CR# 
PPS Changes  
 
Implementation of the Medicare 
R4391CP  09/06/2019  07/01/2019  10971 
Performance Adjustment (MPA) for 
the Maryland Total Cost of Care (MD 
TCOC) Model 
 
Implementation of the Medicare 
R4337CP  07/18/2019  07/01/2019  10971 
Performance Adjustment (MPA) for 
  the Maryland Total Cost of Care (MD 
TCOC) Model- Rescinded and 
 
Replaced by Transmittal 4391 
 
Implementation of the Medicare 
R4308CP  05/16/2019  07/01/2019  10971 
Performance Adjustment (MPA) for 
the Maryland Total Cost of Care (MD 
TCOC) Model- Rescinded and 
Replaced by Transmittal 4337 
 
R4295CP  05/03/2019  Update to the Internet Only Manual  08/27/2019  11274 
(IOM) Publication (Pub.) 100-04, 
Chapter 4 
R4308CP  05/16/2019  Implementation of the Medicare  07/01/2019  10971 
Performance Adjustment (MPA) for   
the Maryland Total Cost of Care (MD 
TCOC) Model 
R4259CP  03/22/2019  Billing for Hospital Part B Inpatient  06/21/2019     11181 
Services 
R4257CP  03/14/2019  Implementation of the Medicare  07/01/2019  10971 
Performance Adjustment (MPA) for 
the Maryland Total Cost of Care (MD 
TCOC) Model- Rescinded and replaced 
by Transmittal 4308 
R4255CP  03/15/2019  April 2019 Update of the Hospital  04/01/2019  11216 
Outpatient Prospective Payment 
System (OPPS) 
R4233CP  02/08/2019  Update to Publication (Pub.) 100-04  03/12/2019  11084 
Chapters 4 and 17 to Provide  Rev #  Issue Date  Subject  Impl Date  CR# 
Language-Only Changes for the New 
Medicare Card Project 
R4230CP  02/01/2019  Implementation of the Medicare  07/01/2019  10971 
Performance Adjustment (MPA) for 
the Maryland Total Cost of Care (MD 
TCOC) Model- Rescinded and replaced 
by Transmittal 4257 
R4204CP  01/17/2019  January 2019 Update of the Hospital  01/07/2019  11099 
Outpatient Prospective Payment 
System (OPPS) 
R4186CP  12/31/2018  January 2019 Update of the Hospital  01/07/2019  11099 
Outpatient Prospective Payment 
System (OPPS)- Rescinded and 
replaced by Transmittal 4204 
R4157CP  11/02/2018  Hospital and Critical Access Hospital  04/01/2019  10962 
(CAH) Swing-Bed Manual Revisions 
and Shared Systems Changes 
R3941CP  12/22/2017  January 2018 Update of the Hospital  01/02/2018  10417 
Outpatient Prospective Payment 
System (OPPS) 
R3795CP  06/17/2017  Updates in the Fiscal Intermediary  10/02/2017  10165 
Shared System (FISS) Inpatient and 
Outpatient Provider Specific Files 
(PSF) 
R3750CP  04/17/2017  New Fields in the Fiscal Intermediary  07/03/2017  9926 
Shared System (FISS) Inpatient and 
Outpatient Provider Specific Files 
(PSF) 
R3739CP  03/17/2017  Billing for Advance Care Planning  06/19/2017  10000 
(ACP) Claims 
R3685CP  12/22/2016  January 2017 Update of the Hospital  01/03/2017  9930 
Outpatient Prospective Payment 
System (OPPS) 
R3680CP  12/19/2016  Update to the Fiscal Intermediary  01/03/2017  9675 
Shared Systems (FISS) Outpatient 
Provider Specific File (OPSF) for  Rev #  Issue Date  Subject  Impl Date  CR# 
Outpatient Prospective Payment 
System (OPPS) Hospitals 
R3622CP  10/13/2016  Update to the Fiscal Intermediary  01/03/2017  9675 
Shared Systems (FISS) Outpatient 
Provider Specific File (OPSF) for 
Outpatient Prospective Payment 
System (OPPS) Hospitals  Rescinded 
and replaced by Transmittal 3680 
R3582CP  08/05/2016  Update to the Fiscal Intermediary  01/03/2017  9675 
Shared Systems (FISS) Outpatient 
Provider Specific File (OPSF) for 
Outpatient Prospective Payment 
System (OPPS) Hospitals 
R3578CP  08/05/2016  Multiple Procedure Payment Reduction  01/03/2017  9647 
(MPPR) on the Professional 
Component (PC) of Certain Diagnostic 
Imaging Procedures 
R3571CP  07/29/2016  New Revenue Code 0815 for  01/03/2017  9674 
Allogeneic Stem Cell Acquisition 
Services 
R3557CP  07/01/2016  July 2016 Update of the Hospital  07/05/2016  9658 
Outpatient Prospective Payment 
System (OPPS) 
R3556CP  07/01/2016  Stem Cell Transplantation for Multiple  10/03/2016  9620 
Myeloma, Myelofibrosis, Sickle Cell 
Disease, and Myelodysplastic 
Syndromes 
R3552CP  06/28/2016  July 2016 Update of the Hospital  07/05/2016  9658 
Outpatient Prospective Payment 
System (OPPS)  Rescinded and 
replaced by Transmittal 3557 
R3523CP  05/13/2016  July 2016 Update of the Hospital  07/05/2016  9658 
Outpatient Prospective Payment 
System (OPPS) - Rescinded and 
replaced by Transmittal 3552 
R3509CP  04/29/2016  Stem Cell Transplantation for Multiple  10/03/2016  9620 
Myeloma, Myelofibrosis, Sickle Cell  Rev #  Issue Date  Subject  Impl Date  CR# 
Disease, and Myelodysplastic 
Syndromes - Rescinded and replaced 
by Transmittal 3556 
R3475CP  03/04/2016  Updates to Pub. 100-04, Chapters 4 and  06/06/2016  9424 
5 to Correct Remittance Advice 
Messages 
R3471CP  02/26/2016  April 2016 Update of the Hospital  04/04/2016  9549 
Outpatient Prospective Payment 
System (OPPS) 
R3425CP  12/18/2015  January 2016 Update of the Hospital  01/04/2016  9486 
Outpatient Prospective Payment 
System (OPPS) 
R3280CP  06/05/2015  July 2015 Update of the Hospital  07/06/2015  9205 
Outpatient Prospective Payment 
System (OPPS) 
R3238CP  04/22/2015  April 2015 Update of the Hospital  04/06/2015  9097 
Outpatient Prospective Payment 
System (OPPS) 
R3235CP  04/14/2015  April 2015 Update of the Hospital  04/06/2015  9097 
Outpatient Prospective Payment 
System (OPPS)  Rescinded and 
replaced by Transmittal 3238 
R3217CP  03/13/2015  April 2015 Update of the Hospital  04/06/2015  9097 
Outpatient Prospective Payment 
System (OPPS)  Rescinded and 
replaced by Transmittal 3235 
R3181CP  01/30/2015  Implementation of New NUBC  07/06/2015  8961 
Condition Code 53 Initial placement 
of a medical device provided as part of 
a clinical trial or a free sample 
R3156CP  12/22/2014  January 2015 Update of the Hospital  01/05/2015  9014 
Outpatient Prospective Payment 
System (OPPS) 
R3150CP  12/12/2014  January 2015 Update of the Hospital  01/05/2015  9014 
Outpatient Prospective Payment  Rev #  Issue Date  Subject  Impl Date  CR# 
System (OPPS)  Rescinded and 
replaced by Transmittal 3156 
R3106CP  11/06/2014  Implementing The Payment Policies  02/10/2015  8959 
Related To Patient Status From The 
CMS-1599-F 
R3065CP  09/12/2014  Billing for Cost Based Payment for  12/15/2014  8897 
Certified Registered Nurse Anesthetists 
(CRNA) Services Furnished by 
Outpatient Prospective Payment 
System (OPPS) Hospitals 
R3019CP  08/07/2014  Medicare Claims Processing Manual,  09/08/2014  8522 
Pub. 100-04, Chapter 4 Update for 
ICD-10 and ASC X12 
R2903CP  03/11/2014  April Update of the Hospital Outpatient  04/07/2014  8653 
Prospective Payment System (OPPS) 
R2894CP  02/28/2014  April Update of the Hospital Outpatient  04/07/2014  8653 
Prospective Payment System (OPPS)  
Rescinded and replaced by Transmittal 
2903 
R2877CP  02/07/2014  Implementing the Payment Policies  04/07/2014  8445 
Related to Patient Status from the 
CMS-1599-F 
R2862CP  01/24/2014  Medicare Claims Processing Manual,  10/01/2014  8522 
Pub. 100-04, Chapter 4 Update for 
ICD-10 and ASC X12  Rescinded and 
replaced by Transmittal 3019 
R2845CP  12/27/2013  January 2014 Update of the Hospital  01/06/2014  8572 
Outpatient Prospective Payment 
System (OPPS) 
R2812CP  11/07/2013  Implementing the Payment Policies  04/07/2014  8445 
Related to Patient Status from the 
CMS-1599-F  Rescinded and replaced 
by Transmittal 2877  Rev #  Issue Date  Subject  Impl Date  CR# 
R2719CP  06/07/2013  Pass-through Payments for Certified  09/09/2013  7896 
Registered Nurse Anesthetist 
Anesthesia Services and Related Care 
R2718CP  06/07/2013  July 2013 Update of the Hospital  07/01/2013  8338 
Outpatient Prospective Payment 
System (OPPS) 
R2696CP  05/03/1013  Implementation of the Hospice Quality  10/07/2013  8241 
Reporting Required by the Affordable 
Care Act (ACA) Section 3004 
R2643CP  01/31/2013  Streamlining the Process for Updating  07/01/2013  8128 
the Abstract Files Used to Price 
Institutional Claims 
R2611CP  12/14/2012  January 2013 Update of the Hospital  01/07/2013  8141 
Outpatient Prospective Payment 
System (OPPS) 
R2581CP  11/02/2012  Outpatient Laboratory Services  04/01/2013  8025 
Rendered in a Critical Access Hospital 
(CAH) 
R2579CP  11/01/2012  Medicare System Update to Include  04/01/2013  8030 
Rendering Line Level National 
Provider Identifiers (NPIs) for Primary 
Care Incentive Program (PCIP) 
Payments to Critical Access Hospitals 
(CAHs) 
R2577CP  11/01/2012  Update to the Fiscal Intermediary  04/01/2013  8066 
Shared Systems (FISS) for the End 
Stage Renal Disease (ESRD) Quality 
Incentive Program (QIP) Adjustments 
for Childrens Hospitals 
R2574CP  10/26/2012  Payment of Global Surgical Split Care  01/07/2013  7872 
in a Method II Critical Access Hospital 
(CAH) Submitted with Modifier 54 
and/or 55 
R2531CP  08/24/2012  October 2012 Update of the Hospital  10/01/2012  8031 
Outpatient Prospective Payment 
System (OPPS)  Rev #  Issue Date  Subject  Impl Date  CR# 
R2510CP  08/03/2012  Payment of Global Surgical Split Care  01/07/2013  7872 
in a Method II Critical Access Hospital 
(CAH) Submitted with Modifier 54 
and/or 55  Rescinded and replaced by 
Transmittal 2574 
R2483CP  06/08/2012  July 2012 Update of the Hospital  07/02/2012  7847 
Outpatient Prospective Payment 
System (OPPS) 
R2455CP  04/26/2012  Hospital Dialysis Services for Patients  10/01/2012  7762 
With and Without End Stage Renal 
Disease (ESRD) 
R2452CP  04/26/2012  Anesthesiologist Services With a  10/01/2012  7764 
Modifier GC in a Method II Critical 
Access Hospital (CAH) 
R2453CP  04/26/2012  CY 2012 OPPS Payment Adjustment  05/29/2012  7780 
for Certain Cancer Hospitals 
R2418CP  03/02/2012  April 2012 Update of the Hospital  04/02/2012  7748 
Outpatient Prospective Payment 
System (OPPS) 
R2403CP  01/26/2012  Medicare System Update to Include a  07/02/2012  7686 
Rendering Provider Field to Allow 
Correct Physician National Provider 
Identifier (NPI) Reporting for the 
Primary Care Incentive Program 
(PCIP) for Critical Access Hospitals 
(CAHs) Reimbursed Under the 
Optional Method 
R2395CP  01/26/2012  Multiple Procedure Payment Reduction  07/02/2012  7684 
(MPPR)for Physician Services for 
Certain Diagnostic Imaging Procedures 
in Critical Access Hospitals (CAH) 
R2386CP  01/13/2012  January 2012 Update of the Hospital  01/03/2012  7672 
Outpatient Prospective Payment 
System (OPPS) 
R2376CP  12/29/2011  January 2012 Update of the Hospital  01/03/2012  7672 
Outpatient Prospective Payment  Rev #  Issue Date  Subject  Impl Date  CR# 
System (OPPS)  Rescinded and 
replaced by Transmittal 2386 
R2361CP  11/25/2011  Clarification and Revisions for Claims  04/02/2012  7593 
Submitted for End Stage Renal Disease 
(ESRD) Patients 
R2335CP  10/28/2011  Clarification and Revisions for Claims  04/02/2012  7593 
Submitted for End Stage Renal Disease 
(ESRD) Patients  Rescinded and 
replaced by Transmittal 2361 
R2333CP  10/28/2011  Payment for Multiple Surgeries in a  04/02/2012  7587 
Method II Critical Access Hospital 
(CAH) 
R2311CP  09/23/2011  Implementation of the MIPPA 153c  01/03/2012  7460 
End Stage Renal Disease (ESRD) 
Quality Incentive Program (QIP) and 
Other Requirements for ESRD Claims 
R2296CP  09/02/2011  October 2011 Update of the Hospital  10/03/2011  7545 
Outpatient Prospective Payment 
System (OPPS) 
R2291CP  08/26/2011  Fiscal Year (FY) 2012 Inpatient  10/03/2011  7508 
Prospective Payment System (IPPS), 
Long Term Care Hospital (LTCH) 
PPS, and Critical Access Hospital 
(CAH) Changes 
R2268CP  08/01/2011  Anesthesiologist Services in a Method  01/03/2012  7465 
II Critical Access Hospital (CAH) 
R2262CP  07/29/2011  Implementation of the MIPPA 153c  01/03/2012  7460 
End Stage Renal Disease (ESRD) 
Quality Incentive Program (QIP) and 
Other Requirements for ESRD Claims 
 Rescinded and replaced by 
Transmittal 2311 
R2242CP  6/17/2011  Revision to Formula to Compute the  07/01/2011  7464 
Time Value of Money under the 
Inpatient Prospective Payment System 
(IPPS), Outpatient Prospective 
Payment System (OPPS), Inpatient  Rev #  Issue Date  Subject  Impl Date  CR# 
Rehabilitation Facility (IRF PPS), 
Inpatient Psychiatric Facility (IPF PPS) 
and Long Term Care Hospital (LTCH 
PPS) 
R2234CP  05/27/2011  July 2011 Update of the Hospital  07/05/2011  7443 
Outpatient Prospective Payment 
System (OPPS) 
R2232CP  05/27/2011  Critical Access Hospital (CAH)  10/03/2011  7404 
Optional Method Election for 
Outpatient Services 
R2202CP  04/27/2011  Section 1833(a)(1)(F) of the Social  10/03/2011  7361 
Security Act-Payment of Licensed 
Clinical Social Workers (LCSW) in a 
Method II Critical Access Hospital 
(CAH) 
R2201CP  04/22/2011  Section 1833(a)(1)(F) of the Social  10/03/2011  7361 
Security Act-Payment of Licensed 
Clinical Social Workers (LCSW) in a 
Method II Critical Access Hospital 
(CAH)  Rescinded and replaced by 
Transmittal 2202 
R2169CP  03/03/2011  Incentive Payment Program for  04/04/2011  7115 
Primary Care Services, Section 5501(a) 
of the Patient Protection and 
Affordable Care Act (the ACA), 
Payment to a CAH Paid Under the 
Optional Method 
R2141CP  01/24/2011  January 2011 Update of the Hospital  01/03/2011  7271 
Outpatient Prospective Payment 
System (OPPS) 
R2137CP  01/21/2011  Certified Registered Nurse Anesthetist  07/05/2011  7207 
(CRNA) Services n a Method II 
Critical Access Hospital (CAH) 
Without a CRNA Pass-Through 
Exemption 
R2130CP  12/30/2010  January 2011 Update of the Hospital  01/03/2011  7271 
Outpatient Prospective Payment  Rev #  Issue Date  Subject  Impl Date  CR# 
System (OPPS)  Rescinded and 
replaced by Transmittal 2141 
R2127CP  12/29/2010  Medical Nutrition Therapy (MNT)  03/29/2011  7262 
Manual Correction 
R2117CP  12/10/2010  Revisions to the Medicare Code Editor  01/12/2011  7246 
(MCE) and Integrated Outpatient Code 
Editor(IOCE) Reporting Requirements 
R2111CP  12/03/2010  Outlier Reconciliation and other  04/04/2011  7192 
Outlier Manual Updates for the 
Inpatient Prospective Payment System 
(IPPS), Outpatient Prospective 
Payment System (OPPS), Inpatient 
Rehabilitation Facility (IRF) PPS, 
Inpatient Psychiatric Facility (IPF) PPS 
and Long Term Care Hospital (LTCH) 
PPS 
R2102CP  11/19/2010  Systems Changes Necessary to  04/04/2011  7219 
Implement Technical Correction 
Related to Critical Access Hospital 
Services, Section 3128 of the 
Affordable Care Act, Pub. 118-148 
R2081CP  12/03/2010  Incentive Payment Program for  04/04/2011  7115 
Primary Care Services, Section 5501(a) 
of the Patient Protection and 
Affordable Care Act (the ACA), 
Payment to a CAH Paid Under the 
Optional Method  Rescinded and 
replaced by Transmittal 2169 
R2078CP  10/28/2010  Incentive Payment Program for Major  04/04/2011  7146 
Surgical Procedures Furnished in 
Health Professional Shortage Areas, 
Section 5501(b) of the Patient 
Protection and Affordable Care Act 
(the ACA), and Payments to a Critical 
Access Hospital (CAH) Paid under the 
Optional Method  Rev #  Issue Date  Subject  Impl Date  CR# 
R2061CP  10/01/2010  October 2010 Update of the Hospital  10/04/2010  7117 
Outpatient Prospective Payment 
System (OPPS) 
R2050CP  09/17/2010  October 2010 Update of the Hospital  10/04/2010  7117 
Outpatient Prospective Payment 
System (OPPS)  Rescinded and 
replaced by Transmittal 2061 
R2024CP  08/06/2010  Payment for Certified Nurse-Midwife  01/03/2011  7005 
Services 
R1980CP  06/04/2010  July 2010 Update of the Hospital  07/06/2010  6996 
Outpatient Prospective Payment 
System (OPPS) 
R1976CP  05/28/2010  July 2010 Update of the Hospital  07/06/2010  6996 
Outpatient Prospective Payment 
System (OPPS)  Rescinded and 
replaced by Transmittal 1980 
R1930CP  03/09/2010  Outpatient Intravenous Insulin  04/05/2010  6775 
Treatment (Therapy) 
R1924CP  02/26/2010  April 2010 Update of the Hospital  04/05/2010  6857 
Outpatient Prospective Payment 
System (OPPS) 
R1923CP  02/22/2010  Outpatient Intravenous Insulin  03/08/2010  6775 
Treatment (Therapy)  Rescinded and 
replaced by Transmittal 1930 
R1921CP  02/19/2010  Billing for Services Related to  04/05/2010  6563 
Voluntary Uses of Advanced 
Beneficiary Notices of Noncoverage 
(ABNs) 
R1913CP  02/05/2010  Outpatient Intravenous Insulin  03/08/2010  6775 
Treatment (Therapy)  Rescinded and 
replaced by Transmittal 1923 
R1894CP  01/15/2010  Billing for Services Related to  04/05/2010  6563 
Voluntary Uses of Advanced 
Beneficiary Notices of Noncoverage  Rev #  Issue Date  Subject  Impl Date  CR# 
(ABNs)  Rescinded and replaced by 
Transmittal 1921 
R1882CP  12/21/2009  January 2010 Update of the Hospital  01/04/2010  6751 
Outpatient Prospective Payment 
System (OPPS) 
R1871CP  12/11/2009  January 2010 Update of the Hospital  01/04/2010  6751 
Outpatient Prospective Payment 
System (OPPS) - Rescinded and 
replaced by Transmittal 1882 
R1846CP  11/06/2009  Implementation of Common Working  04/05/2010  6553 
File (CWF) Editing for Diabetes Self-
Management Training (DSMT) and 
Medical Nutrition Therapy (MNT) 
R1840CP  10/29/2009  Billing for Services Related to  04/05/2010  6563 
Voluntary Uses of Advanced 
Beneficiary Notices of Noncoverage 
(ABNs)  Rescinded and replaced by 
Transmittal 1894 
R1782CP  07/30/2009  Section 148 of the Medicare  07/06/2009  6395 
Improvements for Patients and 
Providers Act (MIPPA) 
R1781CP  07/29/2009  Payment for Co-surgeons in a Method  07/06/2009  6319 
II Critical Access Hospital  (CAH) 
R1777CP  07/24/2009  Payment of Bilateral Procedures in a  01/04/2010  6526 
Method II Critical Access Hospital 
(CAH) 
R1760CP  06/23/2009  July 2009 Update of the Hospital  07/06/2009  6492 
Outpatient Prospective Payment 
System (OPPS) 
R1745CP  05/22/2009  July 2009 Update of the Hospital  07/06/2009  6492 
Outpatient Prospective Payment 
System (OPPS) - Rescinded and 
replaced by Transmittal 1760 
R1729CP  05/08/2009  Section 148 of the Medicare  07/06/2009  6395 
Improvements for Patients and  Rev #  Issue Date  Subject  Impl Date  CR# 
Providers Act (MIPPA) - Rescinded 
and replaced by Transmittal 1782 
R1719CP  04/24/2009  Rural Health Clinic (RHC) and  10/05/2009  6445 
Federally Qualified Health Clinic 
(FQHC) Updates 
R1712CP  04/17/2009  Section 148 of the Medicare  07/06/2009  6395 
Improvements for Patients and 
Providers Act (MIPPA) - Rescinded 
and replaced by Transmittal 1729 
R1702CP  03/13/2009  April 2009 Update of the Hospital  04/06/2009  6416 
Outpatient Prospective Payment 
System (OPPS) 
R1672CP  01/30/2009  Payment for Co-surgeons in a Method  07/06/2009  6319 
II Critical Access Hospital (CAH)  
Rescinded and replaced by Transmittal 
1781 
R1657CP  12/31/2008  January 2009 Update of the Hospital  01/05/2009  6320 
Outpatient Prospective Payment 
System (OPPS) 
R1649CP  12/18/2009  Procedures for Paying Claims Without  11/25/2008  6252 
Passing Through the Integrated 
Outpatient Code Editor (OCE) or 
Medicare Code Editor (MCE) 
R1639CP  11/21/2008  Health Professional Shortage Area  01/05/2009  6106 
(HPSA) Bonus Payment Policy 
Changes 
R1628CP  11/03/2008  Payment for Implanted Prosthetic  01/05/2009  6050 
Devices for Part B Inpatients in 
Hospitals that are Paid Under the 
Hospital Outpatient Prospective 
Payment System (OPPS) 
R1620CP  10/24/2008  Payment of Assistant at Surgery  04/06/2009  6123 
Services in a Method II Critical Access 
Hospital (CAH) 
R1619CP  10/24/2008  Procedures for Paying Claims Without  11/25/2008  6252 
Passing Through the Integrated  Rev #  Issue Date  Subject  Impl Date  CR# 
Outpatient Code Editor (OCE) or 
Medicare Code Editor (MCE) - 
Rescinded and replaced by Transmittal 
1649 
R1599CP  09/19/2008  October Update of the Hospital  10/06/2008  6196 
Outpatient Prospective Payment 
System (OPPS) 
R1597CP  09/12/2008  Payment for Implanted Prosthetic  01/05/2009  6050 
Devices for Part B Inpatients in 
Hospitals that are Paid Under the 
Hospital Outpatient Prospective 
Payment System (OPPS) - Rescinded 
and replaced by Transmittal 1628 
R1590CP  09/08/2008  October 2008 Integrated Outpatient  10/06/2008  6186 
Code Editor (I/OCE) Specifications 
Version 9.3 
R1574CP  08/12/2008  Physician Fee Schedule Payment  10/06/2008  6013 
Policy Indicator File Record Layout for 
Use in Processing Method II Critical 
Access Hospital (CAH) Claims for 
Professional Services 
R1536CP  06/19/2008  July 2008 Update of the Hospital  07/07/2008  6094 
Outpatient Prospective Payment 
System (OPPS) 
R1508CP  05/16/2008  Physician Fee Schedule Payment  10/06/2008  6013 
Policy Indicator File Record Layout for 
Use in Processing Method II Critical 
Access Hospital (CAH) Claims for 
Professional Services - Rescinded and 
replaced by Transmittal 1574 
R1472CP  03/06/2008  Update of Institutional Claims  04/07/2008  5893 
References 
R1446CP  02/08/2008  Update to Common Working File  07/07/2008  5907 
(CWF) Edits 7284 and 7548  Rev #  Issue Date  Subject  Impl Date  CR# 
R1445CP  02/08/2008  January 2008 Update of the Hospital  03/10/2008  5946 
Outpatient Prospective Payment 
System (OPPS)-Manualization 
R1434CP  02/05/2008  Extension of the Dates of Service for  01/07/2008  5937 
the Physician Scarcity Area (PSA) 
Bonus Payment 
R1421CP  01/25/2008  Update of Institutional Claims  04/07/2008  5893 
References - Rescinded and Replaced 
by Transmittal 1472 
R1383CP  11/23/2007  Adjustment to Payment Under Hospital  07/07/2008  5668 
Outpatient Prospective Payment 
System (OPPS) and Ambulatory 
Surgical Center (ASC) Payment 
System for Partial Device Credit 
R1355CP  10/19/2007  National Uniform Billing Committee  01/22/2008  5734 
(NUBC) Update on Revenue Codes 
and Corrected Skilled Nursing Facility 
(SNF) Spell of Illness Chart 
R1336CP  09/14/2007  October 2007 Update of the Hospital  10/01/2007  5718 
Outpatient Prospective Payment 
System (OPPS) Summary of Payment 
Policy Changes 
R1325CP  08/29/2007  Testing and Implementation of 2008  01/07/2008  5680 
Ambulatory Surgical Center (ASC) 
Payment System Changes 
R1321CP  08/24/2007  Sunset of the Physician Scarcity Area  01/07/2008  5711 
(PSA) Bonus Payment 
R1308CP  07/20/2007  Testing and Implementation of 2008  01/07/2008  5680 
Ambulatory Surgical Center (ASC) 
Payment System Changes  Replaced 
by Transmittal 1325 
R1297CP  07/20/2007  Adjustment to Payment Under Hospital  01/07/2008  5668 
Outpatient Prospective Payment 
System (OPPS) and Ambulatory 
Surgical Center (ASC) Payment  Rev #  Issue Date  Subject  Impl Date  CR# 
System for Partial Device Credit  
Replaced by Transmittal 1383 
R1151CP  01/11/2007  Skilled Nursing Facility (SNF)  04/02/2007  5389 
Consolidated Billing (CB) Common 
Working File (CWF) Edit Bypass 
Instructions for Hospital Emergency 
Room (ER) Services Spanning 
Multiple Service Dates 
R1111CP  11/09/2006  Clarification on Billing for  04/02/2007  5376 
Cryosurgery of the Prostate Gland 
R1109CP  11/09/2006  Skilled Nursing Facility (SNF)  04/02/2007  5389 
Consolidated Billing (CB) Common 
Working File (CWF) Edit Bypass 
Instructions for Hospital Emergency 
Room (ER) Services Spanning 
Multiple Service Dates 
R1107CP  11/09/2006  Notification and Testing of an  07/02/2007  5344 
Integrated Outpatient Code Editor 
(OCE) for the July 2007 Release 
R1103CP  11/03/2006  Reporting and Payment of No-Cost  01/02/2007  5263 
Devices Furnished by Outpatient 
Prospective Payment (OPPS) Hospitals 
R1070CP  09/29/2006  New 2007 Current Procedural  01/02/2007  5327 
Terminology (CPT) Mammography 
Codes 
R1060CP  09/18/2006  October 2006 Update of the Hospital  10/02/2006  5304 
Outpatient Prospective Payment 
System (OPPS): Summary of Payment 
Policy Changes 
R1041CP  08/25/2006  Change in Healthcare Common  01/02/2007  5216 
Procedure Coding System (HCPCS) for 
Renal Dialysis Facilities and Hospitals 
Billing for End Stage Renal Disease 
(ESRD) Related Epoetin Alfa (EPO) 
Effective January 1, 2007 
R1030CP  08/11/2006  Policy Changes to the Fiscal  01/02/2007  5238 
Intermediary (FI) Calculation of  Rev #  Issue Date  Subject  Impl Date  CR# 
Hospital Outpatient Payment System 
(OPPS) and Community Mental Health 
Center (CMHC) Cost to Charge Ratios 
(CCRs) 
R1007CP  07/28/2006  Change in Healthcare Common  01/02/2007  5216 
Procedure Coding System (HCPCS) for 
Renal Dialysis Facilities and Hospitals 
Billing for End Stage Renal Disease 
(ESRD) Related Epoetin Alfa (EPO) 
Effective January 1, 2007 
R980CP  06/14/2006  Changes Conforming to CR 3648  10/02/2006  4014 
Instructions for Therapy Services - 
Replaces Rev. 941 
R976CP  06/09/2006  Billing of Temporary "C" HCPCS  10/02/2006  5027 
Codes by Non-Outpatient Prospective 
Payment System (Non-OPPS) 
Providers 
R941CP  05/05/2006  Changes Conforming to CR 3648  10/02/2006  4014 
Instructions for Therapy Services 
R903CP  04/14/2006  Payment for Blood Clotting Factors  07/14/2006  4229 
Administered to Hemophilia Inpatients 
R881CP  03/03/2006  Outpatient Prospective Payment  04/03/2006  4252 
System Hospital Emergency Room 
Services Exceeding 24 Hours 
R817CP  01/20/2006  Update to the Inpatient Provider  04/03/2006  4279 
Specific File (PSF) and the Outpatient 
Provider Specific File (OPSF) to Retain 
Provider Information 
R803CP  01/03/2006  Administration of Drugs and  04/03/2006  4234 
Biologicals in a Method II Critical 
Access Hospital 
R795CP  12/30/2005  Redefined Type of Bill 14X for Non- 04/03/2006  4208 
Patient Laboratory Specimens-CR 3835 
Manualization 
R787CP  12/16/2005  January 2006 Update of the Hospital  01/03/2006  4259 
Outpatient Prospective Payment  Rev #  Issue Date  Subject  Impl Date  CR# 
System Manual Instruction: Changes to 
Coding and Payment for Drug 
Administration. 
R785CP  12/16/2005  January 2006 Update of the Hospital  01/03/2006  4258 
Outpatient Prospective Payment 
System Manual Instruction: Changes to 
Coding and Payment for Drug 
Administration. 
R771CP  12/02/2005  Revisions to Pub.100-04, Medicare  01/03/2006  4181 
Claims Processing Manual in 
Preparation for the National Provider 
Identifier 
R768CP  12/02/2005  Lung Volume Reduction Surgery  03/02/2006  4149 
R763CP  11/25/2005  Update to Repetitive Billing --  N/A  4047 
Manualization 
R734CP  10/28/2005  Redefined Type of Bill (TOB), 14x, for  04/03/2006  3835 
Non-Patient Laboratory Specimens  
R711CP  10/14/2005  Update to Repetitive Billing --  N/A  4047 
Manualization  
R673CP  09/09/2005  Manual Update on Medical Nutrition  N/A  3955 
Therapy (MNT) Services - 
Manualization  
R658CP  08/26/2005  Billing for Devices Under the Hospital  10/03/2005  4017 
Outpatient Prospective Payment 
System (OPPS) 
R650CP  08/12/2005  Manual Update on Medical Nutrition  N/A  3955 
Therapy Services - Manualization 
R646CP  08/12/2005  Update to the Inpatient Provider  01/03/2006  3940 
Specific File (PSF) and the Outpatient 
PSF to Retain Provider Information 
R617CP  07/22/2005  Administration of Drugs and  10/24/2005  3911 
Biologicals in a Method II Critical 
Access Hospital (CAH)  Rev #  Issue Date  Subject  Impl Date  CR# 
R616CP  07/22/2005  Certified Registered Nurse Anesthetist  01/03/2006  3833 
Pass-Through Payment 
R608CP  07/22/2005  New Health Professional Shortage  01/03/2006  3935 
Area (HPSA) Modifier 
R596CP  06/24/2005  Indian Health Service (IHS) or Tribal  04/04/2005  3452 
Hospitals Including Critical Access 
Hospital (CAH) Payment Methodology 
for Inpatient Social Admissions and 
Outpatient Services Occurring During 
Concurrent Stays 
R573CP  06/03/2005  Clarifying Manual Instructions for  06/01/2005  3848 
Coding and Payment for Drug 
Administration Under the Hospital 
Outpatient Prospective Payment 
System (OPPS) 
R566CP  05/20/2005  Clarifying Manual Instructions for  06/01/2005  3848 
Coding and Payment for Drug 
Administration Under the Hospital 
Outpatient Prospective Payment 
System (OPPS) 
R557CP  05/06/2005  Clarifying Manual Instructions for  06/01/2005  3848 
Coding and Payment for Drug 
Administration Under the Hospital 
Outpatient Prospective Payment 
System (OPPS) 
R530CP  04/22/2005  Billing Requirements for Physician  07/05/2005  3800 
Services Rendered in Method II 
Critical Access Hospitals (CAHs) 
R496CP  03/04/2005  Billing for Blood and Blood Products  07/05/2005  3681 
Under the Hospital Outpatient 
Prospective Payment System (OPPS) 
R483CP  02/25/2005  Hospital Partial Hospitalization  10/04/2004  3297 
Services Billing Requirements 
R477CP  02/18/2005  New Case-Mix Adjusted End Stage  04/04/2005  3720 
Renal Disease (ESRD) Composite 
Payment Rates and New Composite  Rev #  Issue Date  Subject  Impl Date  CR# 
Rate Exceptions Window for Pediatric 
ESRD Facilities 
R465CP  02/04/2005  Billing Requirements for Physician  07/05/2005  3559 
Services in Method II Critical Access 
Hospitals (CAHs) 
R442CP  01/21/2005  Hospital Outpatient Prospective  02/22/2005  3507 
Payment System (OPPS): Use of 
Modifiers -52, -73 and -74 for Reduced 
or Discontinued Services 
R407CP  12/17/2004  Hospital Billing for Repetitive Services  01/03/2005  3633 
R404CP  12/17/2004  January 2005 Update of the Hospital  01/03/2005  3610 
Outpatient Prospective Payment 
System (OPPS): Changes to Coding 
and Payment for Drug Administration 
R403CP  12/17/2004  January 2005 Update of the Hospital  01/03/2005  3606 
Outpatient Prospective Payment 
System (OPPS): Billing for Devices 
that do not have Transitional Pass-
Through Status, and that are not 
Classified as New Technology 
Ambulatory Payment Classification 
(APC) Groups 
R379CP  11/26/2004  Low Osmolar Contrast  04/04/2005  3439 
Material/Laboratory Tests/Payment for 
Inpatient Services Furnished by a 
Critical Access Hospital (CAH) 
R370CP  11/19/2004  New Case-Mix Adjusted End Stage  04/04/2005  3572 
Renal Disease (ESRD) Composite 
Payment Rates and New Composite 
Rates and New Composite Rate 
Exceptions Window for Pediatric 
ESRD Facilities 
R351CP  10/29/2004  Editing of Hospitals and Skilled  01/03/2005  3531 
Nursing Facilities Part B Inpatient 
Services (Full Replacement of Change 
Request 3366)  Rev #  Issue Date  Subject  Impl Date  CR# 
R336CP  10/29/2004  Indian Health Service (IHS) or Tribal  04/04/2005  3452 
Hospitals including Critical Access 
Hospitals (CAH) Payment 
Methodology for Inpatient Social 
Admissions and Outpatient Services 
Occurring During Concurrent Stays 
R301CP  09/17/2004  Editing Of Hospital And Skilled  01/03/2005  3366 
Nursing Facility Part B Inpatient 
Services 
R270CP  08/03/2004  Update to the Frequency of Billing  01/03/2005  3382 
R262CP  07/30/2004  Bonus Payment to Physicians That  01/03/2005  3262 
Render Services in a CAH in a 
Designated Physician Scarcity Area 
R251CP  07/23/2004  Editing Of Hospital And Skilled  01/03/2005  3366 
Nursing Facility Part B Inpatient 
Services 
R243CP  07/23/2004  Patient Status Code and Reason for  01/03/2005  2800 
Patient Visit for the Hospital Outpatient 
Prospective Payment System (OPPS) 
R239CP  07/23/2004  Update to the Frequency of Billing  01/03/2005  3382 
R231CP  07/23/2004  Indian Health Service (IHS) or Tribal  01/03/2005  3235 
Critical Access Hospital (CAH) 
Payment Methodology for Inpatient 
and Outpatient Services 
R180CP  05/14/2004  Hospital Partial Hospitalization  N/A  3297 
Services Billing Requirements 
R167CP  04/30/2004  Discontinued Use of Revenue Code  10/04/2004  3194 
0910 
R156CP  04/30/2004  Payment Procedure for Maryland  10/04/2004  3200 
Hospitals Under the Jurisdiction of the 
Health Services Cost Review 
Commission  Rev #  Issue Date  Subject  Impl Date  CR# 
R152CP  04/30/2004  Inclusion of Core-Based Statistical  10/04/2004  3272 
Area (CBSA) Data Elements to the 
Provider Specific Files 
R132CP  03/30/2004  April 2004 Update of the Hospital  04/05/2004  3154 
Outpatient Prospective Payment 
System 
R103CP  02/20/2004  Optional Method for Outpatient  07/01/2004  3114 
Services: Cost-Based Facility Services 
Plus 115 percent Fee Schedule 
Payment for Professional Services 
R089CP  02/06/2004  The Elimination of the 90-Day Grace  07/06/2004  3093 
Period for HCPCS Codes 
R063CP  01/16/2004  Special Rules for Critical Access  04/05/2004  3051 
Hospital (CAH) Outpatient Billing 
R053CP  12/22/2003  Outpatient Code Editors  01/05/2004  3021 
R046CP  12/19/2003  Outpatient Code Editors  01/05/2004  3021 
R045CP  12/19/2003  Outpatient Provider Specific File  01/20/2004  2994 
R041CP  12/08/2003  Special Rules for Critical Access  01/05/2004  2990 
Hospital Outpatient Billing 
R036CP  11/28/2003  Add revenue code 068x  01/01/2004  2995 
R026CP  11/04/2003  Lung Volume Reduction Surgery  01/05/2004  2688 
R001CP  10/01/2003  Initial Publication of Manual  NA  NA 
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