(Medicare Claims Processing Manual)

 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 issu es 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, recover y 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 servic es 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 Corr idor 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 servi ces 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 sched ule, 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 con tains 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 calculat e 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 consi dered 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 inc ludes 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 st atus 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 co de 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 fo r 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 proce dure 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 multi ple 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 Certain Rural Hospitals  (Rev. 1657, Issued: 12- 31-08, Effective: 01-01-09, Implementation: 01-05-09)   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)   Effect ive 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)