Hospital Outpatient Fraud

Hospital Outpatient Prospective Payment System Fraud

The Hospital Outpatient Prospective Payment System (OPPS) was first implemented for services furnished on or after August 1, 2000.

Under the OPPS, Medicare pays for hospital outpatient services on a rate-per-service basis that varies according to the ambulatory payment classification (APC) group to which the service is assigned, and the Healthcare Common Procedure Coding System (HCPCS) codes (which include certain Current Procedural Terminology (CPT) codes) and descriptors to identify and group the services within each APC group. The OPPS includes payment for most (but not all) hospital outpatient services. Fraud patterns commonly include upcoding the APC to a higher-reimbursed discharge diagnosis.

The OPPS rate is an unadjusted national payment amount that includes the Medicare payment and the beneficiary copayment. This rate is divided into a labor-related amount and a non labor-related amount. The labor-related amount is adjusted for area wage differences using the hospital inpatient wage index value for the locality in which the hospital or CMHC is located.

While most hospital outpatient services are payable under the OPPS, payment for ambulance, physical and occupational therapy, and speech-language pathology services, are made under a fee schedule. Also excluded from the OPPS are those services that are paid under fee schedules, for example, the professional services of physicians and non-physician practitioners paid under the Medicare Physician Fee Schedule (MPFS); laboratory services paid under the clinical diagnostic laboratory fee schedule (CLFS); services for beneficiaries with end stage renal disease (ESRD) that are paid under the ESRD composite rate; and services and procedures that require an inpatient stay that are paid under the hospital inpatient prospective payment system (IPPS).