OPPS in Medical Billing
January 19, 2023
Last updated on January 19, 2023
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Medical billing can be complicated when done manually, without the assistance of digital software. Fortunately, there are robust medical billing software solutions such as BillPro that you can depend on to optimize and simplify the process. With these software features, all parties are assured of highly efficient and accurate billing services.

However, a thorough understanding of the concepts of different medical billing systems is still needed for accurate billing.

OPPS, a medical abbreviation for Outpatient Prospective Payment System is one such system that is important to understand. This comprehensive guide covers all you should know about this system, its purpose, and why it benefits patients and service providers alike. These important details will help you make the most of your medical billing software.

What is OPPS in Medical Billing?

Medicare uses the Outpatient Prospective Payment System, or OPPS, to determine the number of funds a community mental health center or hospital will receive for the outpatient care they have provided to Medicare patients. It is also known as the Hospital Outpatient Prospective Payment System or HOPPS.

The reimbursement rate calculations for this system vary depending on the hospital or clinic’s location. The payments are set according to the rates in Medicare Part B. They include emergency department visits, X-rays, and partial hospitalizations. Ambulatory surgical center (ASC) services are also included in the Medicare Part B rates.

What is the Purpose of OPPS?

The OPPS system is implemented by all the Centers for Medicare and Medicaid Services (CMS) so that hospitals and clinics are paid for the outpatient services they provide. Through this arrangement, the CMS can predict and manage programs with better efficiency. 

OPPS has helped reduce beneficiary copayments due to the rapid increases in Medicare expenditures for outpatient services and large copayments made by beneficiaries of Medicare.

The Ambulatory Patient Classification System (APC) is the foundation for OPPS’ functionality. Through this, the CMS assigns Healthcare Common Procedure Coding System (HCPCS) codes, which are updated annually. All services covered by OPPS are thus a part of the APC group, and each procedure group or code is meant to be “similar clinically and with regard to resource consumption.”

The hospitals use the HCPCS codes for all outpatient treatment supplies and services. They must bill on a successor claim form (UB-92).

Within HCPCS codes, Current Procedural Terminology (CPT) codes are included along with all the rates for the patient classification system. These are all predetermined and designated by CMS. This optimizes the billing process and makes reimbursements hassle-free.

Services Paid for by OPPS

Services Paid for by OPPS

The CMS has laid out provisions whereby the OPPS is designed to cover the following in their payments:

  • Partial hospitalization and certain in-patient services funded through Medicare Part B for Community Mental Health Centers (CMHCs)

  • Services and tools for outpatient treatment in designated hospitals

  • Costs of an Initial Preventive Physical Examination (IPPE) for the first year of Medicare Part B coverage

  • Some Medicare Part B services when Medicare is unable to pay for Part A for patients

  • Patients in hospice that require treatment for non-terminal illnesses or other related conditions

  • Administration and costs for hepatitis B vaccines (furnished by the Home Health Agency or Comprehensive Outpatient Rehab Facility)

  • Splints, antigens, and casts for patients with no home health plan for their care

Services Excluded From OPPS Payments

Within the stipulations of the OPPS, the following services are not covered:

  • Therapy services for outpatient treatments

  • Diagnostic mammograms

  • Clinical diagnostic laboratory services

A Brief Background of the OPPS Program

In 1965, the Medicare program retrospectively reimbursed hospital-specific costs for medical services. This significantly increased healthcare expenses due to the exponential demand for medical assistance under Medicare.

In response, the federal government introduced the hospital inpatient prospective payment system, known as the DRG system, in 1983. This system reimbursed all the products and services used in treating a single diagnosis in a single payment, with a fixed prospectively determined structure.

Within this system, hospitals were responsible for costs that exceeded the fixed payment instead of Medicare. The financial risk associated with extended inpatient hospital stays was thus placed on the facilities themselves. This was meant to ensure that they provided highly efficient and cost-effective services.

On the other hand, outpatient services were reimbursed with consideration of the costs associated with the same, as they were not a part of the DRG system. This resulted in higher billing charges for outpatient treatment, which led the CMS to establish the OPPS program for regulation.

The OPPS and DRG programs are thereby similar, as they are intended to control rising healthcare costs by creating a prospective bundled payment system.

What Role Does OPPS Play in Medical Billing?

What Role Does OPPS Play in Medical Billing?

OPPS plays a crucial role in simplifying medical billing, making it more efficient and straightforward. It eliminates discrepancies in hospitals and healthcare facilities when it comes time to reimburse for outpatient procedures.

Medical billing software that is well-versed in the technicalities associated with OPPS, Medicare, and patient classification systems can ensure the timely processing of all claims. There will also be little to no error related to successor claim forms.

This will allow hospitals to receive payments and reimburse the outpatient services and treatments they have provided.

How is OPPS Beneficial?

OPPS was established in August 2000 and replaced the prevalent fee-for-service system. Hospitals that don’t successfully meet the HOPPS requirements of the Hospital Outpatient Quality Data Reporting Program receive a 2% reduction in their annual payment update. 

This is a financial incentive for hospitals to meet the outpatient setting’s quality control criteria. It ensures that the quality of service under OPPS is not compromised. At the same time, it enables clinics and hospitals to provide quality services without adding to their financial load.

Why is Medical Billing Software Important?

Medical billing can be a complex and taxing process, and integrating Medicare and Medicaid requires a high level of involvement. Doing it all manually can add unnecessary complexity, especially for medical centers that require OPPS reimbursements.

Robust medical billing software can be an extremely effective solution to ensure accurate billing and efficient operations. Finding the right medical billing software isn’t as confusing as it seems as long as you know what to look for.

If you need affordable medical software that is easy to implement and provides all the essential features for smooth billing, BillPro ticks all the boxes. Designed by experienced professionals in the medical sector, it will manage all your medical and Medicaid billing needs with ease and accuracy. Book a demo today!

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