In general, the more services that an outpatient receives, the greater the OPPS payment the hospital receives

In general, the more services that an outpatient receives, the greater the OPPS payment the hospital receives

The APC payment is based on the average cost of providing services within the APC. Hospitals bill for all of the services administered to a beneficiary and can receive multiple APC payments for the care provided during a single visit.

There are some services for which Medicare will not pay hospitals if those services are provided on an outpatient basis. CMS identifies certain services, such as heart surgery or hip replacement, that it believes can be safely performed on a typical Medicare beneficiary on only an inpatient basis. These procedures are commonly referred to as “inpatient only” and are not payable under the OPPS.

It can be difficult for a beneficiary to determine his or her status at the hospital based purely on the care provided

Outpatient services include observation services, which may be used to determine whether a patient should be admitted as an inpatient or can be discharged from the hospital. For example, chest pain is the number-one reason for patients who either have short inpatient stays or receive observation services as outpatients.

A patient who receives outpatient observation services at one hospital could be admitted for a short inpatient stay when treated at another hospital. However, Medicare pays considerably more for short inpatient stays than for observation services. For example, for patients with chest pain, Medicare paid $870 more for short inpatient stays in 2012 than it paid for observation stays.

Implications for beneficiaries. The facilities and equipment used to treat inpatients and outpatients are often the same. A patient may be at the hospital for several days but still be considered an outpatient for payment purposes, such as when a patient is kept at the hospital for observation. Despite the similarities in many aspects of care, because of the different payment methodologies for the different hospital settings, the amount the beneficiary pays can vary widely depending on whether he or she is an inpatient or an outpatient.

For inpatient care, a beneficiary pays a single deductible for the inpatient stay. For 2015 the inpatient deductible is $1,260. For outpatient care, the beneficiary pays a copayment that is typically 20 percent of the APC payment amount but can be as much as 40 percent for some services. The OPPS copay amount is capped at the level of the inpatient deductible for each APC, which means that a beneficiary cannot pay more than $1,260 for an individual service.

However, beneficiaries still must pay a copayment for each separately payable OPPS service. As a result, the total copay for all services received on an outpatient basis ount that the beneficiary would have paid if the same care was provided during an inpatient stay.

In addition to the differences in cost sharing, hospital admission status can also affect a beneficiary’s eligibility for other services. One of the requirements necessary for Medicare to cover a stay in a skilled nursing facility (SNF) is that the beneficiary must have had an inpatient hospital stay of at least three days prior to admission to the SNF.

Many patients who receive observation services are clinically similar to patients who have short inpatient stays, including having similar reasons for receiving hospital care and spending at least one night in the hospital

Care received in a hospital emergency department or on outpatient observation status does not count toward this requirement, even if that care was provided for multiple days. The Office of Inspector General at the Department of Health and Human Services found that in 2012 more than 600,000 beneficiaries had hospital stays of three nights or longer that did not include three inpatient days and that more than 25,000 of those beneficiaries inappropriately received SNF benefits following those stays.

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