HOPPS: Evolution of a CMS Process

Medicare's hospital outpatient prospective payment system (HOPPS) was initially developed in response to the rapid rise in Medicare's outpatient expenses between 1980 and 1991. The Balanced Budget Act of 1997 mandated HOPPS, with an implementation date of August 1, 2000. Unlike the Medicare Physician Fee Schedule, the Centers for Medicare and Medicaid Services (CMS) used hospital charge data to develop the ambulatory patient classification (APC) payment weights. During its evolution as a payment system, Congress mandated the creation of an advisory panel as well as the removal of diagnostic mammography from the APCs. The Deficit Reduction Act proposes applying HOPPS for paying technical fees in nonhospital settings.