Services to which the Payment Reduction Applies

10.6.2.2 - Services to which the Payment Reduction Applies (Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) The reduction to the annual update factor for failure to meet the quality reporting requirements applies to most, but not all, services paid under the OPPS. The reduction of payments does not apply to services paid under the OPPS if the payment amounts are not calculated using the conversion factor to which the annual update factor applies (e.g., drugs and biologicals paid based on the average sales price (ASP) methodology, new technology services paid at a fixed amount, and services paid at charges adjusted to cost). The reduction also does not apply to hospital outpatient services paid through other fee schedules or other mechanisms. Examples of these exceptions are services paid under the physician fee schedule (e.g., physical therapy and diagnostic and screening mammography), services paid at reasonable cost (e.g., influenza and pneumococcal vaccines), and services paid under other fee schedules (e.g., clinical laboratory services and durable medical equipment). The specific services to which this policy applies can be identified by OPPS status indicator. CMS will identify the status indicators of the HCPCS codes to which the reduction applies each year in the change request that announces changes to the OPPS for the forthcoming calendar year. Also, the status indicators for the services (identified by HCPCS codes) to which the reduction applies can be found in the OPPS final rule for the year of interest under “Hospital Outpatient Regulations and Notices” at www.cms.hhs.gov/HospitalOutpatientPPS/. The services excluded from the payment reduction may change each year if the method of calculating payment under the OPPS changes.