Application of the Payment Reduction Factor in Calculation

10.6.2.4 - Application of the Payment Reduction Factor in Calculation of the Reduced Payment and Reduced Copayment (Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09) For services to which the payment adjustment applies, CMS calculates a payment reduction factor that is used in the OPPS Pricer to adjust the payments for hospitals that fail to meet the reporting requirements. CMS calculates this factor by dividing the OPPS conversion factor that incorporates the reduced update factor by the OPPS conversion factor that incorporates the full update factor for the applicable calendar year. This ratio is applied to the full national unadjusted payment amount for a service subject to the payment reduction in order to calculate the reduced payment amount. Similarly, this ratio is applied to the full national unadjusted copayment for an applicable service to calculate the reduced copayment that may be collected from the beneficiary by the hospital. The payment reduction factor will be included in the annual OPPS update change request and may also be found in the applicable OPPS final rule, which can be found at www.cms.hhs.gov/HospitalOutpatientPPS/ under “Hospital Outpatient Regulations and Notices”.