[Code of Federal Regulations]
[Title 42, Volume 2]
[Revised as of October 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 42CFR419.2]

[Page 793-794]
 
                         TITLE 42--PUBLIC HEALTH
 
                             HUMAN SERVICES
 
PART 419--PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT DEPARTMENT SERVICES--Table of Contents
 
                      Subpart A--General Provisions
 
Sec. 419.2  Basis of payment.

    (a) Unit of payment. Under the hospital outpatient prospective 
payment system, predetermined amounts are paid for designated services 
furnished to Medicare beneficiaries. These services are identified by 
codes established under the Centers for Medicare & Medicaid Services 
Common Procedure Coding System (HCPCS). The prospective payment rate for 
each service or procedure for which payment is allowed under the 
hospital outpatient prospective payment system is determined according 
to the methodology described in subpart C of this part. The manner in 
which the Medicare payment amount and the beneficiary copayment amount 
for each service or procedure are determined is described in subpart D 
of this part.
    (b) Determination of hospital outpatient prospective payment rates: 
Included costs. The prospective payment system establishes a national 
payment rate, standardized for geographic wage differences, that 
includes operating and capital-related costs that are directly related 
and integral to performing a procedure or furnishing a service on an 
outpatient basis. In general, these costs include, but are not limited 
to--
    (1) Use of an operating suite, procedure room, or treatment room;
    (2) Use of recovery room;
    (3) Use of an observation bed;
    (4) Anesthesia, certain drugs, biologicals, and other 
pharmaceuticals; medical and surgical supplies and equipment; surgical 
dressings; and devices used for external reduction of fractures and 
dislocations;
    (5) Supplies and equipment for administering and monitoring 
anesthesia or sedation;
    (6) Intraocular lenses (IOLs);
    (7) Incidental services such as venipuncture;
    (8) Capital-related costs;
    (9) Implantable items used in connection with diagnostic X-ray 
tests, diagnostic laboratory tests, and other diagnostic tests;
    (10) Durable medical equipment that is implantable;
    (11) Implantable prosthetic devices (other than dental) which 
replace all or

[[Page 794]]

part of an internal body organ (including colostomy bags and supplies 
directly related to colostomy care), including replacement of these 
devices; and
    (12) Costs incurred to procure donor tissue other than corneal 
tissue.
    (c) Determination of hospital outpatient prospective payment rates: 
Excluded costs. The following costs are excluded from the hospital 
outpatient prospective payment system.
    (1) The costs of direct graduate medical education activities as 
described in Sec. 413.86 of this chapter.
    (2) The costs of nursing and allied health programs as described in 
Sec. 413.85 of this chapter.
    (3) The costs associated with interns and residents not in approved 
teaching programs as described in Sec. 415.202 of this chapter.
    (4) The costs of teaching physicians attributable to Part B services 
for hospitals that elect cost-based reimbursement for teaching 
physicians under Sec. 415.160.
    (5) The reasonable costs of anesthesia services furnished to 
hospital outpatients by qualified nonphysician anesthetists (certified 
registered nurse anesthetists and anesthesiologists' assistants) 
employed by the hospital or obtained under arrangements, for hospitals 
that meet the requirements under Sec. 412.113(c) of this chapter.
    (6) Bad debts for uncollectible deductibles and coinsurances as 
described in Sec. 413.80(b) of this chapter.
    (7) Organ acquisition costs paid under Part B.
    (8) Corneal tissue acquisition costs.

[65 FR 18542, Apr. 7, 2000, as amended at 66 FR 59922, Nov. 30, 2001]