[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: 42CFR419.32]

[Page 796-797]
 
                         TITLE 42--PUBLIC HEALTH
 
                             HUMAN SERVICES
 
PART 419--PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT DEPARTMENT SERVICES--Table of Contents
 
 Subpart C--Basic Methodology for Determining Prospective Payment Rates 
                    for Hospital Outpatient Services
 
Sec. 419.32  Calculation of prospective payment rates for hospital outpatient services.

    (a) Conversion factor for 1999. CMS calculates a conversion factor 
in such a manner that payment for hospital outpatient services furnished 
in 1999 would have equaled the base expenditure target calculated in 
Sec. 419.30, taking into account APC group weights and estimated service 
frequencies and reduced by the amounts that would be payable in 1999 as 
outlier payments under Sec. 419.43(d) and transitional pass-through 
payments under Sec. 419.43(e).
    (b) Conversion factor for calendar year 2000 and subsequent years. 
(1) Subject to paragraph (b)(2) of this section, the conversion factor 
for a calendar year is equal to the conversion factor calculated for the 
previous year adjusted as follows:
    (i) For calendar year 2000, by the hospital inpatient market basket 
percentage increase applicable under section 1886(b)(3)(B)(iii) of the 
Act reduced by one percentage point.
    (ii) For calendar year 2001--
    (A) For services furnished on or after January 1, 2001 and before 
April 1, 2001, by the hospital inpatient market basket percentage 
increase applicable under section 1886(b)(3)(B)(iii) of the Act reduced 
by one percentage point; and
    (B) For services furnished on or after April 1, 2001 and before 
January 1, 2002, by the hospital inpatient market basket percentage 
increase applicable under section 1886(b)(3)(B)(iii) of the Act, and 
increased by a transitional percentage allowance equal to 0.32 percent.
    (iii) For the portion of calendar year 2002 that is affected by 
these rules, by the hospital inpatient market basket percentage increase 
applicable under section 1886(b)(3)(B)(iii) of the Act reduced by one 
percentage point, without taking into account the transitional 
percentage allowance referenced in Sec. 419.32(b)(ii)(B).
    (iv) For calendar year 2003 and subsequent years, by the hospital 
inpatient market basket percentage increase applicable under section 
1886(b)(3)(B)(iii) of the Act.
    (2) Beginning in calendar year 2000, CMS may substitute for the 
hospital inpatient market basket percentage in paragraph (b) of this 
section a market basket percentage increase that is determined and 
applied to hospital outpatient services in the same manner that the 
hospital inpatient market basket percentage increase is determined and 
applied to inpatient hospital services.

[[Page 797]]

    (c) Payment rates. The payment rate for services and procedures for 
which payment is made under the hospital outpatient prospective payment 
system is the product of the conversion factor calculated under 
paragraph (a) or paragraph (b) of this section and the relative weight 
determined under Sec. 419.31(b).
    (d) Budget neutrality. CMS adjusts the conversion factor as needed 
to ensure that updates and adjustments under Sec. 419.50(a) are budget 
neutral.

[65 FR 18542, Apr. 7, 2000, as amended at 66 FR 59922, Nov. 30, 2001; 67 
FR 9568, Mar. 1, 2002]

    Effective Date Note: At 66 FR 59922, Nov. 30, 2001, Sec. 41932 was 
amended by revising paragraph (b)(1), effective Jan. 1, 2002. At 66 FR 
67494, Dec. 31, 2001, paragraph (b)(1)(iii) was delayed indefinitely.