[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: 42CFR419.43]

[Page 798-799]
 
                         TITLE 42--PUBLIC HEALTH
 
                             HUMAN SERVICES
 
PART 419--PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT DEPARTMENT SERVICES--Table of Contents
 
                    Subpart D--Payments to Hospitals
 
Sec. 419.43  Adjustments to national program payment and beneficiary copayment amounts.

    (a) General rule. CMS determines national prospective payment rates 
for hospital outpatient department services and determines a wage 
adjustment factor to adjust the portion of the APC payment and national 
beneficiary copayment amount attributable to labor-related costs for 
relative differences in labor and labor-related costs across geographic 
regions in a budget neutral manner.

[[Page 799]]

    (b) Labor-related portion of payment and copayment rates for 
hospital outpatient services. CMS determines the portion of hospital 
outpatient costs attributable to labor and labor-related costs (known as 
the ``labor-related portion'' of hospital outpatient costs) in 
accordance with Sec. 419.31(c)(1).
    (c) Wage index factor. CMS uses the hospital inpatient prospective 
payment system wage index established in accordance with part 412 of 
this chapter to make the adjustment referred to in paragraph (a) of this 
section.
    (d) Outlier adjustment--(1) General rule. Subject to paragraph 
(d)(4) of this section, CMS provides for an additional payment for each 
hospital outpatient service (or group of services) for which a 
hospital's charges, adjusted to cost, exceed the following:
    (i) A fixed multiple of the sum of--
    (A) The applicable Medicare hospital outpatient payment amount 
determined under Sec. 419.32(c), as adjusted under Sec. 419.43 (other 
than for adjustments under this paragraph (d) or paragraph (e) of this 
section); and
    (B) Any transitional pass-through payment under paragraph (e) of 
this section.
    (ii) At the option of CMS, a fixed dollar amount.
    (2) Amount of adjustment. The amount of the additional payment under 
paragraph (d)(1) of this section is determined by CMS and approximates 
the marginal cost of care beyond the applicable cutoff point under 
paragraph (d)(1) of this section.
    (3) Limit on aggregate outlier adjustments--(i) In general. The 
total of the additional payments made under this paragraph (d) for 
covered hospital outpatient department services furnished in a year (as 
estimated by CMS before the beginning of the year) may not exceed the 
applicable percentage specified in paragraph (d)(3)(ii) of this section 
of the total program payments (sum of both the Medicare and beneficiary 
payments to the hospital) estimated to be made under this part for all 
hospital outpatient services furnished in that year. If this paragraph 
is first applied to less than a full year, the limit applies only to the 
portion of the year.
    (ii) Applicable percentage. For purposes of paragraph (d)(3)(i) of 
this section, the term ``applicable percentage'' means a percentage 
specified by CMS up to (but not to exceed)--
    (A) For a year (or portion of a year) before 2004, 2.5 percent; and
    (B) For 2004 and thereafter, 3.0 percent.
    (4) Transitional authority. In applying paragraph (d)(1) of this 
section for hospital outpatient services furnished before January 1, 
2002, CMS may--
    (i) Apply paragraph (d)(1) of this section to a bill for these 
services related to an outpatient encounter (rather than for a specific 
service or group of services) using hospital outpatient payment amounts 
and transitional pass-through payments covered under the bill; and
    (ii) Use an appropriate cost-to-charge ratio for the hospital or 
CMHC (as determined by CMS), rather than for specific departments within 
the hospital.
    (e) Budget neutrality. CMS establishes payment under paragraph (d) 
of this section in a budget-neutral manner.

[65 FR 18542, Apr. 7, 2000, as amended at 65 FR 47677, Aug. 3, 2000; 66 
FR 55856, Nov. 2, 2001]