Prospective payment system for hospital outpatient department services

(A) In general With respect to covered OPD services (as defined in subparagraph (B)) furnished during a year beginning with 1999, the amount of payment under this part shall be determined under a prospective payment system established by the Secretary in accordance with this subsection.

(B) Definition of covered OPD services For purposes of this subsection, the term “covered OPD services”— (i) means hospital outpatient services designated by the Secretary; (ii) subject to clause (iv), includes inpatient hospital services designated by the Secretary that are covered under this part and furnished to a hospital inpatient who (I) is entitled to benefits under part A but has exhausted benefits for inpatient hospital services during a spell of illness, or (II) is not so entitled; (iii) includes implantable items described in paragraph (3), (6), or (8) of section 1395x(s) of this title ; (iv) does not include any therapy services described in subsection (a)(8) or ambulance services, for which payment is made under a fee schedule described in section 1395m(k) of this title or section 1395m( l ) of this title and does not include screening mammography (as defined in section 1395x(jj) of this title ), diagnostic mammography, or personalized prevention plan services (as defined in section 1395x(hhh)(1) of this title ); and (v) does not include applicable items and services (as defined in subparagraph (A) of paragraph (21)) that are furnished on or after January 1, 2017 , by an off-campus outpatient department of a provider (as defined in subparagraph (B) of such paragraph).

Under the payment system—

(A) the Secretary shall develop a classification system for covered OPD services;

(B) the Secretary may establish groups of covered OPD services, within the classification system described in subparagraph (A), so that services classified within each group are comparable clinically and with respect to the use of resources and so that an implantable item is classified to the group that includes the service to which the item relates;

(C) the Secretary shall, using data on claims from 1996 and using data from the most recent available cost reports, establish relative payment weights for covered OPD services (and any groups of such services described in subparagraph (B)) based on median (or, at the election of the Secretary, mean) hospital costs and shall determine projections of the frequency of utilization of each such service (or group of services) in 1999;

(D) subject to paragraph (19), the Secretary shall determine a wage adjustment factor to adjust the portion of payment and coinsurance attributable to labor-related costs for relative differences in labor and labor-related costs across geographic regions in a budget neutral manner;

(E) the Secretary shall establish, in a budget neutral manner, outlier adjustments under paragraph (5) and transitional pass-through payments under paragraph (6) and temporary additional payments for non-opioid treatments for pain relief under paragraph (16)(G), and other adjustments as determined to be necessary to ensure equitable payments, such as adjustments for certain classes of hospitals;

(F) the Secretary shall develop a method for controlling unnecessary increases in the volume of covered OPD services;

(G) the Secretary shall create additional groups of covered OPD services that classify separately those procedures that utilize contrast agents from those that do not; and

(H) with respect to devices of brachytherapy consisting of a seed or seeds (or radioactive source), the Secretary shall create additional groups of covered OPD services that classify such devices separately from the other services (or group of services) paid for under this subsection in a manner reflecting the number, isotope, and radioactive intensity of such devices furnished, including separate groups for palladium-103 and iodine-125 devices and for stranded and non-stranded devices furnished on or after July 1, 2007 .

For purposes of subparagraph (B), items and services within a group shall not be treated as “comparable with respect to the use of resources” if the highest median cost (or mean cost, if elected by the Secretary under subparagraph (C)) for an item or service within the group is more than 2 times greater than the lowest median cost (or mean cost, if so elected) for an item or service within the group; except that the Secretary may make exceptions in unusual cases, such as low volume items and services, but may not make such an exception in the case of a drug or biological that has been designated as an orphan drug under section 360bb of title 21 .

(A) Aggregate amounts that would be payable if deductibles were disregarded The Secretary shall estimate the sum of— (i) the total amounts that would be payable from the Trust Fund under this part for covered OPD services in 1999, determined without regard to this subsection, as though the deductible under subsection (b) did not apply, and (ii) the total amounts of copayments estimated to be paid under this subsection by beneficiaries to hospitals for covered OPD services in 1999, as though the deductible under subsection (b) did not apply.

(B) Unadjusted copayment amount (i) In general For purposes of this subsection, subject to clause (ii), the “unadjusted copayment amount” applicable to a covered OPD service (or group of such services) is 20 percent of the national median of the charges for the service (or services within the group) furnished during 1996, updated to 1999 using the Secretary’s estimate of charge growth during the period. (ii) Adjusted to be 20 percent when fully phased in If the pre-deductible payment percentage for a covered OPD service (or group of such services) furnished in a year would be equal to or exceed 80 percent, then the unadjusted copayment amount shall be 20 percent of amount determined under subparagraph (D). (iii) Rules for new services The Secretary shall establish rules for establishment of an unadjusted copayment amount for a covered OPD service not furnished during 1996, based upon its classification within a group of such services.

(C) Calculation of conversion factors (i) For 1999 (I) In general The Secretary shall establish a 1999 conversion factor for determining the medicare OPD fee schedule amounts for each covered OPD service (or group of such services) furnished in 1999. Such conversion factor shall be established on the basis of the weights and frequencies described in paragraph (2)(C) and in such a manner that the sum for all services and groups of the products (described in subclause (II) for each such service or group) equals the total projected amount described in subparagraph (A). (II) Product described The Secretary shall determine for each service or group the product of the medicare OPD fee schedule amounts (taking into account appropriate adjustments described in paragraphs (2)(D) and (2)(E)) and the estimated frequencies for such service or group. (ii) Subsequent years Subject to paragraph (8)(B), the Secretary shall establish a conversion factor for covered OPD services furnished in subsequent years in an amount equal to the conversion factor established under this subparagraph and applicable to such services furnished in the previous year increased by the OPD fee schedule increase factor specified under clause (iv) for the year involved. (iii) Adjustment for service mix changes Insofar as the Secretary determines that the adjustments for service mix under paragraph (2) for a previous year (or estimates that such adjustments for a future year) did (or are likely to) result in a change in aggregate payments under this subsection during the year that are a result of changes in the coding or classification of covered OPD services that do not reflect real changes in service mix, the Secretary may adjust the conversion factor computed under this subparagraph for subsequent years so as to eliminate the effect of such coding or classification changes. (iv) OPD fee schedule increase factor For purposes of this subparagraph, subject to paragraph (17) and subparagraph (F) of this paragraph, the “OPD fee schedule increase factor” for services furnished in a year is equal to the market basket percentage increase applicable under section 1395ww(b)(3)(B)(iii) of this title to hospital discharges occurring during the fiscal year ending in such year, reduced by 1 percentage point for such factor for services furnished in each of 2000 and 2002. In applying the previous sentence for years beginning with 2000, the Secretary may substitute for the market basket percentage increase an annual percentage increase that is computed and applied with respect to covered OPD services furnished in a year in the same manner as the market basket percentage increase is determined and applied to inpatient hospital services for discharges occurring in a fiscal year.

(D) Calculation of medicare OPD fee schedule amounts The Secretary shall compute a medicare OPD fee schedule amount for each covered OPD service (or group of such services) furnished in a year, in an amount equal to the product of— (i) the conversion factor computed under subparagraph (C) for the year, and (ii) the relative payment weight (determined under paragraph (2)(C)) for the service or group.

(E) Pre-deductible payment percentage The pre-deductible payment percentage for a covered OPD service (or group of such services) furnished in a year is equal to the ratio of— (i) the medicare OPD fee schedule amount established under subparagraph (D) for the year, minus the unadjusted copayment amount determined under subparagraph (B) for the service or group, to (ii) the medicare OPD fee schedule amount determined under subparagraph (D) for the year for such service or group.

(F) Productivity and other adjustment After determining the OPD fee schedule increase factor under subparagraph (C)(iv), the Secretary shall reduce such increase factor— (i) for 2012 and subsequent years, by the productivity adjustment described in section 1395ww(b)(3)(B)(xi)(II) of this title ; and (ii) for each of 2010 through 2019, by the adjustment described in subparagraph (G). The application of this subparagraph may result in the increase factor under subparagraph (C)(iv) being less than 0.0 for a year, and may result in payment rates under the payment system under this subsection for a year being less than such payment rates for the preceding year.

(G) Other adjustment For purposes of subparagraph (F)(ii), the adjustment described in this subparagraph is— (i) for each of 2010 and 2011, 0.25 percentage point; (ii) for each of 2012 and 2013, 0.1 percentage point; (iii) for 2014, 0.3 percentage point; (iv) for each of 2015 and 2016, 0.2 percentage point; and (v) for each of 2017, 2018, and 2019, 0.75 percentage point.

The amount of payment made from the Trust Fund under this part for a covered OPD service (and such services classified within a group) furnished in a year is determined, subject to paragraph (7), as follows:

(A) Fee schedule adjustments The medicare OPD fee schedule amount (computed under paragraph (3)(D)) for the service or group and year is adjusted for relative differences in the cost of labor and other factors determined by the Secretary, as computed under paragraphs (2)(D) and (2)(E).

(B) Subtract applicable deductible Reduce the adjusted amount determined under subparagraph (A) by the amount of the deductible under subsection (b), to the extent applicable.

(C) Apply payment proportion to remainder The amount of payment is the amount so determined under subparagraph (B) multiplied by the pre-deductible payment percentage (as determined under paragraph (3)(E)) for the service or group and year involved, plus the amount of any reduction in the copayment amount attributable to paragraph (8)(C).

(A) In general Subject to subparagraph (D), the Secretary shall provide for an additional payment for each covered OPD service (or group of services) for which a hospital’s charges, adjusted to cost, exceed— (i) a fixed multiple of the sum of— (I) the applicable medicare OPD fee schedule amount determined under paragraph (3)(D), as adjusted under paragraph (4)(A) (other than for adjustments under this paragraph or paragraph (6)); and (II) any transitional pass-through payment under paragraph (6); and (ii) at the option of the Secretary, such fixed dollar amount as the Secretary may establish.

(B) Amount of adjustment The amount of the additional payment under subparagraph (A) shall be determined by the Secretary and shall approximate the marginal cost of care beyond the applicable cutoff point under such subparagraph.

(C) Limit on aggregate outlier adjustments (i) In general The total of the additional payments made under this paragraph for covered OPD services furnished in a year (as estimated by the Secretary before the beginning of the year) may not exceed the applicable percentage (specified in clause (ii)) of the total program payments estimated to be made under this subsection for all covered OPD services furnished in that year. If this paragraph is first applied to less than a full year, the previous sentence shall apply only to the portion of such year. (ii) Applicable percentage For purposes of clause (i), the term “applicable percentage” means a percentage specified by the Secretary up to (but not to exceed)— (I) for a year (or portion of a year) before 2004, 2.5 percent; and (II) for 2004 and thereafter, 3.0 percent.

(D) Transitional authority In applying subparagraph (A) for covered OPD services furnished before January 1, 2002 , the Secretary may— (i) apply such subparagraph to a bill for such services related to an outpatient encounter (rather than for a specific service or group of services) using OPD fee schedule amounts and transitional pass-through payments covered under the bill; and (ii) use an appropriate cost-to-charge ratio for the hospital involved (as determined by the Secretary), rather than for specific departments within the hospital.

(E) Exclusion of separate drug and biological APCS from outlier payments No additional payment shall be made under subparagraph (A) in the case of ambulatory payment classification groups established separately for drugs or biologicals.

(A) In general The Secretary shall provide for an additional payment under this paragraph for any of the following that are provided as part of a covered OPD service (or group of services): (i) Current orphan drugs A drug or biological that is used for a rare disease or condition with respect to which the drug or biological has been designated as an orphan drug under section 360bb of title 21 if payment for the drug or biological as an outpatient hospital service under this part was being made on the first date that the system under this subsection is implemented. (ii) Current cancer therapy drugs and biologicals and brachytherapy A drug or biological that is used in cancer therapy, including (but not limited to) a chemotherapeutic agent, an antiemetic, a hematopoietic growth factor, a colony stimulating factor, a biological response modifier, a bisphosphonate, and a device of brachytherapy or temperature monitored cryoablation, if payment for such drug, biological, or device as an outpatient hospital service under this part was being made on such first date. (iii) Current radiopharmaceutical drugs and biological products A radiopharmaceutical drug or biological product used in diagnostic, monitoring, and therapeutic nuclear medicine procedures if payment for the drug or biological as an outpatient hospital service under this part was being made on such first date. (iv) New medical devices, drugs, and biologicals A medical device, drug, or biological not described in clause (i), (ii), or (iii) if— (I) payment for the device, drug, or biological as an outpatient hospital service under this part was not being made as of December 31, 1996 ; and (II) the cost of the drug or biological or the average cost of the category of devices is not insignificant in relation to the OPD fee schedule amount (as calculated under paragraph (3)(D)) payable for the service (or group of services) involved.

(B) Use of categories in determining eligibility of a device for pass-through payments The following provisions apply for purposes of determining whether a medical device qualifies for additional payments under clause (ii) or (iv) of subparagraph (A): (i) Establishment of initial categories (I) In general The Secretary shall initially establish under this clause categories of medical devices based on type of device by April 1, 2001 . Such categories shall be established in a manner such that each medical device that meets the requirements of clause (ii) or (iv) of subparagraph (A) as of January 1, 2001 , is included in such a category and no such device is included in more than one category. For purposes of the preceding sentence, whether a medical device meets such requirements as of such date shall be determined on the basis of the program memoranda issued before such date. (II) Authorization of implementation other than through regulations The categories may be established under this clause by program memorandum or otherwise, after consultation with groups representing hospitals, manufacturers of medical devices, and other affected parties. (ii) Establishing criteria for additional categories (I) In general The Secretary shall establish criteria that will be used for creation of additional categories (other than those established under clause (i)) through rulemaking (which may include use of an interim final rule with comment period). (II) Standard Such categories shall be established under this clause in a manner such that no medical device is described by more than one category. Such criteria shall include a test of whether the average cost of devices that would be included in a category and are in use at the time the category is established is not insignificant, as described in subparagraph (A)(iv)(II). (III) Deadline Criteria shall first be established under this clause by July 1, 2001 . The Secretary may establish in compelling circumstances categories under this clause before the date such criteria are established. (IV) Adding categories The Secretary shall promptly establish a new category of medical devices under this clause for any medical device that meets the requirements of subparagraph (A)(iv) and for which none of the categories in effect (or that were previously in effect) is appropriate. (iii) Period for which category is in effect Subject to subparagraph (K), a category of medical devices established under clause (i) or (ii) shall be in effect for a period of at least 2 years, but not more than 3 years, that begins— (I) in the case of a category established under clause (i), on the first date on which payment was made under this paragraph for any device described by such category (including payments made during the period before April 1, 2001 ); and (II) in the case of any other category, on the first date on which payment is made under this paragraph for any medical device that is described by such category. (iv) Requirements treated as met A medical device shall be treated as meeting the requirements of subparagraph (A)(iv), regardless of whether the device meets the requirement of subclause (I) of such subparagraph, if— (I) the device is described by a category established and in effect under clause (i); or (II) the device is described by a category established and in effect under clause (ii) and an application under section 360e of title 21 has been approved with respect to the device, or the device has been cleared for market under section 360(k) of title 21 , or the device is exempt from the requirements of section 360(k) of title 21 pursuant to subsection ( l ) or (m) of section 360 of title 21 or section 360j(g) of title 21 . Nothing in this clause shall be construed as requiring an application or prior approval (other than that described in subclause (II)) in order for a covered device described by a category to qualify for payment under this paragraph.

(C) Limited period of payment (i) Drugs and biologicals Subject to subparagraph (G), the payment under this paragraph with respect to a drug or biological shall only apply during a period of at least 2 years, but not more than 3 years, that begins— (I) on the first date this subsection is implemented in the case of a drug or biological described in clause (i), (ii), or (iii) of subparagraph (A) and in the case of a drug or biological described in subparagraph (A)(iv) and for which payment under this part is made as an outpatient hospital service before such first date; or (II) in the case of a drug or biological described in subparagraph (A)(iv) not described in subclause (I), on the first date on which payment is made under this part for the drug or biological as an outpatient hospital service. (ii) Medical devices Payment shall be made under this paragraph with respect to a medical device only if such device— (I) is described by a category of medical devices established and in effect under subparagraph (B); and (II) is provided as part of a service (or group of services) paid for under this subsection and provided during the period for which such category is in effect under such subparagraph.

(D) Amount of additional payment Subject to subparagraph (E)(iii), the amount of the payment under this paragraph with respect to a device, drug, or biological provided as part of a covered OPD service is— (i) subject to subparagraph (H), in the case of a drug or biological, the amount by which the amount determined under section 1395u( o ) of this title (or if the drug or biological is covered under a competitive acquisition contract under section 1395w–3b of this title , an amount determined by the Secretary equal to the average price for the drug or biological for all competitive acquisition areas and year established under such section as calculated and adjusted by the Secretary for purposes of this paragraph) for the drug or biological exceeds the portion of the otherwise applicable medicare OPD fee schedule that the Secretary determines is associated with the drug or biological; or (ii) in the case of a medical device, the amount by which the hospital’s charges for the device, adjusted to cost, exceeds the portion of the otherwise applicable medicare OPD fee schedule that the Secretary determines is associated with the device.

(E) Limit on aggregate annual adjustment (i) In general The total of the additional payments made under this paragraph for covered OPD services furnished in a year (as estimated by the Secretary before the beginning of the year) may not exceed the applicable percentage (specified in clause (ii)) of the total program payments estimated to be made under this subsection for all covered OPD services furnished in that year. If this paragraph is first applied to less than a full year, the previous sentence shall apply only to the portion of such year. This clause shall not apply for 2018 or 2020. (ii) Applicable percentage For purposes of clause (i), the term “applicable percentage” means— (I) for a year (or portion of a year) before 2004, 2.5 percent; and (II) for 2004 and thereafter, a percentage specified by the Secretary up to (but not to exceed) 2.0 percent. (iii) Uniform prospective reduction if aggregate limit projected to be exceeded If the Secretary estimates before the beginning of a year that the amount of the additional payments under this paragraph for the year (or portion thereof) as determined under clause (i) without regard to this clause will exceed the limit established under such clause, the Secretary shall reduce pro rata the amount of each of the additional payments under this paragraph for that year (or portion thereof) in order to ensure that the aggregate additional payments under this paragraph (as so estimated) do not exceed such limit.

(F) Limitation of application of functional equivalence standard (i) In general The Secretary may not publish regulations that apply a functional equivalence standard to a drug or biological under this paragraph. (ii) Application Clause (i) shall apply to the application of a functional equivalence standard to a drug or biological on or after December 8, 2003 , unless— (I) such application was being made to such drug or biological prior to December 8, 2003 ; and (II) the Secretary applies such standard to such drug or biological only for the purpose of determining eligibility of such drug or biological for additional payments under this paragraph and not for the purpose of any other payments under this subchapter. (iii) Rule of construction Nothing in this subparagraph shall be construed to effect the Secretary’s authority to deem a particular drug to be identical to another drug if the 2 products are pharmaceutically equivalent and bioequivalent, as determined by the Commissioner of Food and Drugs.

(G) Pass-through extension for certain drugs and biologicals In the case of a drug or biological whose period of pass-through status under this paragraph ended on December 31, 2017 , and for which payment under this subsection was packaged into a payment for a covered OPD service (or group of services) furnished beginning January 1, 2018 , such pass-through status shall be extended for a 2-year period beginning on October 1, 2018 .

(H) Temporary payment rule for certain drugs and biologicals In the case of a drug or biological whose period of pass-through status under this paragraph ended on December 31, 2017 , and for which payment under this subsection was packaged into a payment for a covered OPD service (or group of services) furnished beginning January 1, 2018 , the payment amount for such drug or biological under this subsection that is furnished during the period beginning on October 1, 2018 , and ending on March 31, 2019 , shall be the greater of— (i) the payment amount that would otherwise apply under subparagraph (D)(i) for such drug or biological during such period; or (ii) the payment amount that applied under such subparagraph (D)(i) for such drug or biological on December 31, 2017 .

(I) Special payment adjustment rules for last quarter of 2018 In the case of a drug or biological whose period of pass-through status under this paragraph ended on December 31, 2017 , and for which payment under this subsection was packaged into a payment amount for a covered OPD service (or group of services) beginning January 1, 2018 , the following rules shall apply with respect to payment amounts under this subsection for covered a OPD 15 15 So in original. Probably should be “a covered OPD”. service (or group of services) furnished during the period beginning on October 1, 2018 , and ending on December 31, 2018 : (i) The Secretary shall remove the packaged costs of such drug or biological (as determined by the Secretary) from the payment amount under this subsection for the covered OPD service (or group of services) with which it is packaged. (ii) The Secretary shall not make any adjustments to payment amounts under this subsection for a covered OPD service (or group of services) for which no costs were removed under clause (i).

(J) Additional pass-through extension and special payment adjustment rule for certain diagnostic radiopharmaceuticals In the case of a drug or biological furnished in the context of a clinical study on diagnostic imaging tests approved under a coverage with evidence development determination whose period of pass-through status under this paragraph concluded on December 31, 2018 , and for which payment under this subsection was packaged into a payment for a covered OPD service (or group of services) furnished beginning January 1, 2019 , the Secretary shall— (i) extend such pass-through status for such drug or biological for the 9-month period beginning on January 1, 2020 ; (ii) remove, during such period, the packaged costs of such drug or biological (as determined by the Secretary) from the payment amount under this subsection for the covered OPD service (or group of services) with which it is packaged; and (iii) not make any adjustments to payment amounts under this subsection for a covered OPD service (or group of services) for which no costs were removed under clause (ii).

(K) Pass-through extension for certain devices (i) In general In the case of a device whose period of pass-through status under this paragraph will end on December 31, 2022 , such pass-through status shall be extended for a 1–year period beginning on January 1, 2023 . (ii) No adjustment for packaged costs For purposes of the 1–year period described in clause (i), the Secretary shall not remove the packaged costs of such device (as determined by the Secretary) from the payment amount under this subsection for a covered OPD service (or group of services) with which it is packaged. (iii) No application of aggregate limit or budget neutrality Notwithstanding any other provision of this subsection, this subparagraph shall not be taken into account— (I) in applying the limit on annual aggregate adjustments under subparagraph (E) for 2023; or (II) in making any budget neutrality adjustments under this subsection for 2023.

(A) Before 2002 Subject to subparagraph (D), for covered OPD services furnished before January 1, 2002 , for which the PPS amount (as defined in subparagraph (E)) is— (i) at least 90 percent, but less than 100 percent, of the pre-BBA amount (as defined in subparagraph (F)), the amount of payment under this subsection shall be increased by 80 percent of the amount of such difference; (ii) at least 80 percent, but less than 90 percent, of the pre-BBA amount, the amount of payment under this subsection shall be increased by the amount by which (I) the product of 0.71 and the pre-BBA amount, exceeds (II) the product of 0.70 and the PPS amount; (iii) at least 70 percent, but less than 80 percent, of the pre-BBA amount, the amount of payment under this subsection shall be increased by the amount by which (I) the product of 0.63 and the pre-BBA amount, exceeds (II) the product of 0.60 and the PPS amount; or (iv) less than 70 percent of the pre-BBA amount, the amount of payment under this subsection shall be increased by 21 percent of the pre-BBA amount.

(B) 2002 Subject to subparagraph (D), for covered OPD services furnished during 2002, for which the PPS amount is— (i) at least 90 percent, but less than 100 percent, of the pre-BBA amount, the amount of payment under this subsection shall be increased by 70 percent of the amount of such difference; (ii) at least 80 percent, but less than 90 percent, of the pre-BBA amount, the amount of payment under this subsection shall be increased by the amount by which (I) the product of 0.61 and the pre-BBA amount, exceeds (II) the product of 0.60 and the PPS amount; or (iii) less than 80 percent of the pre-BBA amount, the amount of payment under this subsection shall be increased by 13 percent of the pre-BBA amount.

(C) 2003 Subject to subparagraph (D), for covered OPD services furnished during 2003, for which the PPS amount is— (i) at least 90 percent, but less than 100 percent, of the pre-BBA amount, the amount of payment under this subsection shall be increased by 60 percent of the amount of such difference; or (ii) less than 90 percent of the pre-BBA amount, the amount of payment under this subsection shall be increased by 6 percent of the pre-BBA amount.

(D) Hold harmless provisions (i) Temporary treatment for certain rural hospitals (I) In the case of a hospital located in a rural area and that has not more than 100 beds or a sole community hospital (as defined in section 1395ww(d)(5)(D)(iii) of this title ) located in a rural area, for covered OPD services furnished before January 1, 2006 , for which the PPS amount is less than the pre-BBA amount, the amount of payment under this subsection shall be increased by the amount of such difference. (II) In the case of a hospital located in a rural area and that has not more than 100 beds and that is not a sole community hospital (as defined in section 1395ww(d)(5)(D)(iii) of this title ), for covered OPD services furnished on or after January 1, 2006 , and before January 1, 2013 , for which the PPS amount is less than the pre-BBA amount, the amount of payment under this subsection shall be increased by the applicable percentage of the amount of such difference. For purposes of the preceding sentence, the applicable percentage shall be 95 percent with respect to covered OPD services furnished in 2006, 90 percent with respect to such services furnished in 2007, and 85 percent with respect to such services furnished in 2008, 2009, 2010, 2011, or 2012. (III) In the case of a sole community hospital (as defined in section 1395ww(d)(5)(D)(iii) of this title ) that has not more than 100 beds, for covered OPD services furnished on or after January 1, 2009 , and before January 1, 2013 , for which the PPS amount is less than the pre-BBA amount, the amount of payment under this subsection shall be increased by 85 percent of the amount of such difference. In the case of covered OPD services furnished on or after January 1, 2010 , and before March 1, 2012 , the preceding sentence shall be applied without regard to the 100-bed limitation. (ii) Permanent treatment for cancer hospitals and children’s hospitals In the case of a hospital described in clause (iii) or (v) of section 1395ww(d)(1)(B) of this title , for covered OPD services for which the PPS amount is less than the pre-BBA amount, the amount of payment under this subsection shall be increased by the amount of such difference.

(E) PPS amount defined In this paragraph, the term “PPS amount” means, with respect to covered OPD services, the amount payable under this subchapter for such services (determined without regard to this paragraph), including amounts payable as copayment under paragraph (8), coinsurance under section 1395cc(a)(2)(A)(ii) of this title , and the deductible under subsection (b).

(F) Pre-BBA amount defined (i) In general In this paragraph, the “pre-BBA amount” means, with respect to covered OPD services furnished by a hospital in a year, an amount equal to the product of the reasonable cost of the hospital for such services for the portions of the hospital’s cost reporting period (or periods) occurring in the year and the base OPD payment-to-cost ratio for the hospital (as defined in clause (ii)). (ii) Base payment-to-cost ratio defined For purposes of this subparagraph, the “base payment-to-cost ratio” for a hospital means the ratio of— (I) the hospital’s reimbursement under this part for covered OPD services furnished during the cost reporting period ending in 1996 (or in the case of a hospital that did not submit a cost report for such period, during the first subsequent cost reporting period ending before 2001 for which the hospital submitted a cost report), including any reimbursement for such services through cost-sharing described in subparagraph (E), to (II) the reasonable cost of such services for such period. The Secretary shall determine such ratios as if the amendments made by section 4521 of the Balanced Budget Act of 1997 were in effect in 1996.

(G) Interim payments The Secretary shall make payments under this paragraph to hospitals on an interim basis, subject to retrospective adjustments based on settled cost reports.

(H) No effect on copayments Nothing in this paragraph shall be construed to affect the unadjusted copayment amount described in paragraph (3)(B) or the copayment amount under paragraph (8).

(I) Application without regard to budget neutrality The additional payments made under this paragraph— (i) shall not be considered an adjustment under paragraph (2)(E); and (ii) shall not be implemented in a budget neutral manner.

(A) In general Except as provided in subparagraphs (B) and (C), the copayment amount under this subsection is the amount by which the amount described in paragraph (4)(B) exceeds the amount of payment determined under paragraph (4)(C).

(B) Election to offer reduced copayment amount The Secretary shall establish a procedure under which a hospital, before the beginning of a year (beginning with 1999), may elect to reduce the copayment amount otherwise established under subparagraph (A) for some or all covered OPD services to an amount that is not less than 20 percent of the medicare OPD fee schedule amount (computed under paragraph (3)(D)) for the service involved. Under such procedures, such reduced copayment amount may not be further reduced or increased during the year involved and the hospital may disseminate information on the reduction of copayment amount effected under this subparagraph.

(C) Limitation on copayment amount (i) To inpatient hospital deductible amount In no case shall the copayment amount for a procedure performed in a year exceed the amount of the inpatient hospital deductible established under section 1395e(b) of this title for that year. (ii) To specified percentage The Secretary shall reduce the national unadjusted copayment amount for a covered OPD service (or group of such services) furnished in a year in a manner so that the effective copayment rate (determined on a national unadjusted basis) for that service in the year does not exceed the following percentage: (I) For procedures performed in 2001, on or after April 1, 2001 , 57 percent. (II) For procedures performed in 2002 or 2003, 55 percent. (III) For procedures performed in 2004, 50 percent. (IV) For procedures performed in 2005, 45 percent. (V) For procedures performed in 2006 and thereafter, 40 percent.

(D) No impact on deductibles Nothing in this paragraph shall be construed as affecting a hospital’s authority to waive the charging of a deductible under subsection (b).

(E) Computation ignoring outlier and pass-through adjustments The copayment amount shall be computed under subparagraph (A) as if the adjustments under paragraphs (5) and (6) (and any adjustment made under paragraph (2)(E) in relation to such adjustments) had not occurred.

(F) Part B rebatable drugs In the case of a part B rebatable drug (as defined in paragraph (2) of section 1395w–3a(i) of this title , except if such drug does not have a copayment amount as a result of application of subparagraph (E)) for which payment under this part is not packaged into a payment for a covered OPD service (or group of services) furnished on or after April 1, 2023 , and the payment for such drug under this subsection is the same as the amount for a calendar quarter under paragraph (3)(A)(ii)(I) of section 1395w–3a(i) of this title , under the system under this subsection, in lieu of calculation of the copayment amount and the amount of payment otherwise applicable under this subsection (other than the application of the limitation described in subparagraph (C)), the provisions of section 1395w–3a(i)(5) of this title and paragraph (1)(EE) of subsection (a), shall, as determined appropriate by the Secretary, apply under this subsection in the same manner as such provisions of section 1395w–3a(i)(5) of this title and subsection (a) apply under such section and subsection.

(A) Periodic review The Secretary shall review not less often than annually and revise the groups, the relative payment weights, and the wage and other adjustments described in paragraph (2) to take into account changes in medical practice, changes in technology, the addition of new services, new cost data, and other relevant information and factors. The Secretary shall consult with an expert outside advisory panel composed of an appropriate selection of representatives of providers to review (and advise the Secretary concerning) the clinical integrity of the groups and weights. Such panel may use data collected or developed by entities and organizations (other than the Department of Health and Human Services) in conducting such review.

(B) Budget neutrality adjustment If the Secretary makes adjustments under subparagraph (A), then the adjustments for a year may not cause the estimated amount of expenditures under this part for the year to increase or decrease from the estimated amount of expenditures under this part that would have been made if the adjustments had not been made. In determining adjustments under the preceding sentence for 2004 and 2005, the Secretary shall not take into account under this subparagraph or paragraph (2)(E) any expenditures that would not have been made but for the application of paragraph (14).

(C) Update factor If the Secretary determines under methodologies described in paragraph (2)(F) that the volume of services paid for under this subsection increased beyond amounts established through those methodologies, the Secretary may appropriately adjust the update to the conversion factor otherwise applicable in a subsequent year.

The Secretary shall pay for hospital outpatient services that are ambulance services on the basis described in section 1395x(v)(1)(U) of this title , or, if applicable, the fee schedule established under section 1395m( l ) of this title.

In the case of hospitals described in clause (iii) or (v) of section 1395ww(d)(1)(B) of this title —

(A) the system under this subsection shall not apply to covered OPD services furnished before January 1, 2000 ; and

(B) the Secretary may establish a separate conversion factor for such services in a manner that specifically takes into account the unique costs incurred by such hospitals by virtue of their patient population and service intensity.

There shall be no administrative or judicial review under section 1395ff of this title , 1395 oo of this title, or otherwise of—

(A) the development of the classification system under paragraph (2), including the establishment of groups and relative payment weights for covered OPD services, of wage adjustment factors, other adjustments, and methods described in paragraph (2)(F);

(B) the calculation of base amounts under paragraph (3);

(C) periodic adjustments made under paragraph (6);

(D) the establishment of a separate conversion factor under paragraph (8)(B); and

(E) the determination of the fixed multiple, or a fixed dollar cutoff amount, the marginal cost of care, or applicable percentage under paragraph (5) or the determination of insignificance of cost, the duration of the additional payments, the determination and deletion of initial and new categories (consistent with subparagraphs (B) and (C) of paragraph (6)), the portion of the medicare OPD fee schedule amount associated with particular devices, drugs, or biologicals, and the application of any pro rata reduction under paragraph (6).

(A) Study The Secretary shall conduct a study to determine if, under the system under this subsection, costs incurred by hospitals located in rural areas by ambulatory payment classification groups (APCs) exceed those costs incurred by hospitals located in urban areas.

(B) Authorization of adjustment Insofar as the Secretary determines under subparagraph (A) that costs incurred by hospitals located in rural areas exceed those costs incurred by hospitals located in urban areas, the Secretary shall provide for an appropriate adjustment under paragraph (2)(E) to reflect those higher costs by January 1, 2006 .

(A) In general The amount of payment under this subsection for a specified covered outpatient drug (defined in subparagraph (B)) that is furnished as part of a covered OPD service (or group of services)— (i) in 2004, in the case of— (I) a sole source drug shall in no case be less than 88 percent, or exceed 95 percent, of the reference average wholesale price for the drug; (II) an innovator multiple source drug shall in no case exceed 68 percent of the reference average wholesale price for the drug; or (III) a noninnovator multiple source drug shall in no case exceed 46 percent of the reference average wholesale price for the drug; (ii) in 2005, in the case of— (I) a sole source drug shall in no case be less than 83 percent, or exceed 95 percent, of the reference average wholesale price for the drug; (II) an innovator multiple source drug shall in no case exceed 68 percent of the reference average wholesale price for the drug; or (III) a noninnovator multiple source drug shall in no case exceed 46 percent of the reference average wholesale price for the drug; or (iii) in a subsequent year, shall be equal, subject to subparagraph (E)— (I) to the average acquisition cost for the drug for that year (which, at the option of the Secretary, may vary by hospital group (as defined by the Secretary based on volume of covered OPD services or other relevant characteristics)), as determined by the Secretary taking into account the hospital acquisition cost survey data under subparagraph (D); or (II) if hospital acquisition cost data are not available, the average price for the drug in the year established under section 1395u( o ) of this title, section 1395w–3a of this title , or section 1395w–3b of this title , as the case may be, as calculated and adjusted by the Secretary as necessary for purposes of this paragraph.

(B) Specified covered outpatient drug defined (i) In general In this paragraph, the term “specified covered outpatient drug” means, subject to clause (ii), a covered outpatient drug (as defined in section 1396r–8(k)(2) of this title ) for which a separate ambulatory payment classification group (APC) has been established and that is— (I) a radiopharmaceutical; or (II) a drug or biological for which payment was made under paragraph (6) (relating to pass-through payments) on or before December 31, 2002 . (ii) Exception Such term does not include— (I) a drug or biological for which payment is first made on or after January 1, 2003 , under paragraph (6); (II) a drug or biological for which a temporary HCPCS code has not been assigned; or (III) during 2004 and 2005, an orphan drug (as designated by the Secretary).

(C) Payment for designated orphan drugs during 2004 and 2005 The amount of payment under this subsection for an orphan drug designated by the Secretary under subparagraph (B)(ii)(III) that is furnished as part of a covered OPD service (or group of services) during 2004 and 2005 shall equal such amount as the Secretary may specify.

(D) Acquisition cost survey for hospital outpatient drugs (i) Annual GAO surveys in 2004 and 2005 (I) In general The Comptroller General of the United States shall conduct a survey in each of 2004 and 2005 to determine the hospital acquisition cost for each specified covered outpatient drug. Not later than April 1, 2005 , the Comptroller General shall furnish data from such surveys to the Secretary for use in setting the payment rates under subparagraph (A) for 2006. (II) Recommendations Upon the completion of such surveys, the Comptroller General shall recommend to the Secretary the frequency and methodology of subsequent surveys to be conducted by the Secretary under clause (ii). (ii) Subsequent secretarial surveys The Secretary, taking into account such recommendations, shall conduct periodic subsequent surveys to determine the hospital acquisition cost for each specified covered outpatient drug for use in setting the payment rates under subparagraph (A). (iii) Survey requirements The surveys conducted under clauses (i) and (ii) shall have a large sample of hospitals that is sufficient to generate a statistically significant estimate of the average hospital acquisition cost for each specified covered outpatient drug. With respect to the surveys conducted under clause (i), the Comptroller General shall report to Congress on the justification for the size of the sample used in order to assure the validity of such estimates. (iv) Differentiation in cost In conducting surveys under clause (i), the Comptroller General shall determine and report to Congress if there is (and the extent of any) variation in hospital acquisition costs for drugs among hospitals based on the volume of covered OPD services performed by such hospitals or other relevant characteristics of such hospitals (as defined by the Comptroller General). (v) Comment on proposed rates Not later than 30 days after the date the Secretary promulgated proposed rules setting forth the payment rates under subparagraph (A) for 2006, the Comptroller General shall evaluate such proposed rates and submit to Congress a report regarding the appropriateness of such rates based on the surveys the Comptroller General has conducted under clause (i).

(E) Adjustment in payment rates for overhead costs (i) MedPAC report on drug APC design The Medicare Payment Advisory Commission shall submit to the Secretary, not later than July 1, 2005 , a report on adjustment of payment for ambulatory payment classifications for specified covered outpatient drugs to take into account overhead and related expenses, such as pharmacy services and handling costs. Such report shall include— (I) a description and analysis of the data available with regard to such expenses; (II) a recommendation as to whether such a payment adjustment should be made; and (III) if such adjustment should be made, a recommendation regarding the methodology for making such an adjustment. (ii) Adjustment authorized The Secretary may adjust the weights for ambulatory payment classifications for specified covered outpatient drugs to take into account the recommendations contained in the report submitted under clause (i).

(F) Classes of drugs For purposes of this paragraph: (i) Sole source drugs The term “sole source drug” means— (I) a biological product (as defined under section 1395x(t)(1) of this title ); or (II) a single source drug (as defined in section 1396r–8(k)(7)(A)(iv) of this title ). (ii) Innovator multiple source drugs The term “innovator multiple source drug” has the meaning given such term in section 1396r–8(k)(7)(A)(ii) of this title . (iii) Noninnovator multiple source drugs The term “noninnovator multiple source drug” has the meaning given such term in section 1396r–8(k)(7)(A)(iii) of this title .

(G) Reference average wholesale price The term “reference average wholesale price” means, with respect to a specified covered outpatient drug, the average wholesale price for the drug as determined under section 1395u( o ) of this title as of May 1, 2003 .

(H) Inapplicability of expenditures in determining conversion, weighting, and other adjustment factors Additional expenditures resulting from this paragraph shall not be taken into account in establishing the conversion, weighting, and other adjustment factors for 2004 and 2005 under paragraph (9), but shall be taken into account for subsequent years.

With respect to payment under this part for an outpatient drug or biological that is covered under this part and is furnished as part of covered OPD services for which a HCPCS code has not been assigned, the amount provided for payment for such drug or biological under this part shall be equal to 95 percent of the average wholesale price for the drug or biological.

(A) Application of reclassification of certain hospitals If a hospital is being treated as being located in a rural area under section 1395ww(d)(8)(E) of this title , that hospital shall be treated under this subsection as being located in that rural area.

(B) Threshold for establishment of separate APCS for drugs The Secretary shall reduce the threshold for the establishment of separate ambulatory payment classification groups (APCs) with respect to drugs or biologicals to $50 per administration for drugs and biologicals furnished in 2005 and 2006.

(C) Payment for devices of brachytherapy and therapeutic radiopharmaceuticals at charges adjusted to cost Notwithstanding the preceding provisions of this subsection, for a device of brachytherapy consisting of a seed or seeds (or radioactive source) furnished on or after January 1, 2004 , and before January 1, 2010 , and for therapeutic radiopharmaceuticals furnished on or after January 1, 2008 , and before January 1, 2010 , the payment basis for the device or therapeutic radiopharmaceutical under this subsection shall be equal to the hospital’s charges for each device or therapeutic radiopharmaceutical furnished, adjusted to cost. Charges for such devices or therapeutic radiopharmaceuticals shall not be included in determining any outlier payment under this subsection.

(D) Special payment rule (i) In general In the case of covered OPD services furnished on or after April 1, 2013 , in a hospital described in clause (ii), if— (I) the payment rate that would otherwise apply under this subsection for stereotactic radiosurgery, complete course of treatment of cranial lesion(s) consisting of 1 session that is multi-source Cobalt 60 based (identified as of January 1, 2013 , by HCPCS code 77371 (and any succeeding code) and reimbursed as of such date under APC 0127 (and any succeeding classification group)); exceeds (II) the payment rate that would otherwise apply under this subsection for linear accelerator based stereotactic radiosurgery, complete course of therapy in one session (identified as of January 1, 2013 , by HCPCS code G0173 (and any succeeding code) and reimbursed as of such date under APC 0067 (and any succeeding classification group)), the payment rate for the service described in subclause (I) shall be reduced to an amount equal to the payment rate for the service described in subclause (II). (ii) Hospital described A hospital described in this clause is a hospital that is not— (I) located in a rural area (as defined in section 1395ww(d)(2)(D) of this title ); (II) classified as a rural referral center under section 1395ww(d)(5)(C) of this title ; or (III) a sole community hospital (as defined in section 1395ww(d)(5)(D)(iii) of this title ). (iii) Not budget neutral In making any budget neutrality adjustments under this subsection for 2013 (with respect to covered OPD services furnished on or after April 1, 2013 , and before January 1, 2014 ) or a subsequent year, the Secretary shall not take into account the reduced expenditures that result from the application of this subparagraph.

(E) Application of appropriate use criteria for certain imaging services For provisions relating to the application of appropriate use criteria for certain imaging services, see section 1395m(q) of this title .

(F) Payment incentive for the transition from traditional X-ray imaging to digital radiography Notwithstanding the previous provisions of this subsection: (i) Limitation on payment for film X-ray imaging services In the case of an imaging service that is an X-ray taken using film and that is furnished during 2017 or a subsequent year, the payment amount for such service (including the X-ray component of a packaged service) that would otherwise be determined under this section (without application of this paragraph and before application of any other adjustment under this subsection) for such year shall be reduced by 20 percent. (ii) Phased-in limitation on payment for computed radiography imaging services In the case of an imaging service that is an X-ray taken using computed radiography technology (as defined in section 1395w–4(b)(9)(C) of this title )— (I) in the case of such a service furnished during 2018, 2019, 2020, 2021, or 2022, the payment amount for such service (including the X-ray component of a packaged service) that would otherwise be determined under this section (without application of this paragraph and before application of any other adjustment under this subsection) for such year shall be reduced by 7 percent; and (II) in the case of such a service furnished during 2023 or a subsequent year, the payment amount for such service (including the X-ray component of a packaged service) that would otherwise be determined under this section (without application of this paragraph and before application of any other adjustment under this subsection) for such year shall be reduced by 10 percent. (iii) Application without regard to budget neutrality The reductions made under this subparagraph— (I) shall not be considered an adjustment under paragraph (2)(E); and (II) shall not be implemented in a budget neutral manner. (iv) Implementation In order to implement this subparagraph, the Secretary shall adopt appropriate mechanisms which may include use of modifiers.

(G) Temporary additional payments for non-opioid treatments for pain relief (i) In general Notwithstanding any other provision of this subsection, with respect to a non-opioid treatment for pain relief (as defined in clause (iv)) furnished on or after January 1, 2025 , and before January 1, 2028 , the Secretary shall not package payment for such non-opioid treatment for pain relief into a payment for a covered OPD service (or group of services), and shall make an additional payment as specified in clause (ii) for such non-opioid treatment for pain relief. (ii) Amount of payment Subject to the limitation under clause (iii), the amount of the payment specified in this clause is, with respect to a non-opioid treatment for pain relief that is— (I) a drug or biological product, the amount of payment for such drug or biological determined under section 1395w–3a of this title that exceeds the portion of the otherwise applicable Medicare OPD fee schedule that the Secretary determines is associated with the drug or biological; or (II) a medical device, the amount of the hospital’s charges for the device, adjusted to cost, that exceeds the portion of the otherwise applicable Medicare OPD fee schedule that the Secretary determines is associated with the device. (iii) Limitation The additional payment amount specified in clause (ii) shall not exceed the estimated average of 18 percent of the OPD fee schedule amount for the OPD service (or group of services) with which the non-opioid treatment for pain relief is furnished, as determined by the Secretary. (iv) Definition of non-opioid treatment for pain relief In this subparagraph, the term “non-opioid treatment for pain relief” means a drug, biological product, or medical device that— (I) in the case of a drug or biological product, has a label indication approved by the Food and Drug Administration to reduce postoperative pain, or produce postsurgical or regional analgesia, without acting upon the body’s opioid receptors; (II) in case of a medical device, is used to deliver a therapy to reduce postoperative pain, or produce postsurgical or regional analgesia, and has— (aa) an application under section 360e of title 21 that has been approved with respect to the device, been cleared for market under section 360(k) of such title, or is exempt from the requirements of section 360(k) of such title pursuant to subsection ( l ) or (m) or section 360 of such title or section 360j(g) of such title; and (bb) demonstrated the ability to replace, reduce, or avoid intraoperative or postoperative opioid use or the quantity of opioids prescribed in a clinical trial or through data published in a peer-reviewed journal; (III) does not receive transitional pass-through payment under paragraph (6); and (IV) has payment that is packaged into a payment for a covered OPD service (or group of services).

(A) Reduction in update for failure to report (i) In general For purposes of paragraph (3)(C)(iv) for 2009 and each subsequent year, in the case of a subsection (d) hospital (as defined in section 1395ww(d)(1)(B) of this title ) that does not submit, to the Secretary in accordance with this paragraph, data required to be submitted on measures selected under this paragraph with respect to such a year, the OPD fee schedule increase factor under paragraph (3)(C)(iv) for such year shall be reduced by 2.0 percentage points. (ii) Non-cumulative application A reduction under this subparagraph shall apply only with respect to the year involved and the Secretary shall not take into account such reduction in computing the OPD fee schedule increase factor for a subsequent year.

(B) Form and manner of submission Each subsection (d) hospital shall submit data on measures selected under this paragraph to the Secretary in a form and manner, and at a time, specified by the Secretary for purposes of this paragraph.

(C) Development of outpatient measures (i) In general The Secretary shall develop measures that the Secretary determines to be appropriate for the measurement of the quality of care (including medication errors) furnished by hospitals in outpatient settings and that reflect consensus among affected parties and, to the extent feasible and practicable, shall include measures set forth by one or more national consensus building entities. (ii) Construction Nothing in this paragraph shall be construed as preventing the Secretary from selecting measures that are the same as (or a subset of) the measures for which data are required to be submitted under section 1395ww(b)(3)(B)(viii) of this title .

(D) Replacement of measures For purposes of this paragraph, the Secretary may replace any measures or indicators in appropriate cases, such as where all hospitals are effectively in compliance or the measures or indicators have been subsequently shown not to represent the best clinical practice.

(E) Availability of data The Secretary shall establish procedures for making data submitted under this paragraph available to the public. Such procedures shall ensure that a hospital has the opportunity to review the data that are to be made public with respect to the hospital prior to such data being made public. The Secretary shall report quality measures of process, structure, outcome, patients’ perspectives on care, efficiency, and costs of care that relate to services furnished in outpatient settings in hospitals on the Internet website of the Centers for Medicare & Medicaid Services.

(A) Study The Secretary shall conduct a study to determine if, under the system under this subsection, costs incurred by hospitals described in section 1395ww(d)(1)(B)(v) of this title with respect to ambulatory payment classification groups exceed those costs incurred by other hospitals furnishing services under this subsection (as determined appropriate by the Secretary). In conducting the study under this subparagraph, the Secretary shall take into consideration the cost of drugs and biologicals incurred by such hospitals.

(B) Authorization of adjustment Insofar as the Secretary determines under subparagraph (A) that costs incurred by hospitals described in section 1395ww(d)(1)(B)(v) of this title exceed those costs incurred by other hospitals furnishing services under this subsection, the Secretary shall, subject to subparagraph (C), provide for an appropriate adjustment under paragraph (2)(E) to reflect those higher costs effective for services furnished on or after January 1, 2011 .

(C) Target PCR adjustment In applying section 419.43(i) of title 42 of the Code of Federal Regulations to implement the appropriate adjustment under this paragraph for services furnished on or after January 1, 2018 , the Secretary shall use a target PCR that is 1.0 percentage points less than the target PCR that would otherwise apply. In addition to the percentage point reduction under the previous sentence, the Secretary may consider making an additional percentage point reduction to such target PCR that takes into account payment rates for applicable items and services described in paragraph (21)(C) other than for services furnished by hospitals described in section 1395ww(d)(1)(B)(v) of this title . In making any budget neutrality adjustments under this subsection for 2018 or a subsequent year, the Secretary shall not take into account the reduced expenditures that result from the application of this subparagraph.

(A) In general Subject to subparagraph (B), with respect to covered OPD services furnished on or after January 1, 2011 , the area wage adjustment factor applicable under the payment system established under this subsection to any hospital outpatient department which is located in a frontier State (as defined in section 1395ww(d)(3)(E)(iii)(II) of this title ) may not be less than 1.00. The preceding sentence shall not be applied in a budget neutral manner.

(B) Limitation This paragraph shall not apply to any hospital outpatient department located in a State that receives a non-labor related share adjustment under section 1395ww(d)(5)(H) of this title .

The Secretary shall not take into account the reduced expenditures that result from the application of section 1395m(p) of this title in making any budget neutrality adjustments this 16 16 So in original. Probably should be preceded by “under”. subsection.

(A) Applicable items and services For purposes of paragraph (1)(B)(v) and this paragraph, the term “applicable items and services” means items and services other than items and services furnished by a dedicated emergency department (as defined in section 489.24(b) of title 42 of the Code of Federal Regulations).

(B) Off-campus outpatient department of a provider (i) In general For purposes of paragraph (1)(B)(v) and this paragraph, subject to the subsequent provisions of this subparagraph, the term “off-campus outpatient department of a provider” means a department of a provider (as defined in section 413.65(a)(2) of title 42 of the Code of Federal Regulations, as in effect as of November 2, 2015 ) that is not located— (I) on the campus (as defined in such section 413.65(a)(2)) of such provider; or (II) within the distance (described in such definition of campus) from a remote location of a hospital facility (as defined in such section 413.65(a)(2)). (ii) Exception For purposes of paragraph (1)(B)(v) and this paragraph, the term “off-campus outpatient department of a provider” shall not include a department of a provider (as so defined) that was billing under this subsection with respect to covered OPD services furnished prior to November 2, 2015 . (iii) Deemed treatment for 2017 For purposes of applying clause (ii) with respect to applicable items and services furnished during 2017, a department of a provider (as so defined) not described in such clause is deemed to be billing under this subsection with respect to covered OPD services furnished prior to November 2, 2015 , if the Secretary received from the provider prior to December 2, 2015 , an attestation (pursuant to section 413.65(b)(3) of title 42 of the Code of Federal Regulations) that such department was a department of a provider (as so defined). (iv) Alternative exception beginning with 2018 For purposes of paragraph (1)(B)(v) and this paragraph with respect to applicable items and services furnished during 2018 or a subsequent year, the term “off-campus outpatient department of a provider” also shall not include a department of a provider (as so defined) that is not described in clause (ii) if— (I) the Secretary receives from the provider an attestation (pursuant to such section 413.65(b)(3)) not later than December 31, 2016 (or, if later, 60 days after December 13, 2016 ), that such department met the requirements of a department of a provider specified in section 413.65 of title 42 of the Code of Federal Regulations; (II) the provider includes such department as part of the provider on its enrollment form in accordance with the enrollment process under section 1395cc(j) of this title ; and (III) the department met the mid-build requirement of clause (v) and the Secretary receives, not later than 60 days after December 13, 2016 , from the chief executive officer or chief operating officer of the provider a written certification that the department met such requirement. (v) Mid-build requirement described The mid-build requirement of this clause is, with respect to a department of a provider, that before November 2, 2015 , the provider had a binding written agreement with an outside unrelated party for the actual construction of such department. (vi) Exclusion for certain cancer hospitals For purposes of paragraph (1)(B)(v) and this paragraph with respect to applicable items and services furnished during 2017 or a subsequent year, the term “off-campus outpatient department of a provider” also shall not include a department of a provider (as so defined) that is not described in clause (ii) if the provider is a hospital described in section 1395ww(d)(1)(B)(v) of this title and— (I) in the case of a department that met the requirements of section 413.65 of title 42 of the Code of Federal Regulations after November 1, 2015 , and before December 13, 2016 , the Secretary receives from the provider an attestation that such department met such requirements not later than 60 days after such date; or (II) in the case of a department that meets such requirements after such date, the Secretary receives from the provider an attestation that such department meets such requirements not later than 60 days after the date such requirements are first met with respect to such department. (vii) Audit Not later than December 31, 2018 , the Secretary shall audit the compliance with requirements of clause (iv) with respect to each department of a provider to which such clause applies. Not later than 2 years after the date the Secretary receives an attestation under clause (vi) relating to compliance of a department of a provider with requirements referred to in such clause, the Secretary shall audit the compliance with such requirements with respect to the department. If the Secretary finds as a result of an audit under this clause that the applicable requirements were not met with respect to such department, the department shall not be excluded from the term “off-campus outpatient department of a provider” under such clause. (viii) Implementation For purposes of implementing clauses (iii) through (vii): (I) Notwithstanding any other provision of law, the Secretary may implement such clauses by program instruction or otherwise. (II) Subchapter I of chapter 35 of title 44 shall not apply. (III) For purposes of carrying out this subparagraph with respect to clauses (iii) and (iv) (and clause (vii) insofar as it relates to clause (iv)), $10,000,000 shall be available from the Federal Supplementary Medical Insurance Trust Fund under section 1395t of this title , to remain available until December 31, 2018 . For purposes of carrying out this subparagraph with respect to clause (vi) (and clause (vii) insofar as it relates to such clause), $2,000,000 shall be available from the Federal Supplementary Medical Insurance Trust Fund under section 1395t of this title , to remain available until expended.

(C) Availability of payment under other payment systems Payments for applicable items and services furnished by an off-campus outpatient department of a provider that are described in paragraph (1)(B)(v) shall be made under the applicable payment system under this part (other than under this subsection) if the requirements for such payment are otherwise met.

(D) Information needed for implementation Each hospital shall provide to the Secretary such information as the Secretary determines appropriate to implement this paragraph and paragraph (1)(B)(v) (which may include reporting of information on a hospital claim using a code or modifier and reporting information about off-campus outpatient departments of a provider on the enrollment form described in section 1395cc(j) of this title ).

(E) Limitations There shall be no administrative or judicial review under section 1395ff of this title , section 1395 oo of this title, or otherwise of the following: (i) The determination of the applicable items and services under subparagraph (A) and applicable payment systems under subparagraph (C). (ii) The determination of whether a department of a provider meets the term described in subparagraph (B). (iii) Any information that hospitals are required to report pursuant to subparagraph (D). (iv) The determination of an audit under subparagraph (B)(vii).

(A) In general With respect to payments made under this subsection for covered OPD services (or groups of services), including covered OPD services assigned to a comprehensive ambulatory payment classification, the Secretary— (i) shall, as soon as practicable, conduct a review (part of which may include a request for information) of payments for opioids and evidence-based non-opioid alternatives for pain management (including drugs and devices, nerve blocks, surgical injections, and neuromodulation) with a goal of ensuring that there are not financial incentives to use opioids instead of non-opioid alternatives; (ii) may, as the Secretary determines appropriate, conduct subsequent reviews of such payments; and (iii) shall consider the extent to which revisions under this subsection to such payments (such as the creation of additional groups of covered OPD services to classify separately those procedures that utilize opioids and non-opioid alternatives for pain management) would reduce payment incentives to use opioids instead of non-opioid alternatives for pain management.

(B) Priority In conducting the review under clause (i) of subparagraph (A) and considering revisions under clause (iii) of such subparagraph, the Secretary shall focus on covered OPD services (or groups of services) assigned to a comprehensive ambulatory payment classification, ambulatory payment classifications that primarily include surgical services, and other services determined by the Secretary which generally involve treatment for pain management.

(C) Revisions If the Secretary identifies revisions to payments pursuant to subparagraph (A)(iii), the Secretary shall, as determined appropriate, begin making such revisions for services furnished on or after January 1, 2020 . Revisions under the previous sentence shall be treated as adjustments for purposes of application of paragraph (9)(B).

(D) Rules of construction Nothing in this paragraph shall be construed to preclude the Secretary— (i) from conducting a demonstration before making the revisions described in subparagraph (C); or (ii) prior to implementation of this paragraph, from changing payments under this subsection for covered OPD services (or groups of services) which include opioids or non-opioid alternatives for pain management.

(A) In general No payment may be made under this subsection (or under an applicable payment system pursuant to paragraph (21)) for items and services furnished on or after January 1, 2028 , by an off-campus outpatient department of a provider (as defined in subparagraph (C)) unless— (i) such department has obtained, and such items and services are billed under, a National Provider Identifier that is separate from such identifier for such provider; (ii) such provider has submitted to the Secretary, during the 2-year period ending on the date such items and services are so furnished, an initial provider-based status attestation that such department is compliant with the requirements described in section 413.65 of title 42, Code of Federal Regulations (or a successor regulation), which, until the Secretary establishes the process described in subparagraph (B), may include an attestation submitted in accordance with paragraph (b)(3) of such section (as in effect on February 3, 2026 ); and (iii) after such provider has submitted an attestation under clause (ii), such provider has submitted a subsequent attestation within the timeframe specified by the Secretary.

(B) Process for submission and review (i) In general The Secretary shall, through notice and comment rulemaking, establish a process for each provider with an off-campus outpatient department of a provider to submit an initial and subsequent attestation pursuant to clauses (ii) and (iii), respectively, of subparagraph (A), and for the Secretary to review each such attestation and determine, through site visits, remote audits, or other means (as determined appropriate by the Secretary), whether such department is compliant with the requirements described in such subparagraph. (ii) Funding In addition to amounts otherwise available, there is appropriated to the Centers for Medicare & Medicaid Services Program Management Account for fiscal year 2026, out of any amounts in the Treasury not otherwise appropriated, $20,000,000, to remain available until expended, for purposes of carrying out this subparagraph.

(C) Off-campus outpatient department of a provider defined For purposes of this paragraph, the term “off-campus outpatient department of a provider” means a department of a provider (as defined in section 413.65 of title 42, Code of Federal Regulations, or any successor regulation) that is not located— (i) on the campus (as defined in such section) of such provider; or (ii) within the distance (described in such definition of campus) from a remote location of a hospital facility (as defined in such section).