Under the Medicare hospital Outpatient Prospective Payment System (OPPS), every HCPCS/CPT code is assigned a Payment Status Indicator (PSI). This one- or two-digit alphabetic code is critical as it dictates the specific payment methodology for the service or procedure. For instance, the PSI determines if a service is paid separately under an Ambulatory Payment Classification (APC), if its cost is packaged into another service's payment, if it is not paid under OPPS, or if it is subject to other specific payment rules. This mechanism is fundamental to how the OPPS functions and ensures proper claims processing and reimbursement for outpatient services.

A. geographic practice cost indices: These adjust payments based on regional cost variations for physician work, practice expense, and malpractice insurance, but do not define the payment method for a service.

B. major diagnostic categories: These are broad classifications of diagnoses used in the inpatient prospective payment system (IPPS) for grouping patients, not in the outpatient system for coding.

C. minimum data set: This is a standardized clinical assessment tool used for care planning and reimbursement in long-term care facilities, not hospital outpatient settings.

1. Sayles

N. B.

& Gordon

L. T. (2021). Health Information Management Technology: An Applied Approach (6th ed.). AHIMA Press.

Page/Section: Chapter 17

"Reimbursement Methodologies

" section on "Outpatient Prospective Payment System (OPPS)." The text states

"Each HCPCS code is assigned a payment status indicator (PSI) that establishes how the service is paid under the OPPS."

2. Centers for Medicare & Medicaid Services (CMS). (2023). Medicare Claims Processing Manual

Chapter 4 - Part B Hospital (Including Inpatient Hospital Part B and OPPS).

Page/Section: Section 10.2

"Payment Status Indicators." This section details that "A payment status indicator is assigned to every HCPCS code" and provides a list of indicators (e.g.

A

C

N

T

V) with explanations of their corresponding payment status under OPPS.

3. Harrington

M. K. (2020). Health Care Finance and the Mechanics of Insurance and Reimbursement. Jones & Bartlett Learning.

Page/Section: Chapter 8

"Reimbursement for Hospital and Other Institutional Providers

" section on "Hospital Outpatient Prospective Payment System." The text explains that status indicators are assigned to HCPCS codes to identify the payment conditions for each service.