Hospital Outpatient Department (HOPD)

Key facts

Medicare payment

Outpatient Prospective Payment System (OPPS), since August 2000

Payment groups

Ambulatory Payment Classifications (APCs)

Provider-based rules

42 CFR 413.65

On-campus test

Generally within 250 yards of the main hospital buildings

Facility claim

Institutional claim (UB-04 or 837I), type of bill 13x

What is a hospital outpatient department?

An HOPD can be an emergency department, a cancer infusion suite, an imaging center, a same-day surgery unit or a physician clinic. What makes it an HOPD is not the building but its legal status: it operates as part of a hospital, under the hospital's license, Medicare certification and Conditions of Participation.

Departments located away from the main campus can still be part of the hospital if they meet the provider-based rules in 42 CFR 413.65, which require clinical, financial and administrative integration with the main hospital. These sites are called off-campus provider-based departments.

How HOPD billing works

HOPD services usually generate two separate charges:

• The hospital bills a facility fee on an institutional claim, paid under the OPPS through Ambulatory Payment Classifications.
• The physician bills a professional fee under the Physician Fee Schedule at a lower facility rate than in an office. Patients can receive two bills and owe cost sharing on both.
• Under Section 603 of the Bipartisan Budget Act of 2015, off-campus departments that began billing after November 2, 2015 are generally paid reduced rates tied to the Physician Fee Schedule instead of full OPPS rates. Dedicated emergency departments and older grandfathered sites are excepted.
• Since 2019, CMS has paid clinic visits at excepted off-campus departments at the lower site-neutral rate, a policy a federal appeals court upheld in 2020.

Why HOPDs matter

The HOPD setting affects price, drug acquisition and referral patterns:

• The same infusion, imaging study or clinic visit usually costs Medicare and patients more in an HOPD than in a physician office, which is the core of site-neutral payment debates.
• When hospitals acquire physician practices, office visits can become HOPD visits, raising prices without changing the care delivered.
• Hospitals in the 340B Drug Pricing Program can generally use discounted drugs at outpatient sites listed on reimbursable lines of their Medicare cost report and registered as child sites.
• Market access teams track HOPD infusion volume because payer site-of-care policies move eligible patients to home or office infusion.