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Hospital Outpatient PPS

Guidance for Hospital Outpatient Prospective Payment System (PPS) rulemaking.


Issued by: Centers for Medicare & Medicaid Services (CMS)

Issue Date: October 03, 2019

340B Drug Payment Policy Remedy Payment for Calendar Year (CY) 2018 to CY 2022

On June 15, 2022, the Supreme Court held in American Hospital Association v. Becerra that because the Centers for Medicare & Medicaid Services (CMS) had not conducted a survey of hospitals’ acquisition costs, it could not vary the payment rates for outpatient prescription drugs by hospital group. On remand, the U.S. District Court for the District of Columbia vacated for the remainder of 2022—beginning September 28, 2022—adjustments CMS had made to payments under the Hospital Outpatient Prospective Payment System for drugs acquired through the 340B program. 

On January 10, 2023, the U.S. District Court for the District of Columbia issued a remand without vacatur to give CMS the opportunity to determine the proper remedy for the reduced payment amounts to 340B hospitals under the payment rates in the final OPPS rules beginning in CY 2018 and continuing through September 27, 2022.

Accordingly, on November 8, 2023, CMS published the Hospital Outpatient Prospective Payment System: Remedy for the 340B-Acquired Drug Payment Policy for Calendar Years 2018 – 2022.

Under this final rule, affected hospitals will be paid a one-time lump-sum amount based on the difference between what they were paid for 340B-acquired drugs from CY 2018 through September 27, 2022, and what they would have been paid during this time-period had the 340B Drug Payment Policy never existed. These payment amounts are listed in Addendum AAA to the final rule. This final rule ensures affected hospitals will receive the approximate payment they would have received if the original CY 2018-2022 340B payment policy had never existed.

On January 8, 2024, Medicare Administrative Contractors (MACs) began making these one-time lump-sum remedy payments to affected providers via HIGLAS. These payments are scheduled to be completed by February 7, 2024. 

The MAC will send these lump sum payments independently and they will not be included in any cost reports.

All remedy payments are subject to the MAC’s standard accounting procedures which may involve combining them with other payment(s) released on the same date and/or include any applicable outstanding Medicare offsets that are the result of provider-specific overpayment obligations or adjustments resulting from errors identified through the lump-sum technical correction process, any of which may impact the provider’s net payment amount.

OPPS and ASC Temporary Increase in Medicare Part B Payment for Certain Biosimilar Biological Products

Section 11403 of the Inflation Reduction Act of 2022 (IRA) temporarily increases payment for certain biosimilar biological products that are calculated using the Medicare Average Sales Price Payment Methodology from average sales price (ASP) plus 6 percent to ASP plus 8 percent of the ASP of the reference biological. The increase applies for a 5-year period defined in the statute. For qualifying biosimilar biological products for which payment was made using ASP as of September 30, 2022, the 5-year period begins on October 1, 2022. For qualifying biosimilar biological products for which payment is first made using ASP between October 1, 2022, through December 31, 2027, the 5-year period begins on the first day of the calendar quarter during which such payment is first made. A qualifying biosimilar biological product is defined as a biosimilar with an ASP that is not more than the ASP of the reference biological.

The Outpatient Prospective and Ambulatory Surgical Center payment systems generally use the Medicare Average Sales Price Payment Methodology for biosimilars. Therefore, in accordance with section 11403 of the IRA, the OPPS and ASC addenda files will reflect the temporary increased amount for qualifying biosimilar biological products beginning with the October 2022 file.

COVID-19: HCPCS Code for Convalescent Plasma in the Outpatient Setting (HCPCS C9507)

On December 28, 2022, the FDA revised the emergency use authorization for COVID-19 convalescent plasma with high titers of anti-SARS-CoV-2 antibodies. It’s authorized for treatment of COVID-19 in patients with immunosuppressive disease or getting immunosuppressive treatment, in the outpatient or inpatient setting.

CMS created HCPCS code C9507 for COVID-19 convalescent plasma for use in the outpatient setting, effective on or after December 28, 2022. For billing & payment information, visit the quarterly OPPS Addendum A and Addendum B Updates.

OPPS Drugs and Biologicals with Quarterly Restated Payment Rates

Some drugs and biologicals based on ASP methodology may have payment rates that are corrected retroactively. These retroactive corrections typically occur on a quarterly basis as a part of the OPPS payment system quarterly update change request. Beginning with the January 2015 OPPS payment system quarterly update change request, the list of drugs and biologicals with corrected payments rates, for a particular quarter, are accessible from the left menu link titled "Restated Drug and Biological Payment Rates".

Hospital Center

For a one-stop resource web page focused on the informational needs and interests of Medicare Fee-for-Service (FFS) hospitals, go to the Hospital Center (see under "Related Links Inside CMS" below). Mailbox:

For files to order, see Limited Data Set Files - Hospital Outpatient Prospective Payment System and the Identifiable Data Files

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DISCLAIMER: The contents of this database lack the force and effect of law, except as authorized by law (including Medicare Advantage Rate Announcements and Advance Notices) or as specifically incorporated into a contract. The Department may not cite, use, or rely on any guidance that is not posted on the guidance repository, except to establish historical facts.