Medicare Claims Processing Manual Chapter 4 Guide

Name: Medicare Claims Processing Manual (Pub. 100-04)
Creator: Centers for Medicare & Medicaid Services
License: https://www.usa.gov/government-works

TL;DR

Chapter 4 of the Medicare Claims Processing Manual is the billing manual for hospital outpatient departments. It explains how the Outpatient Prospective Payment System groups HCPCS codes into ambulatory payment classifications, which services are packaged, how modifiers and units are reported, how beneficiary coinsurance is capped, how the Integrated Outpatient Code Editor edits claims, and the special rules for critical access hospitals, partial hospitalization and intensive outpatient programs.

Chapter 4 at a glance

Current revision: Rev. 13799; Issued May 28, 2026
Effective: June 29, 2026; Implemented June 29, 2026
Sections: 305; 33 top-level sections
Official PDF: 316 pages; clm104c04.pdf
Transmittals in history: 198; Listed at the end of the chapter
Monthly searches: 90; Google Ads, US, October 2026

What chapter 4 governs for billing

Section 10 lays out OPPS payment. Each separately payable HCPCS code is assigned to an ambulatory payment classification (APC) of clinically similar services with similar resource use (10.2), APC rates are computed from hospital cost data (10.3), many supportive items and services are packaged into the primary procedure rather than paid separately (10.4), certain procedures are discounted when performed together (10.5), and outlier, geographic and other adjustments follow (10.6 to 10.8). Section 10.12 restates the payment window under which outpatient services furnished shortly before an inpatient admission are treated as inpatient services and billed on the inpatient claim.

Section 20 is about reporting: HCPCS codes per line item with line item dates of service, correct units, revenue code to HCPCS code reporting, and the modifiers hospitals use (20.6). Discontinued procedures are a common example: a procedure stopped after the patient is prepared but before anesthesia is reported with modifier 73 and paid at 50 percent, while one stopped after anesthesia starts takes modifier 74 and is paid in full. Section 30 covers coinsurance, which for a single service cannot exceed the inpatient hospital deductible, and section 40 describes the Integrated Outpatient Code Editor that every outpatient claim passes through.

The second half of the chapter covers specific situations: transitional pass-through payments for drugs, biologicals and devices and new technology APCs (60), device reporting requirements and credits for replaced devices (61), clinic and emergency visits (160), same-day reporting (170), inpatient-only procedures that are not paid when performed on outpatients (180.7), drug administration (230), blood products (231), inpatient Part B services when Part A cannot pay (240), critical access hospital outpatient billing under the standard and optional methods (250), partial hospitalization (260) and intensive outpatient program services (261).

Sections billing teams use most

Section numbers and headings are CMS's; the notes are ours. Each section number opens the official chapter 4 PDF at the page where that section starts.

Key sections of Medicare Claims Processing Manual Chapter 4: Part B Hospital (Including Inpatient Hospital Part B and OPPS)
Section	CMS heading	Why it matters
10.4	Packaging	Packaging: services whose cost is included in the payment for the primary procedure.
10.12	Payment Window for Outpatient Services Treated as Inpatient Services	Outpatient services before an admission that are billed on the inpatient claim.
20.6	Use of Modifiers	Modifiers on hospital outpatient claims, including discontinued procedures, repeat procedures and bilateral reporting.
30.1	Coinsurance Election	Coinsurance elections and the cap at the inpatient hospital deductible.
40.1	Integrated OCE (July 2007 and Later)	The Integrated Outpatient Code Editor that edits and prices every OPPS claim.
180.7	Inpatient-only Services	Inpatient-only procedures and why they are not paid when furnished to an outpatient.
240.1	Editing of Hospital Part B Inpatient Services: Reasonable and Necessary Part A Hospital Inpatient Denials	Billing Part B inpatient services after a Part A inpatient claim is denied as not reasonable and necessary.
250.2	Optional Method for Outpatient Services: Cost-Based Facility Services Plus 115 percent Fee Schedule Payment for Professional Services	Critical access hospital optional method: cost-based facility payment plus 115 percent of the fee schedule for professional services.

How chapter 4 shows up on claims and denials

Outpatient claims are edited by the Integrated Outpatient Code Editor before anyone reviews them. A packaged line shows no separate payment; under section 10.4 that is the expected result, not a denial. Genuine rejections cluster around invalid code and revenue code combinations, units, device codes missing from device-intensive procedures and modifiers, and they come back with the reason code for the problem found, such as 16 for missing or invalid information or 4 for a modifier that does not fit the code.

When a claim includes a procedure on the inpatient-only list, the editor rejects it rather than paying it at an outpatient rate, so the fix is an inpatient order and an inpatient claim, not an appeal of the outpatient line. For services inside the inpatient payment window, the outpatient claim should be cancelled and the charges moved to the inpatient bill.

Codes you are likely to see on the remittance when a claim runs into this chapter's rules. The code pages explain each code's meaning, root causes and the usual fix.

Remittance codes associated with Medicare Claims Processing Manual Chapter 4: Part B Hospital (Including Inpatient Hospital Part B and OPPS)
Code	Type	When it appears
16	Claim adjustment reason code	Claim or line lacks required information, such as a device code or valid units.
4	Claim adjustment reason code	Procedure code inconsistent with the modifier on the line.
97	Claim adjustment reason code	Benefit included in the payment for another service already adjudicated.
M15	Remark code	Separately billed services bundled as components of the same procedure.

Current revision and recent transmittals

The chapter PDF posted on cms.gov is current through Rev. 13799, issued May 28, 2026, effective June 29, 2026, implemented June 29, 2026 (change request 14482). That revision changed sections 250.3.3.1 (Payment for CRNA Pass-Through Services), 250.18 (CAH Method II Line Level Rendering Provider Billing). Its subject line reads: “Updates to Publication 100-04, Chapter 4, Section 250.3.3.1 and 250.18 of the Internet Only Manual (IOM) for Critical Access Hospital (CAH) Line Level Rendering Providers”.

The newest rows of the transmittal history printed at the end of the chapter (198 revisions in all). Rows whose subject could not be read reliably from the PDF table are left out; the PDF has the complete list.

Newest transmittals for Medicare Claims Processing Manual Chapter 4: Part B Hospital (Including Inpatient Hospital Part B and OPPS)
Revision	Issued	Subject	CR
R13799CP	May 28, 2026	Updates to Publication 100-04, Chapter 4, Section 250.3.3.1 and 250.18 of the Internet Only Manual (IOM) for Critical Access Hospital (CAH) Line Level Rendering Providers	14482
R12979CP	November 22, 2024	Implementation of System Changes for the End Stage Renal Disease (ESRD) Prospective Payment System (PPS) and Payment for Renal Dialysis Services Furnished to Individuals with Acute Kidney Injury (AKI) for Calendar Year (CY)	13686
R12694CP	June 21, 2024	Expand Diabetes Screening and Diabetes Definitions Policy Update in the Calendar Year 2024 Physician Fee Schedule Final Rule	13487
R12552CP	March 21, 2024	April 2024 Update of the Hospital Outpatient Prospective Payment System (OPPS)	13568
R12421CP	December 21, 2023	January 2024 Update of the Hospital Outpatient Prospective Payment System (OPPS)	13488
R12423CP	December 20, 2023	Enforcing Billing Requirements for Intensive Outpatient Program (IOP) Services with New Condition Code 92	13222

Sections ordered by the date in the revision note printed under each heading.

Most recently revised sections of Medicare Claims Processing Manual Chapter 4: Part B Hospital (Including Inpatient Hospital Part B and OPPS)
Section	Heading	Revision
250.3.3.1	Payment for CRNA Pass-Through Services	Rev. 13799, May 28, 2026; effective June 29, 2026
250.18	CAH Method II Line Level Rendering Provider Billing	Rev. 13799, May 28, 2026; effective June 29, 2026
50.1	Outpatient Provider Specific File	Rev. 12979, November 22, 2024; effective January 1, 2025
300	Medical Nutrition Therapy (MNT) Services	Rev. 12694, June 21, 2024; effective January 1, 2024
20.6.12	Modifier PN	Rev. 12552, March 21, 2024; effective April 1, 2024
61.2.2	Edit for Level 6 Intraocular Procedures APC	Rev. 12552, March 21, 2024; effective April 1, 2024
250.14	Payment of Licensed Clinical Social Workers (LCSWs), Marriage and Family Therapists (MFTs) and Mental Health Counselors (MHCs) in a Method II CAH	Rev. 12477, January 25, 2024; effective January 1, 2024
10.2.3	Comprehensive APCs	Rev. 12421, December 21, 2023; effective January 1, 2024

Section index

Every section in the chapter's table of contents, grouped under its top-level heading, with the PDF page where it starts. Open a heading to see its subsections.

10 Hospital Outpatient Prospective Payment System (OPPS) · p. 14 · 57 subsections

Open section 10 in the PDF
10.1 Background · p. 14
10.1.1 Payment Status Indicators · p. 16
10.2 APC Payment Groups · p. 17
10.2.1 Composite APCs · p. 17
10.2.2 Cardiac Resynchronization Therapy · p. 18
10.2.3 Comprehensive APCs · p. 20
10.2.4 Reporting for Certain Outpatient Department Services (That Are Similar to Therapy Services) ("Non-Therapy Outpatient Department Services") and Are Adjunctive to Comprehensive APC Procedures · p. 20
10.3 Calculation of APC Payment Rates · p. 21
10.4 Packaging · p. 22
10.4.1 Combinations of Packaged Services of Different Types That are Furnished on the Same Claim · p. 25
10.5 Discounting · p. 25
10.6 Payment Adjustments · p. 26
10.6.1 Payment Adjustment for Rural Sole Community Hospitals · p. 26
10.6.2 Payment Adjustment for Failure to Meet the Hospital Outpatient Quality Reporting Requirements · p. 26
10.6.2.1 Hospitals to which the Payment Reduction Applies · p. 27
10.6.2.2 Services to which the Payment Reduction Applies · p. 27
10.6.2.3 Contractor Responsibilities
10.6.2.4 Application of the Payment Reduction Factor in Calculation of the Reduced Payment and Reduced Copayment · p. 28
10.6.3 Payment Adjustment for Certain Cancer Hospitals · p. 29
10.6.3.1 Payment Adjustment for Certain Cancer Hospitals for CY 2012 and CY 2013 · p. 30
10.6.3.2 Payment Adjustment for Certain Cancer Hospitals for CY 2014 · p. 30
10.6.3.3 Payment Adjustment for Certain Cancer Hospitals Beginning CY 2015 · p. 30
10.6.3.4 Payment Adjustment for Certain Cancer Hospitals Beginning CY 2016 · p. 31
10.6.3.5 Payment Adjustment for Certain Cancer Hospitals Beginning CY 2017 · p. 31
10.6.3.6 Payment Adjustment for Certain Cancer Hospitals Beginning CY 2018 · p. 31
10.6.3.7 Payment Adjustment for Certain Cancer Hospitals Beginning CY 2019 · p. 31
10.6.3.8 Payment Adjustment for Certain Cancer Hospitals Beginning CY 2020 · p. 32
10.6.4 Payment Adjustment for Rural Emergency Hospitals · p. 32
10.7 Outliers · p. 33
10.7.1 Outlier Adjustments · p. 33
10.7.2 Outlier Reconciliation · p. 36
10.7.2.1 Identifying Hospitals and CMHCs Subject to Outlier Reconciliation · p. 36
10.7.2.2 Reconciling Outlier Payments for Hospitals and CMHCs · p. 38
10.7.2.3 Time Value of Money · p. 40
10.7.2.4 Procedures for Medicare Contractors to Perform and Record Outlier Reconciliation Adjustments · p. 41
10.8 Geographic Adjustments
10.8.1 Wage Index Changes · p. 46
10.9 Updates · p. 46
10.10 Biweekly Interim Payments for Certain Hospital Outpatient Items and Services That Are Paid on a Cost Basis, and Direct Medical Education Payments, Not Included in the Hospital Outpatient Prospective Payment System (OPPS) · p. 47
10.11 Calculation of Overall Cost to Charge Ratios (CCRs) for Hospitals Paid Under the Outpatient Prospective Payment System (OPPS) and Community Mental Health Centers (CMHCs) Paid Under the Hospital OPPS · p. 48
10.11.1 Requirement to Calculate CCRs for Hospitals Paid Under OPPS and for CMHCs · p. 48
10.11.2 Circumstances in Which CCRs are Used
10.11.3 Selection of the CCR to be Used · p. 49
10.11.3.1 CMS Specification of Alternative CCR · p. 49
10.11.3.2 Hospital or CMHC Request for Use of a Different CCR · p. 49
10.11.3.3 Notification to Hospitals Paid Under the OPPS of a Change in the CCR · p. 50
10.11.4 Use of CCRs in Mergers, Acquisitions, Other Ownership Changes, or Errors Related to CCRs · p. 50
10.11.5 New Providers and Providers with Cost Report Periods Less Than a Full Year · p. 51
10.11.6 Substitution of Statewide CCRs for Extreme OPPS Hospital Specific CCRs · p. 51
10.11.7 Methodology for Calculation of Hospital Overall CCR for Hospitals that Do Not Have Nursing and Paramedical Education Programs for Cost Reporting Periods Beginning Before May 1, 2010, Under Cost Report Form 2552-96 · p. 51
10.11.7.1 Methodology for Calculation of Hospital Overall CCR for Hospitals That Do Not Have Nursing and Paramedical Education Programs for Cost Reporting Periods Beginning On or After May 1, 2010, Under Cost Report 2552-10
10.11.8 Methodology for Calculation of Hospital Overall CCR for Hospitals That Have Nursing and Paramedical Education Programs for Cost Reporting Periods Beginning Before May 1, 2010, Under Cost Report Form 2552-96 · p. 52
10.11.8.1 Methodology for Calculation of Hospital Overall CCR for Hospitals That Have Nursing and Paramedical Education Programs for Cost Reporting Periods Beginning On or After May 1, 2010, Under Cost Report 2552-10 · p. 52
10.11.9 Methodology for Calculation of CCR for CMHCs · p. 53
10.11.10 Location of Statewide CCRs, Tolerances for Use of Statewide CCRs in Lieu of Calculated CCRs and Cost Centers to be Used in the Calculation of CCRs · p. 54
10.11.11 Reporting of CCRs for Hospitals Paid Under OPPS and for CMHCs · p. 54
10.12 Payment Window for Outpatient Services Treated as Inpatient Services · p. 54

20 Reporting Hospital Outpatient Services Using Healthcare Common Procedure Coding System (HCPCS) · p. 56 · 27 subsections

Open section 20 in the PDF
20.1 General · p. 56
20.1.1 Elimination of the 90-day Grace Period for HCPCS (Level I and Level II)
20.2 Applicability of OPPS to Specific HCPCS Codes · p. 58
20.3 Line Item Dates of Service · p. 58
20.4 Reporting of Service Units · p. 58
20.5 Clarification of HCPCS Code to Revenue Code Reporting · p. 59
20.6 Use of Modifiers · p. 60
20.6.1 Where to Report Modifiers on the Hospital Part B Claim · p. 60
20.6.2 Modifiers -50
20.6.3 Modifiers -LT and -RT · p. 61
20.6.4 Modifiers 73 and 74 · p. 61
20.6.5 Modifiers 76 and 77 · p. 64
20.6.6 Modifiers for Radiology Services · p. 64
20.6.7 Modifier CA
20.6.8 HCPCS Level II Modifiers
20.6.9 Modifier FB · p. 65
20.6.10 Modifier FC · p. 66
20.6.11 Modifier PO · p. 67
20.6.12 Modifier PN · p. 68
20.6.13 Modifier CT · p. 69
20.6.14 Modifier FX · p. 70
20.6.15 Modifier FY · p. 70
20.6.16 Modifier JG · p. 71
20.6.17 Modifier TB · p. 72
20.6.18 Modifier ER · p. 73
20.6.19 Modifier CG · p. 74
20.7 Billing of ‘C' HCPCS Codes by Non-OPPS Providers · p. 74

30 OPPS Coinsurance · p. 75 · 2 subsections

Open section 30 in the PDF
30.1 Coinsurance Election · p. 76
30.2 Calculating the Medicare Payment Amount and Coinsurance · p. 78

40 Outpatient Code Editors (OCEs) · p. 81 · 9 subsections

Open section 40 in the PDF
40.1 Integrated OCE (July 2007 and Later) · p. 81
40.1.1 Patient Status Code and Reason for Patient Visit for the Hospital OPPS · p. 81
40.2 Outpatient Prospective Payment System (OPPS) OCE (Prior to July 1, 2007) · p. 82
40.2.1 Patient Status Code and Reason for Patient Visit for the Hospital OPPS · p. 82
40.3 Non-OPPS OCE (Rejected Items and Processing Requirements) Prior to July 1, 2007 · p. 82
40.4 Paying Claims Outside of the IOCE · p. 85
40.4.1 Requesting to Pay Claims Without IOCE Approval · p. 85
40.4.2 Procedures for Paying Claims Without Passing through the IOCE · p. 85
40.5 Transitional Pass - Throughs for Designated Drugs or Biologicals · p. 87

50 Outpatient PRICER · p. 87 · 8 subsections

Open section 50 in the PDF
50.1 Outpatient Provider Specific File · p. 88
50.2 Deductible Application · p. 96
50.3 Transitional Pass-Through Payments for Designated Devices · p. 96
50.4 Changes to Pricer Logic Effective April 1, 2002 · p. 97
50.5 Changes to the OPPS Pricer Logic Effective January 1, 2003 · p. 99
50.6 Changes to the OPPS Pricer Logic Effective January 1, 2003 Through January 1, 2006 · p. 101
50.7 Annual Updates to the OPPS Pricer for Calendar Year (CY) 2007 and Later · p. 103
50.8 Annual Updates to the OPPS Pricer for Calendar Year (CY) 2007 and Later · p. 103

60 Billing for Devices Eligible for Transitional Pass-Through Payments and Items Classified in "New Technology" APCs · p. 103 · 8 subsections

Open section 60 in the PDF
60.1 Categories for Use in Coding Devices Eligible for Transitional Pass-Through Payments Under the Hospital OPPS · p. 104
60.2 Roles of Hospitals, Manufacturers, and CMS in Billing for Transitional Pass-Through Items · p. 105
60.3 Devices Eligible for Transitional Pass-Through Payments · p. 105
60.4 General Coding and Billing Instructions and Explanations · p. 106
60.4.1 Explanations of Terms · p. 106
60.4.2 Complete List of Device Pass-through Category Codes · p. 107
60.4.3 Explanations of Certain Terms/Definitions Related to Device Pass-Through Category Codes · p. 114
60.5 Services Eligible for New Technology APC Assignment and Payments · p. 119

61 Billing for Devices under the OPPS · p. 120 · 18 subsections

Open section 61 in the PDF
61.1 Requirements that Hospitals Report Device Codes on Claims on Which They Report Specified Procedures · p. 120
61.2 Edits for Claims on Which Specified Procedures are to be Reported With Device Codes and For Which Specified Devices are to be Reported With Procedure Codes · p. 121
61.2.1 Bypass Edit Modifier "CG" for Claims on Which Specified Procedures are to be Reported With Device Codes · p. 122
61.2.2 Edit for Level 6 Intraocular Procedures APC · p. 122
61.3 Billing for Devices Furnished Without Cost to an OPPS Hospital or Beneficiary or for Which the Hospital Receives a Full or Partial Credit and Payment for OPPS Services Required to Furnish the Device · p. 124
61.3.1 Reporting and Charging Requirements When a Device is Furnished Without Cost to the Hospital Prior to January 1, 2014 · p. 124
61.3.2 Reporting and Charging Requirements When the Hospital Receives Full Credit for the Replaced Device against the Cost of a More Expensive Replacement Device Prior to January 1, 2014 · p. 124
61.3.3 Reporting Requirements When the Hospital Receives Partial Credit for the Replaced Device Prior to January 1, 2014 · p. 125
61.3.4 Medicare Payment Adjustment Prior to January 1, 2014 · p. 125
61.3.5 Reporting and Charging Requirements When a Device is Furnished Without Cost to the Hospital or When the Hospital Receives a Full or Partial Credit for the Replacement Device Beginning January 1, 2014 · p. 126
61.3.6 Medicare Payment Adjustment Beginning January 1, 2014 · p. 127
61.4 Billing and Payment for Brachytherapy Sources · p. 127
61.4.1 Billing for Brachytherapy Sources - General · p. 127
61.4.2 Definition of Brachytherapy Source for Separate Payment · p. 128
61.4.3 Billing of Brachytherapy Sources Ordered for a Specific Patient · p. 128
61.4.4 Billing for Brachytherapy Source Supervision, Handling and Loading Costs · p. 129
61.4.5 Payment for New Brachytherapy Sources · p. 129
61.5 Billing for Intracoronary Stent Placement · p. 129

70 Transitional Corridor Payments · p. 132 · 8 subsections

Open section 70 in the PDF
70.1 TOPs Calculation for CY 2000 and CY 2001 · p. 133
70.2 TOPs Calculation for CY 2002 · p. 134
70.3 TOPs Calculation for CY 2003 · p. 135
70.4 TOPs Calculation for CY 2004 and CY 2005 · p. 136
70.5 TOPs Calculation for CY 2006 - CY 2008 · p. 138
70.6 Transitional Outpatient Payments (TOPs) for CY 2009 · p. 139
70.7 Transitional Outpatient Payments (TOPs) for CY 2010 through CY 2012 · p. 140
70.8 TOPs Overpayments · p. 141

80 Shared system Requirements to Incorporate Provider-Specific Payment-to-Cost Ratios into the Calculation of Interim Transitional Outpatient Payments Under OPPS · p. 142 · 3 subsections

Open section 80 in the PDF
80.1 Background - Payment-to-Cost Ratios · p. 142
80.2 Using the Newly Calculated PCR for Determining Final TOP Amounts · p. 143
80.3 Using the Newly Calculated PCR for Determining Interim TOPs · p. 143

90 Discontinuation of Value Code 05 Reporting · p. 143

Open section 90 in the PDF

100 Medicare Summary Notice (MSN) · p. 143

Open section 100 in the PDF

110 Procedures for Submitting Late Charges Under OPPS

Open section 110 in the PDF

120 General Rules for Reporting Outpatient Hospital Services · p. 145 · 2 subsections

Open section 120 in the PDF
120.1 Bill Types Subject to OPPS · p. 146
120.2 Routing of Claims · p. 147

140 All-Inclusive Rate Hospitals · p. 147

Open section 140 in the PDF

141 Maryland Waiver Hospitals · p. 148

Open section 141 in the PDF

150 Hospitals That Do Not Provide Outpatient Services · p. 148

Open section 150 in the PDF

160 Clinic and Emergency Visits · 1 subsections

Open section 160 in the PDF
160.1 Critical Care Services · p. 150

170 Hospital and CMHC Reporting Requirements for Services Performed on the Same Day · p. 152

Open section 170 in the PDF

180 Accurate Reporting of Surgical and Medical Procedures and Services · p. 154 · 7 subsections

Open section 180 in the PDF
180.1 General Rules · p. 154
180.2 Selecting and Reporting Procedure Codes · p. 154
180.3 Unlisted Service or Procedure · p. 155
180.4 Proper Reporting of Condition Code G0 (Zero) · p. 156
180.5 Proper Reporting of Condition Codes 20 and 21 · p. 157
180.6 Emergency Room (ER) Services That Span Multiple Service Dates · p. 157
180.7 Inpatient-only Services · p. 158

190 Payer Only Codes Utilized by Medicare · p. 159

Open section 190 in the PDF

200 Special Services for OPPS Billing · p. 164 · 15 subsections

Open section 200 in the PDF
200.1 Billing for Corneal Tissue · p. 164
200.2 Hospital Dialysis Services For Patients with and without End Stage Renal Disease (ESRD) · p. 165
200.3 Billing Codes for Intensity Modulated Radiation Therapy (IMRT) and Stereotactic Radiosurgery (SRS) · p. 166
200.3.1 Billing Instructions for IMRT Planning and Delivery · p. 166
200.3.2 Billing for Multi-Source Photon (Cobalt 60-Based) Stereotactic Radiosurgery (SRS) Planning and Delivery · p. 167
200.4 Billing for Amniotic Membrane · p. 168
200.5 Reserved · p. 169
200.6 Billing and Payment for Alcohol and/or Substance Abuse Assessment and Intervention Services · p. 169
200.7 Billing for Cardiac Echocardiography Services
200.7.1 Cardiac Echocardiography Without Contrast · p. 170
200.7.2 Cardiac Echocardiography With Contrast · p. 170
200.8 Billing for Nuclear Medicine Procedures · p. 171
200.9 Billing for "Sometimes Therapy" Services that May be Paid as Non-Therapy Services for Hospital Outpatients · p. 172
200.10 Billing for Cost Based Payment for Certified Registered Nurse Anesthetists (CRNA) Services Furnished by Outpatient Prospective Payment System (OPPS) Hospitals · p. 174
200.11 Billing Advance Care Planning (ACP) · p. 175

230 Billing and Payment for Drugs and Drug Administration · p. 176 · 2 subsections

Open section 230 in the PDF
230.1 Coding and Payment for Drugs and Biologicals and Radiopharmaceuticals · p. 176
230.2 Coding and Payment for Drug Administration · p. 177

231 Billing and Payment for Blood, Blood Products, and Stem Cells and Related Services Under the Hospital Outpatient Prospective Payment System (OPPS) · p. 179 · 12 subsections

Open section 231 in the PDF
231.1 When a Provider Paid Under the OPPS Does Not Purchase the Blood or Blood Products That It Procures from a Community Blood Bank, or When a Provider Paid Under the OPPS Does Not Assess a Charge for Blood or Blood Products Supplied by the Provider's Own Blood Bank Other Than Blood Processing and Storage
231.2 When a Provider Paid Under the OPPS Purchases Blood or Blood Products from a Community Blood Bank or When a Provider Paid Under the OPPS Assesses a Charge for Blood or Blood Products Collected By Its Own Blood Bank That Reflects More Than Blood Processing and Storage
231.3 Billing for Autologous Blood (Including Salvaged Blood) and Directed Donor Blood · p. 181
231.4 Billing for Split Unit of Blood · p. 182
231.5 Billing for Irradiation of Blood Products
231.6 Billing for Frozen and Thawed Blood and Blood Products · p. 183
231.7 Billing for Unused Blood · p. 185
231.8 Billing for Transfusion Services · p. 185
231.9 Billing for Pheresis and Apheresis Services · p. 185
231.10 Billing for Autologous Stem Cell Transplants · p. 186
231.11 Billing for Allogeneic Stem Cell Transplants · p. 186
231.12 Correct Coding Initiative (CCI) Edits · p. 188

240 Inpatient Part B Hospital Services · p. 188 · 6 subsections

Open section 240 in the PDF
240.1 Editing of Hospital Part B Inpatient Services: Reasonable and Necessary Part A Hospital Inpatient Denials · p. 189
240.2 Editing Of Hospital Part B Inpatient Services: Other Circumstances in Which Payment Cannot Be Made under Part A · p. 190
240.3 Implantable Prosthetic Devices · p. 192
240.4 Indian Health Service/Tribal Hospital Inpatient Social Admits
240.5 Payment of Part B Services in the Payment Window for Outpatient Services Treated as Inpatient Services when Part A Payment Cannot Be Made · p. 195
240.6 Submitting Provider-Liable "No-Pay" Part A Claims and Beneficiary Liability · p. 195

250 Special Rules for Critical Access Hospital Outpatient Billing · p. 196 · 48 subsections

Open section 250 in the PDF
250.1 Standard Method - Cost-Based Facility Services, With Billing of A/B MAC (B) for Professional Services · p. 197
250.1.1 Special Instructions for Non-covered Time Increments in Standard Method Critical Access Hospitals (CAHs) · p. 198
250.2 Optional Method for Outpatient Services: Cost-Based Facility Services Plus 115 percent Fee Schedule Payment for Professional Services · p. 199
250.2.1 Billing and Payment in a Physician Scarcity Area (PSA) · p. 203
250.2.2 Zip Code Files · p. 204
250.3 Payment for Anesthesia in a Critical Access Hospital · p. 207
250.3.1 Anesthesia File · p. 207
250.3.2 Physician Rendering Anesthesia in a Hospital Outpatient Setting · p. 207
250.3.3 Anesthesia and CRNA Services in a Critical Access Hospital (CAH) · p. 209
250.3.3.1 Payment for CRNA Pass-Through Services · p. 209
250.3.3.2 Payment for Anesthesia Services by a CRNA (Method II CAH only) · p. 212
250.4 CAH Outpatient Services Part B Deductible and Coinsurance · p. 214
250.5 Medicare Payment for Ambulance Services Furnished by Certain CAHs · p. 214
250.6 Clinical Diagnostic Laboratory Tests Furnished by CAHs · p. 216
250.7 Payment for Outpatient Services Furnished by an Indian Health Service (IHS) or Tribal CAH · p. 216
250.8 Coding for Administering Drugs in a Method II CAH · p. 217
250.8.1 Coding for Low Osmolar Contrast Material (LOCM) · p. 217
250.8.2 Coding for the Administration of Other Drugs and Biologicals · p. 217
250.9 Coding Assistant at Surgery Services Rendered in a Method II CAH · p. 218
250.9.1 Use of Payment Policy Indicators for Determining Procedures Eligible for Payment of Assistants at Surgery · p. 218
250.9.2 Payment of Assistant at Surgery Services Rendered in a Method II CAH · p. 219
250.9.3 Assistant at Surgery Medicare Summary Notice (MSN) and Remittance Advice (RA) Messages · p. 220
250.9.4 Assistant at Surgery Services in a Method II CAH Teaching Hospital · p. 221
250.9.5 Review of Supporting Documentation for Assistants at Surgery Services in a Method II CAH · p. 221
250.10 Coding Co-surgeon Services Rendered in a Method II CAH · p. 221
250.10.1 Use of Payment Policy Indicators for Determining Procedures Eligible for Payment of Co-surgeons · p. 222
250.10.2 Payment of Co-surgeon Services Rendered in a Method II CAH · p. 223
250.10.3 Co-surgeon Medicare Summary Notice (MSN) and Remittance Advice (RA) Messages · p. 223
250.10.4 Review of Supporting Documentation for Co-surgeon Services in a Method II CAH
250.11 Coding Bilateral Procedures Performed in a Method II CAH · p. 225
250.11.1 Use of Payment Policy Indicators for Determining Bilateral Procedures Eligible for 150 Percent Payment Adjustment · p. 225
250.11.2 Payment of Bilateral Procedures Rendered in a Method II CAH · p. 226
250.12 Primary Care Incentive Payment Program (PCIP) Payments to Critical Access Hospitals (CAHs) Paid Under the Optional Method · p. 226
250.12.1 Definition of Primary Care Practitioners and Primary Care Services · p. 226
250.12.2 Identifying Services Eligible for the PCIP · p. 227
250.12.3 Coordination with Other Payments · p. 228
250.12.4 Claims Processing and Payment for CAHs Paid Under the Optional Method · p. 228
250.13 Health Professional Shortage Areas (HPSA) Surgical Incentive Payment Program (HSIP) for Surgical Services Rendered in Critical Access Hospitals (CAHs) Paid under the Optional Method · p. 230
250.13.1 Overview of the HSIP · p. 230
250.13.2 HPSA Identification · p. 231
250.13.3 Coordination with Other Payments · p. 231
250.13.4 General Surgeon and Surgical Procedure Identification for Professional Services Paid under the Physician Fee Schedule (PFS) · p. 231
250.13.5 Claims Processing and Payment · p. 232
250.14 Payment of Licensed Clinical Social Workers (LCSWs), Marriage and Family Therapists (MFTs) and Mental Health Counselors (MHCs) in a Method II CAH · p. 233
250.15 Coding and Payment of Multiple Surgeries Performed in a Method II CAH · p. 234
250.16 Multiple Procedure Payment Reduction (MPPR) on Certain Diagnostic Imaging Procedures Rendered by Physicians · p. 234
250.17 Payment of Global Surgical Split Care in a Method II CAH Submitted with Modifier 54 and/or 55 · p. 234
250.18 CAH Method II Line Level Rendering Provider Billing · p. 235

260 Outpatient Partial Hospitalization Services · p. 237 · 7 subsections

Open section 260 in the PDF
260.1 Special Partial Hospitalization Billing Requirements for Hospitals, Community Mental Health Centers, and Critical Access Hospitals · p. 238
260.1.1 Bill Review for Partial Hospitalization Services Received in Community Mental Health Centers (CMHC) · p. 244
260.2 Professional Services Related to Partial Hospitalization · p. 250
260.3 Outpatient Mental Health Treatment Limitation for Partial Hospitalization Services · p. 251
260.4 Reporting Service Units for Partial Hospitalization · p. 251
260.5 Line Item Date of Service Reporting for Partial Hospitalization · p. 252
260.6 Payment for Partial Hospitalization Services · p. 253

261 Intensive Outpatient Program Services · p. 253 · 7 subsections

Open section 261 in the PDF
261.1 Special Intensive Outpatient Program Billing Requirements for Hospitals, Community Mental Health Centers, and Critical Access Hospitals
261.1.1 Bill Review for Intensive Outpatient Program Services Received in Community Mental Health Centers (CMHC) · p. 259
261.2 Professional Services Related to Intensive Outpatient Program · p. 265
261.3 Outpatient Mental Health Treatment Limitation for Intensive Outpatient Program Services · p. 266
261.4 Reporting Service Units for Intensive Outpatient Program · p. 266
261.5 Line Item Date of Service Reporting for Intensive Outpatient Program · p. 267
261.6 Payment for Intensive Outpatient Program Services · p. 267

270 Billing for Hospital Outpatient Services Furnished by Clinical Social Workers (CSW) · p. 268 · 3 subsections

Open section 270 in the PDF
270.1 Fee Schedule to be Used for Payment for CSW Services · p. 268
270.2 Outpatient Mental Health Payment Limitation for CSW Services · p. 268
270.3 Coinsurance and Deductible for CSW Services · p. 268

280 Hospital-Based Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs) Billing for Non RHC/FQHC Services · p. 269

Open section 280 in the PDF

290 Outpatient Observation Services · p. 269 · 13 subsections

Open section 290 in the PDF
290.1 Observation Services Overview · p. 269
290.2 General Billing Requirements for Observation Services · p. 270
290.2.1 Revenue Code Reporting · p. 270
290.2.2 Reporting Hours of Observation · p. 270
290.4 Billing and Payment for Observation Services Furnished Between January 1, 2006 and December 31, 2007 · p. 271
290.4.1 Billing and Payment for All Hospital Observation Services Furnished Between January 1, 2006 and December 31, 2007
290.4.2 Separate and Packaged Payment for Direct Referral for Observation Services Furnished Between January 1, 2006 and December 31, 2007 · p. 273
290.4.3 Separate and Packaged Payment for Observation Services Furnished Between January 1, 2006 and December 31, 2007 · p. 273
290.5 Billing and Payment for Observation Services Furnished on or After January 1, 2008 · p. 275
290.5.1 Billing and Payment for Observation Services Furnished Between January 1, 2008 and December 31, 2015 · p. 275
290.5.2 Billing and Payment for Direct Referral for Observation Care Furnished Beginning January 1, 2008 · p. 278
290.5.3 Billing and Payment for Observation Services Furnished Beginning January 1, 2016 · p. 279
290.6 Services Not Covered as Observation Services · p. 281

300 Medical Nutrition Therapy (MNT) Services · p. 281 · 7 subsections

Open section 300 in the PDF
300.1 General Conditions and Limitations on Coverage · p. 282
300.2 Referrals for MNT Services · p. 283
300.3 Dietitians and Nutritionists Performing MNT Services · p. 284
300.4 Payment for MNT Services · p. 285
300.5 General Claims Processing Information · p. 286
300.5.1 Rural Health Centers (RHCs)/Federally Qualified Health Centers (FQHCs) Special Billing Instructions · p. 288
300.6 Common Working File (CWF) Edits · p. 288

310 Lung Volume Reduction Surgery · p. 288

Open section 310 in the PDF

320 Outpatient Intravenous Insulin Treatment (OIVIT) · p. 289 · 2 subsections

Open section 320 in the PDF
320.1 HCPCS Coding for OIVIT · p. 289
320.2 Medicare Summary Notices (MSN), Reason Codes, and Remark Codes · p. 290

Using this chapter in a denial or appeal

Start with the remittance. The claim adjustment reason code says what happened to the line, the remark code narrows it, and the group code says who is liable. Match that to the section of the chapter that sets the rule, then read the section in the official PDF rather than a summary: the wording that matters, such as a time limit, a modifier requirement or a documentation element, is usually a single sentence. Check the revision note under the section heading, because a rule that changed after the date of service may not apply to the claim, and an effective date earlier than the issue date can make a new rule reach back.

When the chapter supports the claim, cite it precisely in the redetermination request: the publication number, chapter, section and revision. When it does not, the fix is usually a corrected claim or better documentation rather than an appeal, and a coding or format rejection is corrected and resubmitted because it carries no appeal rights. Manual instructions bind the Medicare Administrative Contractor, so they settle most first-level disputes; at the hearing level, administrative law judges give them substantial deference without being bound by them. If the issue turns on whether a service is covered at all, read the matching Benefit Policy Manual chapter and any national coverage determination or local coverage determination as well, because coverage and billing rules are written in different places.

How QuickIntell works with Claims Processing Manual chapter 4

QuickRCM covers eligibility, claim readiness, denials, posting and A/R with configurable automation and human review, which is where the billing rules in this chapter are checked before a claim goes out. QuickCode supports qualified coder review of the coding and modifier questions the chapter answers.

See QuickRCM for claim readiness See QuickCode for coder review Book a meeting

Frequently asked questions: chapter 4

What does chapter 4 of the Claims Processing Manual cover?

Part B hospital billing, including inpatient Part B and the Outpatient Prospective Payment System. It covers APCs, packaging, discounting, outliers, HCPCS and modifier reporting, coinsurance, the outpatient code editor, pass-through payments, devices, drugs, blood, critical access hospital outpatient billing, partial hospitalization and intensive outpatient programs.

How is OPPS coinsurance limited?

Chapter 4 section 30 explains that the beneficiary coinsurance for a single outpatient service cannot be more than the inpatient hospital deductible for that year; when the calculated coinsurance is higher, the beneficiary pays the deductible amount and Medicare pays the difference.

How are discontinued outpatient procedures paid?

Under section 20.6, a procedure discontinued after the patient is prepared and taken to the room but before anesthesia is reported with modifier 73 and paid at 50 percent of the OPPS amount; one discontinued after anesthesia is reported with modifier 74 and paid in full.

Sources

Every figure on this page is taken from the CMS publications below, as released by the Centers for Medicare & Medicaid Services. Projection built 2026-10-10. Verify against the primary file before billing or contracting decisions. The reference methodology explains how each figure is computed from these files.

Medicare Claims Processing Manual, Chapter 4: Part B Hospital (Including Inpatient Hospital Part B and OPPS)
Version Rev. 13799, issued 2026-05-28 · effective 2026-06-29 · file clm104c04.pdfSHA-256 d272fe74505caa2d…
Medicare Claims Processing Manual (Pub. 100-04)
Version 39 chapter PDFs; newest revision Rev. 13836 (chapter 14), issued 2026-06-24 · effective 2026-09-27 · file 100-04-claims-processing-manual/*.pdf (39 chapters; SHA-256 of their sha256sum listing)SHA-256 f87bc3bcd9d1570d…

Disclaimer

This guide summarizes a CMS manual chapter in our own words for billing teams; section headings and transmittal subjects are quoted from the chapter PDF. The chapter itself is the authority, and it changes by transmittal. Not legal, clinical or billing advice.

Found a figure that does not match the CMS file? Report a data correction with the CMS file and the value you expected; the request reaches the editorial team through the contact form.

Medicare Claims Processing Manual Chapter 4: Part B Hospital (Including Inpatient Hospital Part B and OPPS)