Laboratory Outpatient and Professional Services (LOPS) represent a specific category of medical procedures and tests. This term is primarily used within the Centers for Medicare & Medicaid Services (CMS) framework to define how certain high-volume services are billed and reimbursed. The designation ensures these services, which are frequently performed across various clinical settings, are paid uniformly regardless of whether they occur in a hospital or a physician’s office. This regulatory classification separates them from the bundle of services typically covered under standard facility payments.
Defining the Service Components
The LOPS designation covers three distinct types of services that are carved out of broader payment systems.
Laboratory Services
This component includes clinical diagnostic laboratory tests, such as blood chemistry panels, genetic testing, and urinalysis. These are procedures performed on specimens to obtain objective data for screening, diagnosis, or treatment monitoring. The focus here is on the technical process of analyzing a sample, which requires specialized equipment and personnel.
Outpatient Services
Outpatient Services refers to care provided to a patient who is not formally admitted to a hospital. This encompasses procedures and tests delivered in settings like hospital outpatient departments or independent diagnostic testing facilities. The key aspect is the location of the service, which is a non-inpatient setting, even if it is physically located within a hospital complex.
Professional Services
Professional Services cover the work performed by the licensed healthcare provider, such as a physician, surgeon, or non-physician practitioner. This component includes the cognitive effort, interpretation of results, and the hands-on performance of a procedure. Professional services are distinct from the costs associated with the physical location or the equipment used to perform the service.
The Specific Payment Mechanism
The regulatory nature of LOPS is most evident in how CMS determines reimbursement for these services. CMS utilizes specialized fee schedules for LOPS components, effectively excluding them from the comprehensive payment methods used for most hospital services. This approach ensures consistency in payment rates, regardless of the site of service.
Clinical Laboratory Fee Schedule (CLFS)
The payment for the Laboratory component is primarily determined by the CLFS. Under this system, laboratories that meet certain revenue thresholds are required to report private payer rates for their tests under the Protecting Access to Medicare Act (PAMA) guidelines. These reported rates are then used to establish the Medicare payment amount, which is intended to reflect a market-based rate for the diagnostic tests.
Medicare Physician Fee Schedule (MPFS)
The Professional component is paid through the MPFS. This fee schedule uses a resource-based relative value scale (RBRVS) to calculate payment, which assigns a specific number of Relative Value Units (RVUs) to each service. These RVUs account for the physician’s work, the practice expense, and the malpractice expense, which are then adjusted by a geographic factor and converted into a dollar amount.
The distinction of LOPS ensures that the payment for these specific services is standardized and efficient. By paying for clinical diagnostic laboratory tests and many professional services via the CLFS and MPFS, CMS avoids bundling them into the complex, often higher-rate, payments that apply to the majority of hospital outpatient procedures.
Comparing LOPS to Facility Fees
The financial distinction between LOPS and standard Facility Fees often causes confusion for patients receiving care in a hospital setting. Facility fees cover the hospital’s overhead costs, including the building, utilities, staff salaries, supplies, and equipment used during a patient encounter. These facility services are typically paid under the Outpatient Prospective Payment System (OPPS) when provided in a hospital outpatient department.
A single medical encounter may result in two separate charges: a facility fee and a professional fee. Services designated as LOPS are specifically separated from the OPPS facility payment. For example, when a patient has a blood test at a hospital, the technical performance and analysis of the lab work are paid under the CLFS (a LOPS payment), while the physician’s interpretation of the results is paid under the MPFS (the professional LOPS payment).
In contrast, the charge for the nurse drawing the blood, the use of the examination room, and the administrative costs of the hospital visit are covered by the facility fee, which is paid under OPPS. The LOPS designation, therefore, acts as a mechanism to separate the provider-specific and diagnostic components, paid via their own fee schedules, from the hospital’s operational costs.