Since the inception of the Medicare Outpatient Prospective Payment System (OPPS) three years ago, hospitals have been eligible to receive transitional corridor payments if their OPPS payments were less than the payments they would have received under the prior payment system. However, according to physician and member of Association of American Medical Colleges Thomas Scully, author of a 2003 article on the financial changes to this aspect of the Medicare Program, although the financial structure of the program may strive to thus reduce the gap between OPPS and prior payments, they do not eliminate the gap.

             Scully states that with the exception of children"s and designated cancer hospitals, transitional corridor payments, a critical source of financial support for many major teaching hospitals, still are not fully compensated for by the OPPS program. Major teaching hospitals in particular receive payments that are substantially below their outpatient outpatient corresponding costs. True, "as with the inpatient PPS, the OPPS makes additional payments for outpatient services that are extremely costly ("outliers")." (Scully, 2003, p.4) But the disproportionate reliance on transitional corridor payments by major teaching hospitals demonstrates that the ambulatory payment classification (APC) payment methodology does not address the higher outpatient patient care costs associated with the unique patient load of hospitals, which often draws upon a disproportionately high number of outpatients. (Scully, 2003, pp.1-2).

             The disproportionate receipt of outlier payments is also due to the fact that a pre-calculated portion of outlier payments is used to compensate for inadequate APC payment rates, which does not take into consideration the potential for random cases that have unusually high costs. In other words, rather than taking into consideration extraordinary cases, a general falling-below the margin rate is budgeted for based upon the previous year, even though this rate may widely vary on a yearly or even a monthly basis, depending on case demands.