In 2000, CMS implemented a new congressionally mandated hospital outpatient prospective system (OPPS). The new system changed payments for hospital outpatient services from a retrospective cost basis to a prospective amount based on the median resource cost of groups of services expected to be provided. Because of the magnitude of the potential impact of this payment change on both rural hospitals and rural residents, small rural hospitals were granted protection from payment reductions in the transition to OPPS-referred to as "hold harmless" provisions. Given changes in rural hospital reimbursement for outpatient services, particularly as the hold-harmless protection is expected to phase out in December 2009, the purpose of this policy brief is to explore alternatives to the OPPS and how these options would affect rural hospitals.