As the uneasily awaited Medicare outpatient prospective payment system becomes reality July 1, hospital emergency department and outpatient clinics face an even greater need for accurate coding models and systems, as well as vigorous cost-reduction strategies. By the nature of the services they provide, such facilities will find securing adequate payment for appropriate, quality care to be a complex and challenging task. Those organizations that have prepared effectively, however, may benefit under the prospective payment system.