OBJECTIVE: The Centers for Medicare and Medicaid Services (CMS) assigns relative weights to procedures in the hospital outpatient setting and may do so for pharmacy handling costs in 2006. This study examines the current approach to assignment of relative weights for drug and biological administration codes under the CMS Hospital Outpatient Prospective Payment System (OPPS) and compares this approach to the resource-based level of effort concept initially created for payment to physicians. METHODS: Resource-based methods originally proposed for the hospital OPPS and equivalent measurement methods in the original Harvard RBRVS work were deconstructed and evaluated. The MedPAC rationale for recommendation of relative weights for payment of pharmacy handling costs and the proposed weights were also examined and evaluated. RESULTS: The evaluation sought indications of resource-based level of effort applications in the OPPS and their comparability to the original resource-based studies, especially in the area of intensity measures. The underlying intent of the resource-based relative value scale (RBRVS) was to create a hierarchy of resource-based level of effort in physician service delivery. The concept of hospital OPPS was also intended to reflect resource-based service delivery. Procedures are assigned a relative weight, implying that payment includes level of effort resources. Recommended 2006 handling costs for drugs are assigned five relative weights, each compared to drawing up an injected drug for administration. We postulate these relative weights contain insufficient recognition of the level of effort and resource consumption required, thus distorting the concept's initial intent. CONCLUSIONS: Many researchers and policy makers assume that relative weights equate to level of effort resource consumption in all instances. We cannot find this is so regarding the five levels of relative weights recommended for OPPS pharmacy handling costs. Because resource consumption is disproportionately greater than relative weights assigned in many cases, the resulting payment will be understated.