Ambulatory Payment Classification (APC)
Ambulatory payment classification (APC) is the United States government's method of paying for facility outpatient services for the Medicare program.
What is an Ambulatory Payment Classification (APC)?
An Ambulatory Payment Classification (APC) is a system used by the United States government, specifically the Centers for Medicare and Medicaid Services (CMS), to determine payment rates for outpatient services provided by hospitals and other healthcare facilities for the Medicare program. This method of payment applies when a Medicare patient is discharged from an emergency department or clinic, or transferred to another unaffiliated hospital.
APCs were implemented to encourage hospitals to be more responsible for their outpatient services by transferring some of the financial risk to them. This system incentivizes hospitals to provide outpatient services in an economical, efficient, and profitable manner. While many services fall under APC payments, some hospital outpatient services, like certain drugs and supplies, may not be paid under APCs, or may be packaged into a larger APC payment.
What is the difference between an Ambulatory Payment Classification (APC) and DRG?
Both Ambulatory Payment Classifications (APCs) and Diagnosis-Related Groups (DRGs) are systems used to determine payment rates in healthcare, primarily for Medicare. APCs are for outpatient services, while DRGs are for inpatient hospital stays. Both aim to control costs and standardize payments, but in different healthcare settings.
Type of Care: APCs are for outpatient services (e.g., diagnostic tests, minor procedures, emergency room visits), while DRGs are for inpatient hospital stays requiring admission.
Payment Method: APCs provide a fixed payment per service category, whereas DRGs provide a fixed payment per diagnosis regardless of the length of stay.
Affected Parties: APCs impact hospitals and outpatient clinics providing ambulatory care, while DRGs primarily affect hospitals for inpatient care.
Risk Factor: Both systems place financial risk on hospitals if actual service costs exceed fixed payments.
Number of Groups: DRGs have 497 groups, and APCs have 346 groups.
What are examples of an Ambulatory Payment Classification (APC)?
A Medicare patient is discharged from an emergency department after receiving treatment for a sprained ankle. The hospital bills Medicare using an APC for the outpatient services provided.
A patient receives a colonoscopy at an outpatient surgical center. The procedure is grouped with similar surgical procedures, and an APC code is assigned to determine the payment rate.
A patient undergoes physical therapy sessions at a hospital outpatient department following knee surgery. These services are billed to Medicare using APCs.
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