APC Flashcards

What are APCs

• Ambulatory Payment Classifications (APCs) are payment methods for outpatient services under the Medicare program.
• Established as part of the Federal Balanced Budget Act of 1997 to implement the Outpatient Prospective Payment System (OPPS).
• OPPS mimics the inpatient Medicare payment system based on Diagnosis Related Groups (DRGs).
• APCs specifically apply to hospitals and do not affect physician payments under the Medicare Physician Fee Schedule.
• Hospitals receive APC payments only for outpatient discharges or transfers, not for inpatient admissions.

How do APCs work

• Each APC groups similar services by clinical intensity, resource use, and cost.
• Payments are based on Healthcare Common Procedure Coding System (HCPCS) codes submitted by hospitals on UB 04 claim forms.
• The hospital assumes risk for profit or loss with each fixed APC payment.
• Payment is calculated by multiplying the APC's relative weight by the OPPS conversion factor, with adjustments for geography.
• Patient co-payments typically range from 20% to 40%, with a future cap set at 20%.

Why did CMS create APCs

• APCs were designed to shift financial risk for outpatient services from the Federal government to hospitals.
• The aim is to promote cost-effective, efficient, and profitable outpatient service delivery.

Areas of Hospital Outpatient Services Paid under APCs

• APC payments cover a variety of outpatient services: Outpatient Surgery, Outpatient Clinics, Emergency Department Services, and Observation Services.
• Includes payment for outpatient testing (e.g., radiology, nuclear medicine) and certain therapies (drugs, intravenous therapies, blood products).
• Revised guidelines in 2016 clarified the APC for Observation services, incorporating specific codes for extended assessments and management.

Hospital Outpatient Services NOT Paid under APCs

• Durable Medical Equipment and certain lab tests are paid using non-APC methodologies.
• Bundling of services is emphasized for 2016 and beyond, affecting many outpatient tests in the ED.
• Non-bundled tests include diagnostic radiology studies, bedside ultrasounds, and EKGs, while IV infusions and push dose medications are add-ons that also remain unbundled.