What is Ambulatory Payment Classification (APC)?
The Centers for Medicare & Medicaid Services (CMS) typically makes payment for hospital outpatient department services through the Hospital Outpatient Prospective Payment System (OPPS).
Every item and service reimbursed under the OPPS is assigned to payment groups called Ambulatory Payment Classifications (APC). This method groups services and items that are clinically similar and use equal resources.
APC payments are made under OPPS for services and items provided by hospital outpatient departments.
What are APC codes?
Ambulatory Payment Classification (APC) codes are a set of codes used to determine the payment rates for outpatient services provided by healthcare facilities and hospitals.
Each APC code is associated with a certain payment rate, determined by CMS based on historical cost data. It helps standardize payments for services of similar nature across different providers.
Here are a few of the APC codes:
0701‑2632 Administrative, Miscellaneous and Experimental
2041‑5232 Surgical Procedures on the Cardiovascular System
4003‑9055 Radiation Oncology Treatment
0702‑9540 Drugs and Biologicals (Excluding Cancer/Chemotherapy)
How do you calculate APC?
The standard process for determining APC payments involves multiplying an annually updated relative weight (for a given service) by an annually updated conversion factor.
APC = RW * CF
The Centers for Medicare & Medicaid Services (CMS) publishes the annual updates on the conversion factor and relative weights in the November Federal Register (The conversion factor stated for 2024 is $87.382).
What is the difference between APG and APC?
Ambulatory Patient Groups (APG) and Ambulatory Payment Classifications (APC) are the systems used to categorize and reimburse outpatient services. However, both differ in terms of their application, development, and structure.
State Medicaid programs and some private payers primarily use APG. Medicare, on the other hand, primarily uses APC for the Hospital Outpatient Prospective Payment System (OPPS).
In APG, payments are based on the overall intensity and resource use of the entire outpatient visit rather than just individual services. In contrast, APC enables payments based on individual services or procedures rather than the entire visit.
Examples of Ambulatory Payment Classification (APC)
APC 5012: Temporary Procedures and Professional Services
For instance, Tina, a patient managing a chronic condition such as diabetes, went to a hospital outpatient clinic for a routine follow-up visit.
The APC 5012 category covers the entire cost of Tina's visit. This includes the healthcare provider's time, basic diagnostic tests, and other services.
By categorizing this type of service under APC 5012, the healthcare system ensures that the hospital outpatient clinic receives a standardized payment for managing chronic disease follow-ups, promoting consistency and efficiency in outpatient care delivery.
APC 5072: Level II Excision/ Biopsy/ Incision and Drainage:
For instance, Nick undergoes a minor surgical procedure to remove a skin lesion or perform a biopsy. These procedures are often necessary to diagnose or treat various medical conditions, such as suspicious moles, cysts, or abscesses.
Hospitals receive a standardized payment for this category of minor procedures, which typically includes the costs of the surgical room, supplies, and staff. This type of procedure falls under APC 5072.