What is the Ambulatory Patient Category (APC) payment methodology?

• A. DRG-based inpatient rate
• B. Medicare reimburses hospitals for ambulatory services based upon an all-inclusive APC rate
• C. Only for laboratory tests
• D. Not used by Medicare

Answer: (B)

The key idea is how Medicare pays for outpatient care. Ambulatory Patient Categories group outpatient services a patient receives into categories that have similar resource use and costs. For each encounter, the hospital is paid a single, fixed all-inclusive rate based on the APC to which the visit is assigned. That rate is designed to cover the facility’s costs for that ambulatory encounter, including most services provided during the visit, rather than billing piece by piece. Physician fees are billed separately under a different system, so the APC payment focuses on hospital outpatient payments.

So the correct concept is that Medicare reimburses hospitals for ambulatory services based upon an all-inclusive APC rate, paid per encounter. This differs from inpatient DRG-based payments and from payments that would apply only to labs or to non-Medicare systems.