The adjusted average per capita cost (AAPCC) serves as the basis for payment made by Medicare to Health Maintenance Organizations (HMOs) on behalf of a beneficiary.
The four original factors that contributed to the AAPCC were:
- welfare status
- institutional status
Since then, the factors influencing AAPCC have expanded and been modified to include Medicaid eligibility and whether the individual has both Part A and Part B of Medicare, among other factors.
Currently, the AAPCC is calculated as 95% of the average cost of delivering medical care in the fee-for-service sector.
Separate AAPCCs are calculated for Part A and Part B services for those who are older, disabled, or with end-stage renal disease (ESRD).