Ambulatory Payment Classification (APC)

What are ambulatory payment classifications (APCs)?

Ambulatory payment classifications (APCs) are the method by which the government pays facilities for outpatient services through the Medicare program.

Each APC contains services similar in resource utilization, clinical intensity, and cost. All services grouped under the same APC then result in an annually updated Medicare “prospective payment” for the APC.

The APC is a prospective and fixed payment, meaning hospitals are paid upfront for all the included services and may thus sustain a profit or loss if the costs of these services are less or more than the amount they receive from the government.

Hospitals receive APC payments when the Medicare patient is discharged from the emergency department or clinic, or is transferred to another unaffiliated hospital.

Why are ambulatory payment classifications (APCs) important for healthcare?

APCs were created to increase the responsibility of hospitals regarding their outpatient services by placing some of the financial risk on the hospitals. This transfer of risk creates an incentive for hospitals to provide efficient, economical, and profitable outpatient services.