The Incremental Cost of Second and Third Ambulatory Procedures

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Abstract
The discount factor applied to payments for second and subsequent ambulatory procedures in a payment system based on ambulatory patient groups (APGs) is important in determining the financial incentives of the system and the adequacy of the payment rates. A1995 empirical study of data from all ambulatory surgery cases done in acute general hospitals in Maryland suggests that the incremental charges associated with an APG when it is a second procedure APG are about 24% of the charges that are Incurred when the APG Is the only procedure APG in an encounter. For the third procedure APG, the percentage drops to 16%. This 24% factor is much lower than the discount factor generally used in APG payment systems. The article presents APG-adjusted charges by payer to show differences in resource use by payer. These results will be useful for organizations developing APG-based payment systems for ambulatory surgery or desiring to use APGs for benchmarking purposes.

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