What is the main distinction between a DRG and an APC in revenue management?

The main distinction between a Diagnosis-Related Group (DRG) and an Ambulatory Payment Classification (APC) lies in their application to different types of healthcare services. A DRG is specifically used for categorizing inpatient hospital services. It groups patients who are expected to have similar hospital resource use and are classified based on their diagnosis and treatment during an inpatient stay. This classification is crucial for determining reimbursement rates from Medicare and other payers for inpatient care.

On the other hand, an APC is related to outpatient services. It categorizes services that are provided in outpatient settings, such as same-day surgical procedures, evaluation and management visits, and other services that do not require an overnight hospital stay. The APC system is designed to bundle payments for outpatient services, facilitating a more streamlined billing process and helping healthcare providers manage costs associated with outpatient care.

This distinction is fundamental to revenue management in healthcare, as it directly influences how facilities code and bill for various services, impacting overall revenue cycle operations.