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. A 1995 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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