Medicare Adjusted Average Per Capita Costs (AAPCC)

Since Health Maintenance Organizations (HMOs) do not have a claims database, they were at a disadvantage in participating in rating Medicare when it was introduced in 1965. After a number of largely unsuccessful efforts, Medicare implemented in 1985 the Adjusted Average Per Capita Costs (AAPCC) payment methodology under authorization from Congress in the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). There is a history of Medicare’s approaches to paying managed care plans in its first 35 years. (more…)