This paper seeks to summarize recent developments announced by the USA's third‐party payers, changing the basis on which they reimburse hospitals for services rendered. Outcome, not just service delivery, now matters more than ever.
The paper takes the form of a narrative review starting from public records of events which the author attended.
In 2006, the Centers for Medicare and Medicaid Services announced an intention to investigate ways of using their purchasing power to promote reduction or elimination of serious and costly errors in the provision of health care services – costly errors that should never happen. In 2008, they announced their new policy. CMS will start denying payment of bills for service in cases where various adverse outcomes occur unless those complications are present on admission. This represents important leadership toward rewarding quality, but raises many important questions about operational details.
The impact and effectiveness of pay‐for‐performance initiatives need to be monitored as new initiatives become operational
Until recently, bills were tendered and paid regardless of quality of care. Leading hospitals and third‐party payers are giving more attention to best practices for dealing with medical error, including not presenting a bill in egregious cases. Hospitals now also face denial of additional payment for treating complications where those complications are deemed preventable.
Historically, financial disincentives diminished the monetary value of steadily improving the safety and quality of patient care. Now, healthcare providers are being put on notice by influential third parties that the payment formula is being corrected. That change has been announced, and responses are being debated, in a very public manner.
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