An Environmental Scan of Pay for Performance in the Hospital Setting: Final Report. The Disconnect Between Payments and Performance


Existing mechanisms for paying hospitals, both Medicare’s per-hospitalization payments using diagnosis-related groups (DRGs) and the per diem payments used by commercial payers, do not differentiate payments to hospitals providing efficient, high quality care. Current payment policies in both the public and the private sector reward the quantity rather than the quality of care delivered and provide neither incentive nor support for improving quality of care. Historically, hospitals have gotten paid the same regardless of the quality of care they provided and, in some cases, may have even received additional payment for treatment of avoidable complications and for readmissions and complications that occurred as a result of providing poor quality care. Starting in 2008, CMS has announced that it will no longer pay Prospective Payment System (PPS) hospitals for the additional costs of certain preventable conditions acquired in the hospital (CMS, 2007a).

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"PayPerform07.pdf" (pdf, 1.22Mb)

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