Nonpayment for Performance? Medicare's New Reimbursement Rule

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Abstract
To defuse physicians' and hospitals' opposition to the creation of Medicare back in 1965, the program's congressional architects selected payment mechanisms designed to preserve the status quo.1 But as Medicare has expanded and problems of affordability and quality of care have grown, such an approach has become untenable. Recently, the Centers for Medicare and Medicaid Services (CMS) announced its decision to cease paying hospitals for some of the care made necessary by “preventable complications” — conditions that result from medical errors or improper care and that can reasonably be expected to be averted. This rule, which implements a congressionally mandated change in hospital reimbursement, is the latest in a series of steps that have rendered Medicare's payment policy far less passive than it once was.2

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