The current Medicare operation—reimbursing medical goods and services to a growing number of people without basing the reimbursement benefit on the actual cost of the services—is unsustainable, but there are some possible remedies.
Appropriate use of the pay-for-performance system may improve quality of care by counteracting physician incentives to overtreat in fee-for-service situations or undertreat in capitation plans.
To be a useful tool for assessing quality of physician care, pay-for-performance must be designed to include process measures and to not penalize physicians for treating patients with difficult-to-manage conditions.