Case payment in Australian hospitals: any skeletons in the cupboard?

This paper examines two major concerns with the proposal to introduce case payment for Australian hospitals. The first relates to the potential negative impact on government budgetary outlays of an open-ended payment system based on output and the second to inherent incentives that may jeopardise quality of care. A number of options for capping payments are presented and the impact of the U.S. Medicare prospective payment system on quality described.