Preparing for quality-based payments: trends and legal barriers to successful implementation

Healthcare providers, attorneys, and others working in the healthcare industry in the United States are well aware of the widespread concerns among federal and state policymakers (among others) about the growing cost and variability of care among different segments of the population. To address these concerns, many policymakers have begun supporting pay-for-performance and other quality-focused initiatives. This article examines the legal barriers to successful implementation of such initiatives, focusing specifically on payment changes in the Medicare program, and on the federal fraud and abuse laws (namely, the Anti-Kickback Statute, the Civil Monetary Penalty Law, and the Physician Self-Referral Law). As part of this examination, the article highlights several central statutory developments and federal agency initiatives that have begun exploring quality-based payment in the Medicare program, as well as some important initiatives likely to receive attention in the current political environment. The article also proposes congressional and regulatory actions that could help remove or reduce the legal impediments these initiatives will face. Finally, the article provides suggestions to help providers (especially hospitals) prepare for quality-based payment reforms.