P4P: Building a culture of quality and bringing costs of care down

Pay-for-performance—it's a term you'll hear more about. Medicare officials think pay-for-performance (P4P) could encourage hospitals to improve quality while bringing costs down—a priority given that the hospital trust fund is projected to run out of money in 11 years. Congress has asked Medicare to come up with a plan that would pay hospitals a little more for improving on certain quality indicators, starting in 2009. The plan would build on Medicare's current pay-for-reporting plan, which ties hospitals' quality reporting to their payment updates.