Outlier payments for cardiac surgery and hospital quality.

In 2002, several hospitals in the Tenet system were accused of overbilling Medicare for cardiac surgery. This led to increased scrutiny of so-called outlier payments, which are used to compensate hospitals when actual costs far exceed those anticipated under prospective payment. Since then, the overall proportion of coronary artery bypass graft (CABG) procedures associated with outlier payments has fallen from 13 percent in 2000-02 to 8 percent in 2003-06. Still, there is variation across U.S. hospitals, with some hospitals experiencing much higher rates. These findings imply that there is potential for quality improvement to reduce costs while improving morbidity and mortality.