considering the centuries of medical progress , it was not long ago1988that avedis donabedian summarized the prevailing view that quality was  something of a mystery : real , capable of being perceived and appreciated , but not subject to measurement 
( donabedian , 1988 ) . his disagreement with that view ranks among the most - cited articles in medicine . in measuring quality , donabedian differentiated structure , process , and outcome . for diabetes , for example , structure is establishing a performance improvement project , process is measuring hemoglobin a1c levels , and outcome is the percentage of patients with hemoglobin a1c ( hba1c ) less than 7.0% .
donabedian also argued that outcomes include not only mortality , readmissions , and similar measures but also patient satisfaction . that he had to provide
a voice for patients underscores the traditional provider - centric view of quality . over recent decades  and with the added impetus of the similarly famous to err
is human ( institute of medicine , 1999)we have seen an evolution in views of clinical quality . with some exaggeration to sharpen contrast
, table 1 compares the traditional view with an alternative approach that seems increasingly well accepted .
these days , everyone talks about quality . as of december 2015 , the national quality measures clearinghouse listed 1279 measures , most of them process measures ( ahrq , n.d . ) .
indeed , concern is growing that measures  are proliferating at an astonishing rate ,  causing confusion , cost , and lack of focus ( blumental & mcginnus , 2015 ) .
leaders in the quality movement have called on payers to  align with other payers on a smaller required set of high - impact and outcome - oriented measures  ( cassel et al . , 2014 ) . following that prescription ,
as donabedian noted , neither process nor outcome measures are inherently superior ; much depends on the scientific validity of the linkage between the 2 .
the importance of immunization rates  a classic process measure  is well established , for example ( zhou et al . , 2014 ) .
most patients care more about the goal  preserving life , avoiding infection , maximizing functional status  than about the steps along the way .
for example , will discharge planning be more effective as a check box on a process form  or when the hospital pays penalties for high readmission rates ? that said , outcomes have challenges that process measures do not .
clinicians are often resistant ; interventional cardiologists , for example , fear that performing angioplasty on high - risk patients will make their outcomes look bad ( narins et al . , 2005 ) .
in medicaid , rewarding managed care organizations ( mcos ) for positive birth outcomes could impede access for women with high - risk pregnancies .
casemix adjustment is the all - purpose answer , but in the real world casemix measurement is imperfect and complex ( lee , 2015 ) . whether and how to adjust for sociodemographic factors is especially contentious ( nqf , 2014 ) .
the issue affects both comparisons of medicaid with other populations ( frakt et al . , 2011 ) and within the increasingly diverse medicaid population ( macpac , 2012 ) .
the measures were structural , and basic at that  such as requiring licensure . to be sure , 20 years ago rhode island and other pioneers in medicaid managed care tracked immunization rates and patient satisfaction scores while medicare contractors monitored early discharges from hospital .
but as a general statement , payers were hands - off . in the past decade , the federal government , under both democratic and republican leadership , has propelled quality initiatives under rubrics such as value - based purchasing . as is typical , medicare has been the chosen lever for moving the world of health care .
less typically , washington broadened its focus to include medicaid . on their own initiative ,
medicare measures such as heart attack readmissions and postoperative hip fractures do little to address medicaid priorities .
what are those priorities ? looking first at acute care , figure 1 shows inpatient market shares as a proxy for acute care in general .
medicaid pays for about 20% of all hospital stays nationwide , but for obstetric , pediatric , and newborn care its share is more like half . for adult mental health ,
medicaid also covers more than 40% of stays for hiv / aids , sickle cell anemia , asthma , and congenital heart defects .
the total count of 36.5 million stays also includes 49 835 uncategorized stays . because the  private + mco  payer category may include some stays paid by medicaid managed care organizations , the  medicaid  payer shares are lower - bound estimates . 
neonate  refers to sick newborns . in 2014 , the centers for medicare and medicaid services ( cms ) published its fifth annual report on the quality of pediatric care in medicaid ( cms , 2014a ) .
of the 24 core measures , we count 6 outcomes : low - birthweight babies , central - line infections , body mass index , cesarean delivery rates , emergency department visits , and patient satisfaction .
a task force convened by the national quality forum ( nqf ) has recommended that the cms develop an additional outcome measure for pediatric readmissions ( nqf , 2015a ) . in 2014 ,
the cms also published its first report on quality of care for medicaid adults ( cms , 2014b ) .
of the 26 core measures , we count 10 outcomes : elective early childbirth ; admission rates for diabetes , heart failure , asthma , chronic obstructive pulmonary disease ; control of hypertension ; all - cause readmissions ; hiv viral load suppression ; hba1c values ; and patient satisfaction . results from an ambitious satisfaction survey of medicaid adults are expected in 2016 . for the future ,
an nqf task force recommended an outcome measure for controlling hypertension in people with serious mental illness ( nqf , 2015b ) . turning to long - term care
, medicaid provides 61% of funding , with the second - highest  payer  being individuals and families at 22% ( o'shaughnessy , 2014 ) .
although medicare pays for many nursing facility and home health services , the short - term and postacute needs of its patients are quite different from those medicaid patients who often need services and supports for years .
an nqf committee is now preparing recommendations to the cms for a quality strategy for home and community - based services . over time
what is different today is not just the growing numbers of mco enrollees20 states plan expansions in fy 2015 or fy 2016 ( smith et al .
simultaneously , states are paying more attention to mco quality . in fy 2015 , 21 states implemented new or expanded quality initiatives and 19 states plan to do so in fy 2016 .
these include public reporting of quality metrics , pay for performance , capitation withholds , performance bonuses or penalties , and special quality initiatives and performance improvement projects ( smith et al . , 2015 ) .
the growth of managed care has 3 implications for medicaid outcomes . first , measuring outcomes may show off the great advantage that managed care has over fee - for - service medicaid , namely flexibility in how care is provided and paid for .
second , managing the care of patients with complex needs  think of a homebound person with little income , heart failure , diabetes , arthritis , and depression  raises real concerns about access and quality .
just 5% of the medicaid population accounts for 48% of medicaid spending ( gao , 2015 ) . because casemix adjustors explain , at best , 20% of the cost variation among mco enrollees ( schone & brown , 2013 ) , mcos have a strong financial incentive to stint on access and quality for the most vulnerable patients .
third , the number of medicaid mcos  now 275 nationwide ( kaiser family foundation , 2015)makes it harder to say there is  one medicaid program  in each state .
influence will be fragmented unless medicaid programs coordinate initiatives within , and perhaps across , states .
we now discuss 3 outcomes in a medicaid population : hospital admissions , readmissions , and inpatient complications . in each case
, our analysis compares measures developed by the federal government with the  potentially preventable event  approach developed by 3 m health information systems ( goldfield et al . , 2012 ) .
( neither we nor our employer has a financial interest in any of the measures discussed . )
we chose to discuss admissions , readmissions , and complications because of their importance , the opportunity to compare approaches , and the opportunity to summarize findings from analyses by ourselves and others .
other outcomes such as patient satisfaction , early elective deliveries , low - birthweight babies , mortality , emergency department visits , and functional measures also apply to medicaid , but are beyond the scope of this commentary . for conditions such as asthma , pneumonia , and diabetes ,
the 2 main measures are prevention quality indicators developed by the agency for healthcare research and quality ( ahrq , 2015 ) and potentially preventable admissions ( ppas ) developed by 3 m .
the algorithms are similar in their incidence , but differ in casemix adjustment . in the ppa algorithm , 25 of the 314
all patient refined diagnosis related groups are considered ppas . using the national inpatient sample , we measured ppa incidence in the medicaid population in 2012 ( table 2 ) .
for an estimated 1.1 million ppas , hospitals levied charges of $ 26.8 billion and incurred costs of $ 7.6 billion .
although many admissions can not be prevented , even a 10% reduction would represent $ 758 million in reduced hospital cost , not to mention the benefits for patients .
abbreviations : apr drg , all patient refined diagnosis related group ; n&v , nausea and vomiting ; ppa , potentially preventable admissions .
notes : 
  pediatric  and  adult  definitions are consistent with the care categories shown in figure 1
. stays in the normal newborn , neonate , and obstetric care categories were excluded from this table . including all care categories , the total number of medicaid stays was 7 620 265.rank  refers to the frequency of this drg relative to all drgs in the medicaid pediatric and adult populations , respectively.total stays  is for pediatric and adult care categories , excluding the newborn , neonate , and obstetric categories.2975 medicaid stays did not have a patient age and are excluded from totals shown.because the 
private + mco  payer category may include some stays paid by medicaid managed care organizations , the counts of  medicaid  stays are lower - bound estimates .
 pediatric  and  adult  definitions are consistent with the care categories shown in figure 1 .
stays in the normal newborn , neonate , and obstetric care categories were excluded from this table . including all care categories ,
rank  refers to the frequency of this drg relative to all drgs in the medicaid pediatric and adult populations , respectively .
 total stays  is for pediatric and adult care categories , excluding the newborn , neonate , and obstetric categories .
2975 medicaid stays did not have a patient age and are excluded from totals shown . because the  private + mco  payer category may include some stays paid by medicaid managed care organizations , the counts of  medicaid  stays are lower - bound estimates .
source : authors ' analysis of 2012 national inpatient sample , using the list of potentially preventable admission apr - drgs developed by 3 m health information systems .
prevention quality indicators and potentially preventable admissions can be used to evaluate the performance of mcos and of medicaid programs overall .
they also reflect the quality of long - term care , where an estimated three - fifths of hospitalizations from nursing facilities are potentially preventable ( eg , infections , injuries , and heart failure ) ( spector et al . , 2013 ) . when comparing populations , casemix adjustment is essential for fairness and to minimize access problems for the sickest patients .
prevention quality indicators handle casemix adjustment by excluding patients with certain comorbidities and then standardizing rates by age and sex .
potentially preventable admissions adjust for patient - specific admission risk using the clinical risk groups algorithm that categorizes individuals by health status .
readmissions have been described as  one of those magical occasions in which better care can both save money and improve outcomes  ( jencks , 2010 ) .
certainly , randomized controlled trials have shown that readmissions can be reduced ( jack et al . , 2009 ) .
the obstacle has been the lack of a business model . in running a successful program to reduce heart failure readmissions
10 years ago , park nicollet health services in minnesota cut its own revenue ( abelson , 2009 ) .
 we 've kept it up out of a sense of moral obligation to these patients , but we 're getting killed ,  the hospital 's chief executive said .
 we will totally run out of gas .  to provide that business model , medicare , several state medicaid programs , and other payers now link payment to readmission rates . as of october 2015 ,
another 10 had plans to do likewise ( smith et al . , 2015 ) .
the medicare initiative targets medicare conditions such as heart failure and joint arthroplasty . in non - medicare populations ,
new york , texas , and several other states therefore apply the 3 m potentially preventable readmission ( ppr ) algorithm , which covers almost all conditions .
table 3 , for example , shows that psychiatric readmissions are a much bigger issue in medicaid than cardiac readmissions . while medicare 's sophisticated regression model implicitly assumes that all readmissions are potentially preventable , the ppr approach counts only readmissions with a plausible clinical connection to the initial admission .
it is also a categorical model that provides a reason why each readmission was or was not potentially preventable . of medicaid admissions ,
about 4% were followed by a potentially preventable readmission ( ppr ) within 15 d and about 5% by a ppr within 30 d.a when obstetric stays were excluded , ppr rates were in the range of 6% ( within 15 d)a and 9%-11% ( within 30 d)b , c of all - payer admissions , about 7%-8% were followed by a ppr within 15 d and about 7%-11% by a ppr within 30 dd , e in comparing readmission rates , casemix adjustment is essential .
ppr risk varies predictably with the reason for admission , the severity of illness , patient age , and the presence of a mental health and substance abuse ( mh / sa ) comorbidity for medical and surgical staysa , d conditions with the highest risk of a ppr included psychiatric and liver diseases , with ppr rates approaching 20% .
obstetric conditions were notable for low ppr risk ( < 1%)a , b , d in medicaid , the most frequent readmission category is mh / sa , accounting for 25%-35% of all pprs and , among care categories , the highest risk of a ppr.a , b adult circulatory ( ie , cardiovascular ) pprs accounted for 8%-15% of all pprsa , b the risk of readmission peaks 2 - 3 d after discharge and then falls steadily over timea , d very few readmissions appear to reflect frank medical error .
the most common reasons for readmission were continuation or recurrence of the original medical or mh / sa reason for admission .
only about 2% of pprs were for postsurgical complicationsa , d hospitals exhibit considerable range in casemix - adjusted performance , indicating opportunities for improvementa , c a hospital 's ppr performance in 1 y is roughly correlated with its performance in the following yeara , d about 60%-75% of pprs are to the same hospital as the original discharge.a , c , d the proportion is higher for surgical readmissions and lower for mh / sa readmissionsa of all readmissions for any cause , about 60% are counted as  potentially preventable  in the 3 m ppr algorithmf texas health and human services commission ( 2013a ) .
included at least one potentially preventable complication ( ppc)a in comparing complication rates , casemix adjustment is essential .
ppc risk varies predictably with the reason for admission and the severity of illness in medicaid , the most common ppcs include obstetric hemorrhage , obstetric lacerations , renal failure , and urinary tract infectionsa in medicaid , the most costly ppcs include septicemia , shock , urinary tract infections , renal failure , and respiratory failurea in an all - payer population , common ppcs include renal failure , respiratory failure , and urinary tract infections as a percentage of hospital cost , ppcs accounted for about 4% of the cost of treating medicaid patientsa and about 10% of the cost of treating all patients hospitals exhibit considerable range in casemix - adjusted performance .
the implication is that opportunities for improvement exist the ppc algorithm is more suitable for adults than for pediatric patientsa texas health and human services commission ( 2013b ) .
the study populations comprised all - payer california stays from fy 2006 and all - payer maryland stays from fy 2008 .
great attention has been focused on inpatient complications , and with good reason . in 2010 ,
adult inpatients experienced an estimated 4.8 million adverse events nationwide , or 145 events per 1000 discharges .
these included harmful medication errors , nosocomial infections , pressure ulcers , falls , and others ( ahrq , 2014 ) . in a separate study of medicare inpatients
, physician reviewers judged that nearly half of these types of complications were clearly or likely preventable ( dhhs oig , 2010 ) .
medicare ( and , later , medicaid ) reduced payment for specific stays that included a  never event  or an hac .
the lists were drawn narrowly so that an incident was almost always in and of itself evidence of bad care .
although much publicity was generated , the initiatives had minimal impact , with never events and hacs identified in just 0.6% and 1.0% , respectively , of medicare stays ( with some overlap ) ( dhhs oig , 2010 ) . because medicare pays hospitals by diagnosis - related group , the percentage impacts on payment were smaller still
meanwhile , maryland , texas , and new york were applying an alternative approach , measuring hospital - wide rates of potentially preventable complications ( ppcs  not to be confused with other meanings for this acronym ) ( hughes et al . , 2006 ) .
the ppc list includes not only pneumonia , cellulitis , septicemia , and other infections but also kidney failure , heart failure , dysrhythmias , and other common sequelae of serious illness . as with pprs ,
the assumption was that many complications are potentially preventable , even if many complications are not ( table 4 ) .
maryland 's unique all - payer system has had notable success . by measuring ppc incidence , comparing hospital performance on a risk - adjusted basis , and setting financial incentives ,
the state achieved a 15% reduction in ppc incidence from 2009 to 2011 , reducing hospital cost by $ 111 million or 0.6% ( calikoglu et al . , 2012 ) .
improvement has continued ; a recent report showed double - digit declines between 2013 and 2014 in the incidence of many ppcs ( patel et al . , 2015 ) . under the affordable care act of 2010 , medicare added a new program , which also ( confusingly ) refers to hospital - acquired conditions .
the list is broader and the approach changed to look at hospital - wide rates ( not individual stays ) , with infection rates casemix adjusted ( cassidy , 2015 ) .
effective october 1 , 2014 , low - performing hospitals have seen 1% cuts in medicare inpatient payments . in both the medicare hac and 3 m ppc approaches , monitoring hospital reporting is essential , lest payment cuts fall unfairly on the hospitals that are most diligent about reporting complications .
for conditions such as asthma , pneumonia , and diabetes , hospitalization rates often reflect the quality of care in the community .
the 2 main measures are prevention quality indicators developed by the agency for healthcare research and quality ( ahrq , 2015 ) and potentially preventable admissions ( ppas ) developed by 3 m .
the algorithms are similar in their incidence , but differ in casemix adjustment . in the ppa algorithm , 25 of the 314 all patient refined diagnosis related groups
are considered ppas . using the national inpatient sample , we measured ppa incidence in the medicaid population in 2012 ( table 2 ) . for
an estimated 1.1 million ppas , hospitals levied charges of $ 26.8 billion and incurred costs of $ 7.6 billion . although many admissions can not be prevented , even a 10% reduction would represent $ 758 million in reduced hospital cost , not to mention the benefits for patients .
abbreviations : apr drg , all patient refined diagnosis related group ; n&v , nausea and vomiting ; ppa , potentially preventable admissions .
notes : 
  pediatric  and  adult  definitions are consistent with the care categories shown in figure 1 .
stays in the normal newborn , neonate , and obstetric care categories were excluded from this table . including all care categories ,
the total number of medicaid stays was 7 620 265.rank  refers to the frequency of this drg relative to all drgs in the medicaid pediatric and adult populations , respectively.total stays 
is for pediatric and adult care categories , excluding the newborn , neonate , and obstetric categories.2975 medicaid stays did not have a patient age and are excluded from totals shown.because the 
private + mco  payer category may include some stays paid by medicaid managed care organizations , the counts of  medicaid  stays are lower - bound estimates .
 pediatric  and  adult  definitions are consistent with the care categories shown in figure 1 .
stays in the normal newborn , neonate , and obstetric care categories were excluded from this table . including all care categories , the total number of medicaid stays was 7 620 265 .
 rank  refers to the frequency of this drg relative to all drgs in the medicaid pediatric and adult populations , respectively .
 total stays  is for pediatric and adult care categories , excluding the newborn , neonate , and obstetric categories .
2975 medicaid stays did not have a patient age and are excluded from totals shown . because the  private + mco  payer category may include some stays paid by medicaid managed care organizations , the counts of  medicaid  stays are lower - bound estimates .
source : authors ' analysis of 2012 national inpatient sample , using the list of potentially preventable admission apr - drgs developed by 3 m health information systems .
prevention quality indicators and potentially preventable admissions can be used to evaluate the performance of mcos and of medicaid programs overall .
they also reflect the quality of long - term care , where an estimated three - fifths of hospitalizations from nursing facilities are potentially preventable ( eg , infections , injuries , and heart failure ) ( spector et al . , 2013 ) . when comparing populations , casemix adjustment is essential for fairness and to minimize access problems for the sickest patients .
prevention quality indicators handle casemix adjustment by excluding patients with certain comorbidities and then standardizing rates by age and sex .
potentially preventable admissions adjust for patient - specific admission risk using the clinical risk groups algorithm that categorizes individuals by health status .
readmissions have been described as  one of those magical occasions in which better care can both save money and improve outcomes  ( jencks , 2010 ) .
certainly , randomized controlled trials have shown that readmissions can be reduced ( jack et al . , 2009 ) .
the obstacle has been the lack of a business model . in running a successful program to reduce heart failure readmissions
10 years ago , park nicollet health services in minnesota cut its own revenue ( abelson , 2009 ) .
 we 've kept it up out of a sense of moral obligation to these patients , but we 're getting killed ,  the hospital 's chief executive said .
 we will totally run out of gas .  to provide that business model , medicare , several state medicaid programs , and other payers now link payment to readmission rates . as of october 2015 , 17 states had incentives or policies to reduce readmissions .
another 10 had plans to do likewise ( smith et al . , 2015 ) .
the medicare initiative targets medicare conditions such as heart failure and joint arthroplasty . in non - medicare populations ,
new york , texas , and several other states therefore apply the 3 m potentially preventable readmission ( ppr ) algorithm , which covers almost all conditions .
table 3 , for example , shows that psychiatric readmissions are a much bigger issue in medicaid than cardiac readmissions .
while medicare 's sophisticated regression model implicitly assumes that all readmissions are potentially preventable , the ppr approach counts only readmissions with a plausible clinical connection to the initial admission .
it is also a categorical model that provides a reason why each readmission was or was not potentially preventable . of medicaid admissions ,
about 4% were followed by a potentially preventable readmission ( ppr ) within 15 d and about 5% by a ppr within 30 d.a when obstetric stays were excluded , ppr rates were in the range of 6% ( within 15 d)a and 9%-11% ( within 30 d)b , c of all - payer admissions , about 7%-8% were followed by a ppr within 15 d and about 7%-11% by a ppr within 30 dd , e in comparing readmission rates , casemix adjustment is essential .
ppr risk varies predictably with the reason for admission , the severity of illness , patient age , and the presence of a mental health and substance abuse ( mh / sa ) comorbidity for medical and surgical staysa , d conditions with the highest risk of a ppr included psychiatric and liver diseases , with ppr rates approaching 20% .
obstetric conditions were notable for low ppr risk ( < 1%)a , b , d in medicaid , the most frequent readmission category is mh / sa , accounting for 25%-35% of all pprs and , among care categories , the highest risk of a ppr.a , b adult circulatory ( ie , cardiovascular ) pprs accounted for 8%-15% of all pprsa , b the risk of readmission peaks 2 - 3 d after discharge and then falls steadily over timea , d very few readmissions appear to reflect frank medical error .
the most common reasons for readmission were continuation or recurrence of the original medical or mh / sa reason for admission .
only about 2% of pprs were for postsurgical complicationsa , d hospitals exhibit considerable range in casemix - adjusted performance , indicating opportunities for improvementa , c a hospital 's ppr performance in 1 y is roughly correlated with its performance in the following yeara , d about 60%-75% of pprs are to the same hospital as the original discharge.a , c , d the proportion is higher for surgical readmissions and lower for mh / sa readmissionsa of all readmissions for any cause , about 60% are counted as  potentially preventable  in the 3 m ppr algorithmf texas health and human services commission ( 2013a ) .
of medicaid admissions , about 5% included at least one potentially preventable complication ( ppc)a in comparing complication rates , casemix adjustment is essential .
ppc risk varies predictably with the reason for admission and the severity of illness in medicaid , the most common ppcs include obstetric hemorrhage , obstetric lacerations , renal failure , and urinary tract infectionsa in medicaid , the most costly ppcs include septicemia , shock , urinary tract infections , renal failure , and respiratory failurea in an all - payer population , common ppcs include renal failure , respiratory failure , and urinary tract infections as a percentage of hospital cost , ppcs accounted for about 4% of the cost of treating medicaid patientsa and about 10% of the cost of treating all patients hospitals exhibit considerable range in casemix - adjusted performance .
the implication is that opportunities for improvement exist the ppc algorithm is more suitable for adults than for pediatric patientsa texas health and human services commission ( 2013b ) .
the study populations comprised all - payer california stays from fy 2006 and all - payer maryland stays from fy 2008 .
great attention has been focused on inpatient complications , and with good reason . in 2010 ,
adult inpatients experienced an estimated 4.8 million adverse events nationwide , or 145 events per 1000 discharges .
these included harmful medication errors , nosocomial infections , pressure ulcers , falls , and others ( ahrq , 2014 ) . in a separate study of medicare inpatients
, physician reviewers judged that nearly half of these types of complications were clearly or likely preventable ( dhhs oig , 2010 ) .
medicare ( and , later , medicaid ) reduced payment for specific stays that included a  never event  or an hac .
the lists were drawn narrowly so that an incident was almost always in and of itself evidence of bad care .
although much publicity was generated , the initiatives had minimal impact , with never events and hacs identified in just 0.6% and 1.0% , respectively , of medicare stays ( with some overlap ) ( dhhs oig , 2010 ) . because medicare pays hospitals by diagnosis - related group , the percentage impacts on payment were smaller still
meanwhile , maryland , texas , and new york were applying an alternative approach , measuring hospital - wide rates of potentially preventable complications ( ppcs  not to be confused with other meanings for this acronym ) ( hughes et al .
the ppc list includes not only pneumonia , cellulitis , septicemia , and other infections but also kidney failure , heart failure , dysrhythmias , and other common sequelae of serious illness . as with pprs ,
the assumption was that many complications are potentially preventable , even if many complications are not ( table 4 ) .
maryland 's unique all - payer system has had notable success . by measuring ppc incidence , comparing hospital performance on a risk - adjusted basis , and setting financial incentives ,
the state achieved a 15% reduction in ppc incidence from 2009 to 2011 , reducing hospital cost by $ 111 million or 0.6% ( calikoglu et al . , 2012 ) .
improvement has continued ; a recent report showed double - digit declines between 2013 and 2014 in the incidence of many ppcs ( patel et al . , 2015 ) .
under the affordable care act of 2010 , medicare added a new program , which also ( confusingly ) refers to hospital - acquired conditions .
the list is broader and the approach changed to look at hospital - wide rates ( not individual stays ) , with infection rates casemix adjusted ( cassidy , 2015 ) .
effective october 1 , 2014 , low - performing hospitals have seen 1% cuts in medicare inpatient payments . in both the medicare hac and 3 m ppc approaches , monitoring hospital reporting is essential , lest payment cuts fall unfairly on the hospitals that are most diligent about reporting complications .
should medicaid even be in the business of measuring , judging , and incentivizing quality of care ?
payment methods , however , can not be neutral on quality ( quinn , 2015 ) . by
encouraging or discouraging the provision of care overall and in specific situations , every payment method affects quality of care . paying hospitals for preventable readmissions undercuts efforts to reduce readmissions , for example . in deciding where to focus medicaid 's famously scarce resources
this criterion supports initiatives in pediatrics , obstetrics , mental health , and long - term care .
fourth  and particularly relevant  do current financial incentives undermine quality improvement efforts ( averill et al . , 2011 ) ?
fifth , can medicaid leverage the efforts of others ? developing a new measure costs an estimated $ 500 000 ( ncqa , n.d . ) ; plus , providers already complain about too many disparate measures .
outcome initiatives that may meet these criteria include admissions , readmissions , complications , pressure ulcers and use of restraints in long - term care settings , transfers from long - term care to hospital , patient and family satisfaction in all settings but perhaps especially in long - term care , early elective childbirth , and birthweight . because few people enjoy being judged on quality and having their pay adjusted as a result , skillful implementation matters .
suggestions include carefully balancing discussion of quality improvement and financial savings ; genuine collaboration with stakeholders , including other payers wherever possible ; a staged approach of design , then measurement , then financial incentives ; careful attention to casemix adjustment ; and close monitoring of potentially adverse impacts . over the past 30 years , payment policy worldwide has been revolutionized by the adoption of prospective payment systems , sparked by medicare 's 1983 implementation of payment by diagnosis - related group ( quinn , 2014 ) .
although the technical and political challenges are formidable , that is a worthy goal , for the health care system and for medicaid .
 as medicaid expands in scope and influence , it is evolving toward being a  purchaser  of quality health care . this commentary discusses measurement and incentivization of clinical outcomes in medicaid . 
 advantages and disadvantages of outcome versus process measures are discussed . 
 distinctions are drawn between the roles of medicare and medicaid , including the implications of the growth in medicaid managed care . 
 medicaid 's influence is particularly notable for obstetric , pediatric , newborn , and long - term care . 
 we provide data on 3 medicaid outcomes : potentially preventable hospital admissions , readmissions , and complications . 
 the commentary concludes with suggestions for choosing and implementing outcome - oriented value - based purchasing initiatives in medicaid . 
EVOLVING APPROACHES TO QUALITY
MEASURING CLINICAL OUTCOMES IN MEDICAID
EXAMPLES OF CLINICAL OUTCOMES IN MEDICAID
Preventable hospital admissions
Preventable hospital readmissions
Potentially preventable complications
NEXT STEPS FOR MEDICAID