Kai Ryssdal: Health care economists have been saying forever that if you want to lower health care costs, you've got to reward doctors and hospitals for giving better care, not just more care. Now, one of the country's biggest insurers says it's going to do just that. From the Marketplace Health Desk at WHYY, Gregory Warner reports.
Gregory Warner: Every year, the insurance company WellPoint pays hospitals about 8 percent more than it did the year before to keep up with health care costs. But starting next year, hospitals won't get that raise unless they meet WellPoint's new criteria for quality and safety -- things like reductions in surgical errors, and banning smoking on hospital grounds.
David Cutler: It really shows that the private insurance industry is waking up to the new reality.
David Cutler is a health economist at Harvard. He says WellPoint's move forecasts a larger trend. Next year, Medicare will start paying higher reimbursements to more efficient hospitals.
Cutler: And then you say, look I have to practice differently. I'd better figure out how to get rid of those re-admissions, I better figure out how to eliminate those infections, otherwise I'm going to be out of business.
Which he says will make patients safer and reduce extra procedures that cost taxpayers billions of dollars.
Critics say WellPoint's plan could punish big city hospitals. Buz Cooper teaches medicine at the University of Pennsylvania.
Buz Cooper: It's poor people in urban neighborhoods whose outcomes are poor. And one can't really adjust for that in the billing data that gets reported to WellPoint.
He says the new-quality test could push hospitals to chose better patients: wealthier and healthier.
In Philadelphia, I'm Gregory Warner for Marketplace.