Many factors have contributed to the potential for increased medical error occurrences.  In the early 1980’s, the government instituted financial restraints on healthcare facilities by limiting Medicare payments to a specific lump sum, according to Diagnosis Related Groups (DRG).  A DRG payment is based on the average cost to Medicare for a specific diagnosis.  This was established nationwide and the payment may be more or less than the actual cost to a hospital.

The Balanced Budget Act (BBA) of 1997 further reduced payments to facilities, both inpatient and ambulatory, in the payment method for Medicare beneficiary reimbursements.  Both DRG payments and the BBA of 1997 resulted in more financial pressures on healthcare organizations.  These financial pressures resulted in staffing cuts, greater patient to healthcare professional ratios, and increased stress and burnout by staff.  Many healthcare professionals have had to deal with reimbursement changes in their office practices, as well.

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