According to the report by management consultants PA Consulting, Payment by Results (PbR) is costing specialist hospitals large amounts of money and discourages investment in new technology known to improve patient outcomes.
Commissioned by the Department of Health and finalised in May, the report was not published until Friday 8 August – the opening day of the Beijing Olympics.
Liberal Democrat shadow health secretary, Norman Lamb, accused the government of attempting to bury the report.
He said: ‘The Health Secretary is probably too busy worrying about the leadership of the Labour party to pay proper attention to the warnings in the report about the damage being wrought in the NHS.
‘What other explanation could there be for sitting on the report for three months and only publishing it on a quiet Friday when most people are on holiday?’
PbR works by paying hospitals when they carry out any treatment on a patient.
They are reimbursed according to a tariff, which the report said did not always cover the cost of specialist cancer treatments.