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Does pay for performance improve quality?

Medical Staff Leader Connection, August 15, 2006

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Few empirical studies of explicit financial incentives for quality exist, and more research is required to determine the effects of pay-for-performance programs on the quality of healthcare, according to a systematic review of the medical literature published in the August 15 edition of the Annals of Internal Medicine.

Several of the studies reviewed found partial or positive effects on measures of quality. However, four studies of the 17 analyzed demonstrated unintended consequences of pay for performance, including adverse selection - when physicians avoid treating the sickest patients - and "gaming the system," such as nursing homes admitting purportedly disabled patients who then "miraculously" recover in short periods of time.

The authors concluded that "ongoing monitoring of incentive programs is critical to determine whether incentives are having unintended effects on quality of care."

The authors proposed a research agenda for studying pay for performance, including:

·        What types of clinical conditions should be the target of financial incentives?

·        Within what types of payment structures (e.g., fee-for-service, salaried, capitation) are financial incentives most effective?

·        What are the optimum magnitude, frequency, and duration of financial incentives?

·        What types of quality measures should be rewarded: process, outcomes, or both?

·        Will important patient care activities that are not rewarded be stopped?

To read the article, click here.

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