Can Pay-for-Performance Improve Quality and Reduce Health Disparities?

P ay-for-performance programs have been embraced by United States and United Kingdom policy makers and payors (those who pay for health-care services) as a means to improve the quality of health care. In fact, since the Institute of Medicine's 2001 report Crossing the Quality Chasm suggested realigning incentives to improve care [1], the UK's National Health Service (NHS) introduced pay-for-performance (P4P) contracts for all family practitioners. In the US, more than half of commercial health maintenance organizations have started using such contracts, and recent legislation requires that the Centers for Medicare and Medicaid Services do the same for Medicare [2]. Despite growing enthusiasm for P4P programs in the policy and commercial sectors, the evidence to support their effectiveness is weak. Only a handful of studies have directly examined the impact of fi nancial incentives on improving health-care processes and outcomes, and the results of those studies are mixed (K. unpublished data). Generally, studies show that modest improvements can be achieved on the measures that are explicitly incentivized, at least over the short term [3]. However, it is unclear whether the improvements are a result of the fi nancial incentives themselves rather than simply the increased focus on services resulting from measurement of performance and publication of data [4]. In addition to the lack of evidence supporting P4P programs, there are also concerns about the possible unintended consequences of implementing P4P. For example, in their evaluation of the NHS P4P program, Doran and colleagues found that the strongest predictor of high achievement (i.e., where a family practice successfully met a number of pre-specifi ed quality targets) was exception reporting—a practice where physicians can exempt certain patients from being included in their performance data due to medical or other reasons [5]. Exception reporting rates for physician practices ranged from 0% to 85.8%, with a median of 6%. In addition to creating incentives for dishonest reporting of data, or gaming, we are starting to see evidence that P4P may undermine other important quality initiatives such as reducing health disparities. In the NHS program, family practices with a high proportion of patients who were living in single-parent or low-income households were less likely to meet the quality targets [5]. In a new study published in PLoS Medicine, Christopher Millett and colleagues more fully explore the link between health disparities and P4P [6]. The authors provide the fi rst look at the differential impact of …