Pay for Performance in Health Care: Methods and Approaches

document when you quote from it. You must not sell the document or make a profit from reproducing it. Chapter 4 Concerns about quality of care have accelerated since the 1990s, as studies by Wennberg, Fisher, and others have documented large and unexplained variations in rates of health care utilization and clinical outcomes across geographic areas, calling into question the traditional approach of relying on the medical profession to deliver high-quality care uniformly (Davis & Guterman, 2007; Wennberg et al., 2002). Since about 2000, several landmark publications have highlighted widespread problems with patient safety and quality of care, most notably from the Institute of Medicine (IOM) and the These studies helped to galvanize a policy consensus, leading the federal government and private health insurance plans to increasingly focus policy, regulatory, and management interventions more directly on quality of care measurement, quality improvement programs, and financial incentives for quality improvement through pay for performance (P4P). P4P programs have focused primarily on quality of care measures to assess provider performance. Although other performance evaluation approaches, such as efficiency measures, are possible for P4P, those in policy circles currently perceive the lack of incentives for improved quality in the prevailing fee-for-service (FFS) payment systems as a major problem in the US health care system. As a result, P4P programs have focused mainly on addressing this problem. This chapter reviews issues regarding the application of quality measures in P4P programs. The first section of the chapter provides background, including conceptual frameworks for quality of care, and reviews organizations that develop and certify quality measures. The second section discusses different types of quality measures, including structure, process, and outcome measures (Donabedian, 1966). The third section reviews issues in selecting quality measures for P4P programs. The fourth section describes methods for 100 Chapter 4 analyzing quality measures for P4P. The fifth section discusses public reporting of quality measures and how that separate approach to quality improvement can be integrated with P4P programs.