Lessons From Evaluations of Purchaser Pay-for-Performance Programs

There has been a growing interest in the use of financial incentives to encourage improvements in the quality of health care. Several articles have reviewed past studies of the impact of specific incentive arrangements, but these studies addressed small-scale experiments, making their findings arguably of limited relevance to current improvement efforts. In this article, the authors review evaluations of more recent pay-for-performance initiatives instituted by health plans or by provider organizations in cooperation with health plans. Findings show improvement in selected quality measures in most of these initiatives, but the contribution of financial incentives to that improvement is not clear; the incentives typically were implemented in conjunction with other quality improvement efforts, or there was not a convincing comparison group. However, the literature relating to purchaser pay-for-performance initiatives does underscore several important issues that deserve attention going forward that relate to the design and implementation of pay-for-performance initiatives.