Although healthcare policymakers and private insurers champion pay for performance (P4P) as a tool for improving the quality of health care, a large P4P initiative failed to produce either a major improvement in quality or notable disruption in care, according to “Can You Get What You Pay For? Pay-for-Performance and the Quality of Healthcare Providers,” by Kathleen J. Mullen, Richard G. Frank, and Meredith B. Rosenthal, published in the Spring 2010 issue of the RAND Journal of Economics. Researchers recently analyzed performance reports from medical groups that worked with a large network HMO before and after implementation of two P4P programs in California. Although the researchers found that some incentivized measures of quality may have improved in response to P4P, they did not find evidence of positive spillovers to other related aspects of care.
The P4P program rewards healthcare providers with bonuses for high marks in areas of preventive medicine, such as blood sugar testing for diabetics. The Institute of Medicine recently recommended that Medicare join private insurers in offering better quality, incentive-based care. However, the research shows that P4P might persuade providers to focus on incentivized areas rather than shift resources toward general quality improvement.
