Pay for Performance in Commercial HMOs

Department of Health Policy and Management , Harvard University, Cambridge, Massachusetts, United States
New England Journal of Medicine (Impact Factor: 55.87). 12/2006; 355(18):1895-902. DOI: 10.1056/NEJMsa063682
Source: PubMed


Pay for performance has increasingly become the subject of intense interest and debate, both of which have been heightened as the Centers for Medicare and Medicaid Services moves closer to adopting this approach for Medicare. Although many claims have been made for the effectiveness of this approach, the extent of its national penetration remains unknown.
We surveyed a sample of 252 health maintenance organizations (HMOs) (response rate, 96%) drawn from 41 metropolitan areas across the nation about use of pay for performance. We determined the prevalence of pay-for-performance programs, detailed the features of such programs, and examined the adoption of pay for performance as a function of the characteristics of both the health plans and markets.
More than half the HMOs, representing more than 80% of persons enrolled, use pay for performance in their provider contracts. Of the 126 health plans with pay-for-performance programs, nearly 90% had programs for physicians and 38% had programs for hospitals. Use of pay for performance was statistically associated with geographic region, use of primary care providers (PCPs) as gatekeepers, use of capitation to pay PCPs, and whether the plans themselves received bonuses or penalties according to performance.
Pay for performance is now commonly used by HMOs, especially those that are situated to assign responsibility for a particular patient to a PCP or medical group. As the design of Medicare with pay for performance moves forward, it will be important to leverage the early experience of pay for performance in the commercial market.

12 Reads
  • Source
    • "Inevitably, public scrutiny has triggered interests in performance-based pay in healthcare organizations (Berwick et al., 2003; Jha et al., 2012; Rosenthal et al., 2006). Moreover, exacerbated by the effects of the recession of 2008, the need to cap compensation of executives in nonprofit healthcare organizations has also been raised (Matolcsy & Wright, 2011; Wangness, 2009). "
    [Show abstract] [Hide abstract]
    ABSTRACT: This study examines the relationship between CEO compensation and patient satisfaction in Ontario, Canada. The purpose of this paper is to determine what impact hospital CEO compensation has on hospital patient satisfaction. CEO compensation does not significantly influence hospital patient satisfaction. Both patient satisfaction and CEO compensation appear to be driven primarily by hospital size. Patient satisfaction decreases, while CEO compensation increases, with the number of acute care beds in a hospital. In addition, CEO compensation does not even appear to moderate the influence of hospital size on patient satisfaction. The findings seem to suggest that hospital directors seeking to improve patient satisfaction may find their efforts frustrated if they focus exclusively on the hospital CEO. The findings highlight the need for further research on how CEOs may, through leading and supporting those hospital clinicians and staff that interact more closely with patients, indirectly enhance patient satisfaction.
    Journal of Health Organisation and Management 03/2015; 29(1):111-127. DOI:10.1108/JHOM-02-2013-0034 · 0.36 Impact Factor
  • Source
    • "P4P is now widely being applied in the United States and the United Kingdom [4, 85, 89] and increasingly being implemented in many other countries [5, 7, 24, 46, 66, 84]. However, in contrast to what its popularity in practice suggests, P4P effectiveness has not been convincingly confirmed. "
    [Show abstract] [Hide abstract]
    ABSTRACT: Pay for performance (P4P) is increasingly being used to stimulate healthcare providers to improve their performance. However, evidence on P4P effectiveness remains inconclusive. Flaws in program design may have contributed to this limited success. Based on a synthesis of relevant theoretical and empirical literature, this paper discusses key issues in P4P-program design. The analysis reveals that designing a fair and effective program is a complex undertaking. The following tentative conclusions are made: (1) performance is ideally defined broadly, provided that the set of measures remains comprehensible, (2) concerns that P4P encourages "selection" and "teaching to the test" should not be dismissed, (3) sophisticated risk adjustment is important, especially in outcome and resource use measures, (4) involving providers in program design is vital, (5) on balance, group incentives are preferred over individual incentives, (6) whether to use rewards or penalties is context-dependent, (7) payouts should be frequent and low-powered, (8) absolute targets are generally preferred over relative targets, (9) multiple targets are preferred over single targets, and (10) P4P should be a permanent component of provider compensation and is ideally "decoupled" form base payments. However, the design of P4P programs should be tailored to the specific setting of implementation, and empirical research is needed to confirm the conclusions.
    The European Journal of Health Economics 09/2011; 14(1). DOI:10.1007/s10198-011-0347-6 · 2.10 Impact Factor
  • Source
    • "While the program was scheduled to end in 2010, the Patient Protection and Accountable Care Act of 2010 authorized its extension through 2014 (and renamed the program as the Physician Quality Reporting System, PQRS) indicating Congress' hope that large scale pay-for-performance initiatives will provide leverage for improving quality and reducing healthcare costs. The PQRI was a major step toward establishing P4P in Medicare, consistent with the growing trend in adoption of P4P in a variety of healthcare systems [1]. In 2007, the first year of PQRI implementation, 17% of eligible physicians participated in the voluntary program [2], and participation is expected to have increased since then as the number of measures and size of incentive payments have grown. "
    [Show abstract] [Hide abstract]
    ABSTRACT: Medicare established the Physicians Quality Reporting Initiative (PQRI, recently renamed the Physicians Quality Reporting System) to increase reporting of quality metrics and promote healthcare quality. To identify characteristics of PQRI participants and examine their beliefs about its impact. National survey of 4934 U.S. physicians, conducted June through October 2009. All practice settings. Randomly selected physicians categorized as primary care, medical specialists, surgeons, other specialists. Beliefs about impact of PQRI reporting on quality. The response rate was 49.8%. There were no significant differences between respondents and non-respondents by age, gender, specialty, and region. Thirty-eight percent participated in the PQRI, and were more likely than non-participants to be practice owners (69.0% vs. 57.1%, p<.0001) and to receive performance bonuses through their employer or practice (50.4% vs. 37.0%, p<.0001). Half of PQRI participants believed it had no impact on quality. Medical specialists (57.0%) and surgeons (55.1%) were more likely than primary care (40.4%) and other physicians (45.7%) to say that PQRI has no impact on quality (p=.004). Most PQRI participants believed it had little if any impact on quality. Medicare should identify the reasons behind physicians' negative views while it works to expand the Physicians Quality Reporting System.
    Health Policy 05/2011; 102(2-3):229-34. DOI:10.1016/j.healthpol.2011.05.003 · 1.91 Impact Factor
Show more


12 Reads
Available from