Effects of Paying Physicians Based on Their Relative Performance for Quality

Increasingly, health plans and employer groups across the United States are adopting pay-for-performance programs that link financial incentives to quality of care. Studies examining the effectiveness of these programs have so far focused on the type where physicians receive bonuses if they reach predetermined targets. The incentive program instigated by the Rochester Individual Practice Association (RIPA) did not offer predetermined rewards. Instead, physicians had the opportunity to gain or lose compensation in direct relation to performance. The researchers examined whether this program succeeded in improving quality of care for the patients, in particular, by evaluating a set of performance measures for diabetes. In RIPA, each physician had approximately 5 percent of his or her fees withheld to fund an incentive pool and each doctor was eligible to receive between 50 to 150 percent of their contribution depending on performance. The study found that while performance levels improved immediately after the program took effect, there was no difference between pre- and post-level interventions for patients in the long term. Only the eye examination measure showed a statistically significant change such that physicians improved their adherence rate to offering tests by 7 percentage points in the year after the program was adopted. Further research is necessary to find out how to improve quality of care through incentive structures.