Pay-for-Performance Programs to Reduce Racial/Ethnic Disparities

What Might Different Designs Achieve?

This research highlights the need to consider the impact of P4P on disparities.

Pay-for-performance (P4P) programs can increase quality of care and decrease costs of care but may, however, have unintended effects on racial/ethnic disparities.

This study uses a two-metric ranking method: a quality rank and a disparity rank. Using process measures of quality for acute myocardial infarction (AMI), heart failure (HF), and pneumonia (PNE), the study looked at data from the Hospital Quality Alliance (HQA) for individual patients 18 years and older admitted to HQA hospitals. Only hospitals with at least 30 minority and 30 White cases in two years combined were included.

Key Findings:

  • National composite quality scores were 82.4 percent (AMI); 60.6 percent (HF); and 48.5 percent (PNE).
  • The disparity scores ranged from five to seven percentage points for the combined minorities group, depending on the condition.
  • Top-performing U.S. hospitals had low disparity scores, with many providing equal or better quality care to minority patients.

This research shows that minorities in the general population are often treated in hospitals that perform poorly on common quality score composites. P4P may unintentionally penalize hospitals serving a disproportionate share of minority individuals.

P4P programs should be designed to consider both quality and disparities to avoid unintended consequences and to better set achievable performance targets.

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