Pay for Performance Improving Health Care Quality; but Challenges Persist

    • November 14, 2005

"Pay-for-Performance" programs can improve both medical care and quality of life by giving health care providers a financial incentive to seek measurable improvements in the health of their patients, a diverse group of health leaders engaged in a long-term national study reported today. But they warned that P4P is not a magic bullet and there are many challenges to overcome for it to sustain its effect on the quality of health care, including whether it can work in all health care settings.

The findings, released today at a National Press Club briefing, are the combined result of seven experimental projects designed to test a variety of pay-for-performance models (P4P). Known as the Rewarding Results program, the three-year effort is both the largest and most diverse of its kind.

The projects "provide some of the first tangible evidence that P4P incentives can raise the quality of patient care," says Suzanne Delbanco, CEO of the Leapfrog Group, the organization providing technical assistance to the projects, which are supported by grants from the Robert Wood Johnson Foundation (RWJF), the California HealthCare Foundation (CHCF) and the Commonwealth Fund.

Delbanco cautioned that the findings also show that such programs can be complicated to implement. "P4P clearly has great potential for driving quality improvement, but challenges persist that can be overcome only with the kind of careful and independent evaluations these projects are undertaking to assess their progress," she says.

The results of the Rewarding Results effort come amid a flurry of activity on P4P in both the private and public sectors, including Medicare. Earlier this month, the Senate passed a bill that includes a package of P4P-related measures for Medicare. What has been missing in the discussions, according to health quality experts, are empirical results from rigorously studied programs. As P4P increasingly is viewed as a means to motivate provider behavior change and care improvement, leaders from Rewarding Results have critical lessons to share about the possibilities and challenges it poses.

"Whether or not you believe P4P will make a significant difference, it's time for payers of health care to reward providers who are improving quality rather than turn a blind eye. Pay for performance represents the first real attempt to pay providers differently based on the quality of care they give to patients and these projects have a lot to teach others about what works and what doesn't," says RWJF President and CEO Risa Lavizzo-Mourey, M.D., M.B.A.

One of the biggest questions is whether the P4P model can be implemented in non-managed care settings, such as preferred provider organizations (PPOs), where a majority of Americans get their health care.

Nevertheless, through use of incentives, the Rewarding Results projects have:

  • Significantly increased patient visits to the doctor for everything from adolescent check-ups to diabetic screening among privately insured and Medicaid patients.
  • Pushed physicians and physician groups to embrace information technology and electronic medical records at a faster pace.
  • Increased the numbers of patients who receive annual mammograms, well-check ups and other preventive screenings.
  • Motivated physicians to monitor patient care more aggressively, particularly for chronically ill patients.

"These projects are advancing the goal of a quality-driven health care system," says Sophia W. Chang, M.D., director, Chronic Disease Care for the CHCF. "In California alone, we are excited to see how a diversity of P4P models have engaged physicians in quality improvement and brought patients, particularly those with chronic illnesses, in to receive crucial medical care sooner than they otherwise would have," she adds.

"Most agree that the existing financial incentives in health care need to be realigned. These projects add to the mounting evidence that rewarding good performance can encourage doctors to provide appropriate care to patients to help them live longer and healthier lives," says Karen Davis, president of the Commonwealth Fund.

Despite those achievements, the projects are still grappling with:

  • Working out what size financial rewards are needed to effect change.
  • How to engage physicians continuously in quality improvement activities linked to P4P.
  • Whether the return on investment and the quality gains outweigh the financial and human effort.
  • How to sustain improvement with adequate information technology and other infrastructure.
  • Whether P4P can work in all settings, particularly an environment in which there is a looser network of physicians such as a PPO or even traditional Medicare.

Since 2002, the seven Rewarding Results projects have been identifying ways to measure, disclose, and reward improvements to motivate providers to deliver appropriate care more efficiently; help consumers make more informed health care decisions; and improve medical outcomes for preventable and chronic illnesses. One project is testing out P4P in Medicaid; two are state-based coalitions involving a broad array of partners; one is a large commercial health insurer; one is a managed care plan; one is a hospital-based program; and one is a branded employer-based project.

Projects are being tested in a variety of states including Massachusetts, California, New York, Michigan, Georgia, and Minnesota [see the Related Links section below for a list of project descriptions and the lessons they have learned]. To find out more about the Rewarding Results program visit its Web site.


The Leapfrog Group was founded in November 2000 by the Business Roundtable and has support from the Robert Wood Johnson Foundation. Over 170 Fortune 500 corporations and other large private and public sector health benefits purchasers have joined the Leapfrog Group, representing more than 36 million enrollees. The Leapfrog Group is an initiative driven by organizations that buy health care who are working to initiate breakthrough improvements in the safety, quality, and affordability of healthcare for Americans. It is a voluntary program aimed at mobilizing employer purchasing power to alert America's health industry that big leaps in health care safety, quality and customer value will be recognized and rewarded. For more information visit: