Incentives 2.0: Is Paying for Performance Enough?

October 14, 2014

Every day, health care professionals make complex decisions that directly affect the cost and quality of care. Increasingly, both private and public payers are implementing payment reforms to motivate quality improvement, reward providers for delivering high quality care, and, in some cases, impose penalties for sub-par performance, while bipartisan policy proposals to reform Medicare physician payment would modify existing provider incentive programs.

This briefing will explore the effectiveness of pay-for-performance programs to date, highlight factors that influence providers’ choices beyond financial rewards or penalties, and explain how these factors can be used to improve health system performance. A distinguished panel of experts addressed these and related questions.

Dr. Ashish Jha, professor of health policy, Harvard School of Public Health, provided an overview of the evidence on the use of provider incentives in payment reform initiatives in the public and private sectors.

Dr. Ateev Mehrotra, associate professor of health care policy and medicine, Harvard Medical School, discussed the evidence on how well provider incentive programs are working and describe how policymakers can learn from research on provider decision-making to improve health care delivery system and payment reforms.

Dr. Patrick Herson, president, Fairview Medical Group (Minnesota), discussed how Fairview is using physician, provider, and team incentives—both financial and non-financial—to drive improvements in quality.

Ed Howard, executive vice president, Alliance for Health Reform and Anne-Marie Audet, vice president for delivery system reform & breakthrough opportunities at The Commonwealth Fund, co-moderated.
Follow the briefing on Twitter: #PayForPerformance

Contact: Sarah Dash 202-789-2300

The event was sponsored by the nonpartisan Alliance for Health Reform and The Commonwealth Fund.
If you were unable to attend the briefing, here are some key takeaways:
BEYOND FINANCIAL INCENTIVES. Many factors influence provider behavior, including financial incentives, policy regulations, organizational influence and intrinsic motivation, stated Dr. Anne-Marie Audet. Better provider incentives will result in high value care, she emphasized.
PAY FOR PERFORMANCE AND HOSPITAL READMISSIONS. Evidence for the effectiveness of the pay for performance model is variable, stated Dr. Ashish Jha. The Premier Hospital Quality Incentive Demonstration (HQID) compared hospitals focusing on pay for performance against control hospitals and found that there was no significant difference after 6 years.  However, a JAMA study (Patrick Conway, CMS) found that hospital readmissions fell after the introduction of pay for performance incentives. To ensure that incentives work, we must target small number of outcomes, structure it right and play into provider intrinsic motivations, he added.

SMALL REWARDS WORK. Behavioral economics research can be used to design more effective pay for performance programs, stated Dr. Ateev Mehrotra. For example, offering multiple small, immediate rewards rather than one large, uncertain reward can increase provider motivation.
INVESTMENT OF RESOURCES NEEDED. Pay for performance programs require an investment of resources from providers, stated Dr. Patrick Herson.  In an evaluation of Fairview Medical Center’s compensation plan, providers ranked productivity, individual quality and team quality as most important factors in determining their compensation.


Full Transcript (Adobe Acrobat PDF)

Speaker Presentations

Anne ‐ Marie J. Audet Presentation (Adobe Acrobat PDF)
Ashish Jha Presentation (Adobe Acrobat PDF)
Patrick Herson Presentation (Adobe Acrobat PDF)
Ateev Mehrota Presentation (Adobe Acrobat PDF)

Event Details

Agenda (Adobe Acrobat PDF)
Speaker Biographies (Adobe Acrobat PDF)

Event Resources