Pay for Performance (P4P)
Pay-for-performance (P4P) programs are designed to offer financial incentives to physicians and other health care providers to meet defined quality, efficiency, or other targets. Examples of recent P4P research and tools supported by the Agency for Healthcare Research and Quality (AHRQ) are briefly summarized below.
AHRQ Resources on Pay for Performance (P4P) (P4P) may be defined as "a strategy to improve health care delivery that relies on the use of market or purchaser power. AHRQ Resources on Pay for Performance (P4P), depending on the context, refers to financial incentives that reward providers for the achievement of a range of payer objectives, including delivery efficiencies, submission of data and measures to payer, and improved quality and patient safety."1
Health plans, large employers, and other purchasers of health care services, including Medicare and Medicaid, seek evidence on what works and what does not work in AHRQ Resources on Pay for Performance (P4P), including what benchmarks to use and how to structure incentives to promote and sustain quality improvement.
The Agency for Healthcare Research and Quality (AHRQ) conducts and supports research on AHRQ Resources on Pay for Performance (P4P) to help meet these information needs. Examples of recent P4P research and other activities supported or conducted by AHRQ are:
Pay for Performance (P4P): A Decision Guide for Purchasers, by R. Adams Dudley and Meredith B. Rosenthal. (Final Contract Report) Rockville, MD: Agency for Healthcare Research and Quality, 2006. AHRQ Pub. No. 06-0047.
This guide presents 20 questions for purchasers to address when considering AHRQ Resources on Pay for Performance (P4P), reviews options and any available evidence that may inform their decisionmaking, and discusses potential effects and unintended consequences. Questions are grouped into one of four phases: contemplation, design, implementation, and evaluation.
Toward a Research Agenda on Quality-Payment Alignment: Findings From an Invitational Colloquium. Rockville, MD: Agency for Healthcare Research and Quality, May 2007. AHRQ Pub. No. 07-0055-EF.
This report summarizes the findings from a November 2006 meeting convened by the Agency for Healthcare Research and Quality and the Commonwealth Fund to clarify research needs and further define areas for investigation into aligning provider payment incentives and consumer financial incentives with quality-of-care improvement strategies.
"Pay-for-performance: will the latest payment trend improve care?" by Meredith B. Rosenthal and R. Adams Dudley. In: Journal of the American Medical Association 2007 February 21;297(7):740-4.
The authors review five key design elements of pay-for-performance programs that are important determinants of their influence: (1) deciding on an individual vs. group focus for payment; (2) paying the right amount; (3) selecting high-impact performance measures; (4) having payments reward all high-quality care; and (5) making quality improvement for underserved populations a priority.
How Four Purchasers Designed and Implemented Quality-Based Purchasing Activities: Lessons From the Field, by Meredith B. Rosenthal and Joe Camillus. [Report commissioned by the Agency for Healthcare Research and Quality.] Rockville, MD: Agency for Healthcare Research and Quality, 2007. AHRQ Pub. No. 07-RG008.
This report summarizes the results of a group of studies undertaken to examine the breadth of purchaser efforts to improve quality of care in their respective communities. The studies assessed public report cards sponsored by the Ohio Department of Aging and the Colorado Business Group on Health and pay-for-performance schemes sponsored by the Maine Health Management Coalition and the Hudson (New York) Health Plan.
"Purchaser Strategies To Influence Quality of Care: From Rhetoric to Global Applications" by Peggy McNamara. In: Quality and Safety in Health Care 2006 June;15(3):171-173. AHRQ Pub. No. 06-R051.*
This commentary discusses three strategies that health care purchasers can use to influence quality and safety: 1) selective contracting based on quality; 2) payment differentials based on quality; and 3) sponsorship of comparative provider report cards. Examples illustrating each strategy are included with the aim to encourage thoughtful discussion about whether or not one or more purchaser strategies might support a nation's goals to improve health care.
"Incentive Implementation in Physician Practices: A Qualitative Study of Practice Executive Perspectives on AHRQ Resources on Pay for Performance (P4P)" by Barbara G. Bokhour, James F. Burgess Jr., Julie M. Hook, et al. In: Medical Care Research and Review 2006 February;63(1 Suppl):73S-95S. (Grant HS13591).
The authors discuss findings from a qualitative survey of physician practice executives' views on AHRQ Resources on Pay for Performance (P4P), including quality incentives as change agents that are both bonus rewards and superior to utilization incentives. This study, part of the Rewarding Results demonstration project evaluation, also examines the role of executives in achieving successful pay-for-performance programs.
"Improving Quality of Care: Emerging Evidence on Pay-for-Performance," edited by Dan Berlowitz, James F. Burgess Jr., and Gary J. Young. Medical Care Research and Review 2006 February;63(1 Suppl). AHRQ Pub. No. OM06-0036.*
This AHRQ-supported journal supplement includes five in-depth papers: one addresses pay-for-performance implementation issues, specifically how physician practices may transmit incentives to individual physicians; another discusses how disease management programs may be a potential feature of P4P programs focusing on quality of care for patients with chronic conditions; and three papers offer evidence on the effectiveness of P4P programs in different care settings—a large physician group practice, a multihospital system, and a health plan with a statewide P4P program for hospitals.
"Pay-for-Performance Research: How To Learn What Clinicians and Policy Makers Need To Know," by R. Adams Dudley. In: Journal of the American Medical Association 2005 October 12;294(14):1821-23.
This editorial maintains that investigators and research funding agencies need to develop strategies addressing four fundamental aspects of pay-for-performance research: study design, selection of theory-driven hypotheses, reporting of research findings in a complete and informative manner, and setting of research priorities.
"Quality-Based Payment: Six Case Examples" by Peggy McNamara. In: International Journal for Quality in Health Care 2005 August;17(4):357-62. AHRQ Pub. No. 05-R060.*
This review article explores contexts in which quality-based payment appears feasible in order to examine whether and how quality-based payment might fit within a particular developing country's framework of policies that would ensure and promote quality of care. The author uses six quality-based payment schemes to identify environmental contexts and design features.
"Conceptual Issues in the Design and Implementation of Pay-for-Quality Programs," by Gary J. Young, Bert White, James F. Burgess Jr., et al. In: American Journal of Medical Quality 2005 May-June;20(3):144-50. (Grant HS13591).
This article provides health care professionals with a framework for designing, implementing, and evaluating pay-for-quality programs—i.e., programs which offer financial incentives to providers for achieving predefined quality targets. Examples are drawn from the Rewarding Results demonstration project for which the authors serve as the national evaluation team.
"Quality-Based Purchasing in the United States: Applications in Developing Countries?" by Peggy McNamara. In: Spending Wisely: Buying Health Services for the Poor (Alexander S. Preker and John C. Langenbrunner, editors). Washington, DC: World Bank, 2005; chapter 22, pp. 375-88. AHRQ Pub. No. 06-R009.*
This book chapter discusses quality-based purchasing strategies, including both supply- and demand-directed employer efforts to promote quality. The author points out that data and information collection is prerequisite to any strategy because of the need to identify high-performing providers in accordance with employer-relevant quality indicators. Recent evidence, though limited, seems to suggest that collection and dissemination of comparative provider performance data may have quality improvement applications for purchasers in low- and middle-income countries.
"Paying for Quality: Providers' Incentives for Quality Improvement," by Meredith B. Rosenthal, Rushika Fernandopulle, HyunSook Ryu Song, et al. In: Health Affairs (Millwood). 2004 March-April;23(2):127-41. (Grant HS10803)
This article examines more than 30 examples of pay-for-quality programs over a 5-year period and assesses each of the identified programs in terms of key design features, including the market share of payers, the structure of the reward system, the amount of revenue at stake, and the targeted domains of health care quality.
Strategies To Support Quality-based Purchasing: A Review of the Evidence by R. Adams Dudley, Anne Frolich, David L. Robinowitz, et al. (Prepared by the Stanford-UCSF Evidence-based Practice Center under Contract No. 290-02-0017). Rockville, MD: Agency for Healthcare Research and Quality, 2004. Technical Review 10, AHRQ Pub. No. 04-0057; Technical Review Summary, AHRQ Pub. No.04-P024.* Go to: https://www.ahrq.gov/clinic/tp/qpurchtp.htm
This report develops a conceptual model of how incentives influence provider behavior, summarizes what is known from randomized controlled trials about the effectiveness of different quality-based purchasing strategies, describes ongoing research, and presents the results of simulations to determine whether outcomes reports are too influenced by chance events to be used in quality-based purchasing.
Evaluating the Impact of Value-Based Purchasing Initiatives: A Guide for Purchasers, by Dennis P. Scanlon, Michael Chernew, and Hilary E. Doty. (Report prepared for the Agency for Healthcare Research and Quality under Contract No. 290-95-2000.) Rockville, MD: Agency for Healthcare Research and Quality, 2002. AHRQ Pub. No. 02-0029.
This guide defines value-based purchasing (VBP), provides examples of the types of activities associated with VBP, and discusses five steps involved in evaluating VBP activities. This guide was initially prepared for an expert meeting convened by AHRQ in 2001 entitled "Understanding How Employers Can Be Catalysts for Quality: Insights for a Research Agenda."
For More Information
Printed copies of the reports marked with an asterisk (*) may be obtained free of charge from the AHRQ Publications Clearinghouse via phone at 800-358-9295 or Email at AHRQPubs@ahrq.hhs.gov. Order by title and publication number.