Pay for performance

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Pay for performance is the quality informatics concept of monetary reward for meeting defined quality measures and sometimes efficiency. This is in contrast to other payment schemes such as fee for service.

Issues with pay for performance

A few of the pay for performance worries include:

  1. Performing towards the test – physicians may focus on a handful of measures to practice by, and may not focus on other measures or the larger picture when it comes to patient care.
  2. The reporting burden – time taken away from patient care for administrative care, which computerized information systems is supposed to help with.
  3. Poor time- money balance – some measures seem easy to achieve but if there is not enough money to pay off the time to achieve it, it may not be done.
  4. Measures must reflect evidenced based medicine.
  5. Some incentives are misaligned – for example the number of patients enrolled in a smoking cessation program is a measure, but insurance programs may not pay for enrollment.

How do quality informatics and pay for performance go together?

Information systems are expected to help improve quality measurement and quality control in clinical systems. Pay for performance can use these quality measurements as one of their measures to grade clinical systems by. Public reporting of these measures is expected to improve the quality as well.

Tax Relief & Health Care Act of 2006

The Tax Relief & Health Care Act of 2006 (H.R. 6111) (Public Law 109-432) includes a provision that providers can voluntarily report their quality measures for Medicare patients, the 2007 Physician Quality Reporting Initiative (PQRI) was from July 1, 2007 to December 31, 2007. Physicians and other providers who participate were eligible for a 1.5% bonus incentive. There is also the same initiative for 2009 and 2010.

Studies done on pay for performance

In 2007, Peter Lindenauer and colleagues studied 10 individual and 4 composite measures of quality over two years. 613 hospitals voluntarily reported their quality of care through a national public-reporting initiative. 207 of them simultaneously participated in a pay for performance demonstration project funded by the Centers for Medicare and Medicaid Services. The other 406 hospitals with public reporting only were used as the control hospitals. The methods used was a multivariable modeling to estimate the improvement that can be attributable to financial incentives after adjusting for baseline performance and other hospital characteristics.

The study concluded that those hospitals that did both public reporting and pay for performance saw greater improvements (however modest) in quality than hospitals that did only public reporting. Some of these measures of care dealt with heart failure, acute myocardial infarction and pneumonia. The author did acknowledge that financial incentives were beneficial in this case. However, an area that needs more study is how different pay incentives will change quality measures. Also, public reporting may lead to some hospitals being “better” and others being “poorer” which may have an implication when discussing our hospitals that are meant to be a safety net in the community. Another acknowledgment was that it took extra caregivers or personnel to run the QI project which received monetary compensation for the project. It is hard to tell if when the QI project personnel are not there, whether the improvement in measures is sustainable over time.

In 2009 J.C. Robinson and colleagues studied how pay for performance and quality improvement programs affect physician’s uptake of clinical information technology (CIT). Methods was a national survey of physician groups and independent practice association (IPA) physician organizations with 20 or more physicians in the United States, from 2006 to 2007. They received a 60.3% response rate. 19 CIT capabilities were measured and multivariate statistical analysis of the financial and organizational factors associated with adoption and use of CIT were considered. CIT varied from electronic access to labs, e-prescription services, to alerts for potential drug interaction, and email communication between patient and physician. The study found that adoption of CIT was stronger in those groups that had pay for performance incentives as well as those groups who participated in reporting of quality improvement measures.

Summary of Quality Initiatives from the CMS can be found at:

Summary of The Physicians Quality Reporting Initiative can be found at:


1. Laurie Barclay. Pay for performance linked to modest improvements in hospital quality. From Medscape Medical News found at on 11/21/09.

2. Peter K. Lindenauer, Denise Remus, Sheila Roman, Michael B. Rothberg, Evan M. Benjamin, Allen Ma, Dale W. Bratzler. Public Reporting and Pay for Performance in Hospital Quality Improvement. N Engl J Med. 2007; 356:486-496.

3. J.C. Robinson, L.P. Casalino, R.R. Gillies, D.R. Rittenhouse, S.S. Shortell, S. Fernandes-Taylor. Financial incentives, quality improvement programs and the adoption of clinical information technology. Med Care. 2009. 47 (4): 411-417.

4. Gina Shaw. What can go wrong with pay for performance incentives. From the March ACP Observer, 2006, ACP. Found at on 11/21/09.

5. accessed on 11/21/09.

Submitted by Mary Le