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Previous Volume 355:1895-1902 November 2, 2006 Number 18 Next

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ABSTRACT

Background Pay for performance has increasingly become the subject of intense interest and debate, both of which have been heightened as the Centers for Medicare and Medicaid Services moves closer to adopting this approach for Medicare. Although many claims have been made for the effectiveness of this approach, the extent of its national penetration remains unknown.

Methods We surveyed a sample of 252 health maintenance organizations (HMOs) (response rate, 96%) drawn from 41 metropolitan areas across the nation about use of pay for performance. We determined the prevalence of pay-for-performance programs, detailed the features of such programs, and examined the adoption of pay for performance as a function of the characteristics of both the health plans and markets.

Results More than half the HMOs, representing more than 80% of persons enrolled, use pay for performance in their provider contracts. Of the 126 health plans with pay-for-performance programs, nearly 90% had programs for physicians and 38% had programs for hospitals. Use of pay for performance was statistically associated with geographic region, use of primary care providers (PCPs) as gatekeepers, use of capitation to pay PCPs, and whether the plans themselves received bonuses or penalties according to performance.

Conclusions Pay for performance is now commonly used by HMOs, especially those that are situated to assign responsibility for a particular patient to a PCP or medical group. As the design of Medicare with pay for performance moves forward, it will be important to leverage the early experience of pay for performance in the commercial market.

Source Information

From the Departments of Health Policy and Management (M.B.R., A.M.E.) and Biostatistics (S.-L.T.N.), Harvard School of Public Health; the Department of Health Care Policy, Harvard Medical School (B.E.L., S.-L.T.N., R.G.F., A.M.E.); the Division of General Medicine and Primary Care, Beth Israel Deaconess Medical Center (B.E.L.); and the Division of General Medicine, Brigham and Women's Hospital (A.M.E.) — all in Boston.

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