Abstract
Pay for performance has become almost a cliché in health policy discussions during the past 5 years. Proponents and opponents have tended to take sides based largely on abstractions, but in reality pay for performance is likely to be more beneficial than critics allow and less transformational than its strongest advocates suggest. Both economic theory and common sense support the notion that payment for healthcare should be determined, at least in part, based on meaningful indicators of quality or value, but precisely how this should occur depends on a number of factors, including the importance of patient differences and the nature of physician motivation. Despite considerable investment in both the infrastructure for and operating expenses of pay for performance, we have learned very little to date that is useful for determining how much and in what way performance should influence provider payment in healthcare. Looking ahead, it seems likely that performance incentives will remain part of the reimbursement landscape, but that payers and policy makers will turn their attention to more comprehensive payment reform. Novel mixed payment (i.e., part prospective, part fee for service and part pay for performance) models have emerged as the most promising proposals for such reform.
Published Version
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