How Financial and Reputational Incentives Can Be Used to Improve Medical Care

Abstract

ObjectivesNarrative review of the impact of pay‐for‐performance (P4P) and public reporting (PR) on health care outcomes, including spillover effects and impact on disparities.Principal FindingsThe impact of P4P and PR is dependent on the underlying payment system (fee‐for‐service, salary, capitation) into which these schemes are introduced. Both have the potential to improve care, but they can also have substantial unintended consequences. Evidence from the behavioral economics literature suggests that individual physicians will vary in how they respond to incentives. We also discuss issues to be considered when including patient‐reported outcome measures (PROMs) or patient‐reported experience measures into P4P and PR schemes.ConclusionWe provide guidance to payers and policy makers on the design of P4P and PR programs so as to maximize their benefits and minimize their unintended consequences. These include involving clinicians in the design of the program, taking into account the payment system into which new incentives are introduced, designing the structure of reward programs to maximize the likelihood of intended outcomes and minimize the likelihood of unintended consequences, designing schemes that minimize the risk of increasing disparities, providing stability of incentives over some years, and including outcomes that are relevant to patients' priorities. In addition, because of the limitations of PR and P4P as effective interventions in their own right, it is important that they are combined with other policies and interventions intended to improve quality to maximize their likely impact.

Impact of Provider Incentives on Quality and Value of Health Care

“…Advocates would argue that incentives can play an important balancing role in a blended payment model, countering the perverse incentives of other forms of remuneration (77), and that the failures of incentives to date represent part of the learning process as program designs develop. In enlisting behavioral economics to rescue a faltering idea, it may be that they are simply yoking two fashionable but unproven bandwagons together; it would not be the first time that the medical fraternity favored intuitive appeal over the weight of evidence (22).…”

“…However, designers have been slow to respond, and evidence for the effectiveness of incentive schemes is yet to materialize. Commentators have therefore returned to the behavioral economics literature in an attempt to reinvigorate pay-for-performance (34,58,77), basing their guidance on interpretations of key biases affecting physician behavior under incentive schemes ( Table 1).…”

Challenges of incentivising patient centred care

“…These scores therefore cannot be used to make meaningful comparisons of quality or outcomes of care between practices. 22 This conclusion may change if PROMs are incorporated into routine practice in primary care and used to guide clinical decision making. 23…”

Pay-for-performance in resource-constrained settings: Lessons learned from Thailand’s Quality and Outcomes Framework

“…In other settings, such as in the UK QOF, the programme can aim to increase a providers' performance by establishing a reporting system that provides on-going feedback about achievement in real-time. The UK QOF has also sought to incorporate the quality improvement potential of reputation incentives in parallel with financial ones through the public reporting of QOF achievements 19 . However, both of these systems rely on a robust and reliable IT system and it may not be possible to introduce them into the Thai QOF unless the NHSO overcomes its IT problems.…”