Link Between Pay for Performance Incentives and Physician Payment Mechanisms: Evidence From the Diabetes Management Incentive in Ontario

Abstract

Pay for performance (P4P) incentives for physicians are generally designed as additional payments that can be paired with any existing payment mechanism such as a salary, fee-for-services and capitation. However, the link between the physician response to performance incentives and the existing payment mechanisms is still not well understood. In this article, we study this link using the recent primary care physician payment reform in Ontario as a natural experiment and the Diabetes Management Incentive as a case study. Using a comprehensive administrative data strategy and a difference-in-differences matching strategy, we find that physicians in a blended capitation model are more responsive to the Diabetes Management Incentive than physicians in an enhanced fee-for-service model. We show that this result implies that the optimal size of P4P incentives vary negatively with the degree of supply-side cost-sharing. These results have important implications for the design of P4P programs and the cost of their implementation.

A population-based analysis of incentive payments to primary care physicians for the care of patients with complex disease

“…37 The Ontario picture is complicated by the fact that physician payment mechanisms were also modified, which may have influenced both care for patients with chronic disease 38 and uptake of incentives. 39 Most research in this area focuses on care for individual diseases, using the delivery of specific services as indicators of quality. 24,[30][31][32][33][34] Evidence of the effect of incentive-based programs on broader outcomes such as access to primary care, continuity of care, 40 hospital admissions [25][26][27][28][29]41,42 and overall resource use 30,34,43 has been inconclusive.…”

Implementation Processes and Pay for Performance in Healthcare: A Systematic Review

“…13 Another study found that the underlying payment structure influenced performance, and that higher incentives may be necessary when the degree of cost sharing is lower. 9 Finally, a study examining the relationship between P4P and patient experience in California over a 3-year period found that, compared with larger incentives (>10%), smaller incentives were associated with greater improvement in provider communication and office staff interaction measures. 11 These findings were contrary to the hypotheses of the authors, who concluded that their findings may have been influenced by the tendency of practices with smaller incentives to incentivize clinical quality and patient experience measures (vs. productivity measures), which were also associated with improvements in office staff interaction.…”

“…Thirteen studies [9][10][11][12][13][14][15][16][17][18][19][20]50 examined program design features and found:…”

Prevention of cardiovascular disease in rural Australian primary care: an exploratory study of the perspectives of clinicians and high-risk men

“…Blended payment systems have been recommended worldwide in primary care to ensure an appropriate mix of service provision (Roland and Campbell 2014). Systems such as those in, Canada and New Zealand, for example, include a combination of incentives, universal capitated funding, patient co-payments and targeted fee-for-service for specific items (Wranik and Drurier-Copp 2010;Goodyear-Smith et al 2012;Kantarevic and Kralj 2013). Blended payment systems have been shown to have had positive effects on preventive care activity (Wranik and Drurier-Copp 2010).…”