NW Overview

"Overview" contains three sections: 1) Definition, 2) Overview, and 3) Expansion

1)       Definition. This section is devoted to providing a ten-thousand-foot view of P4P. Pay for Performance has many definitions. Features common to most definitions include an insurer or health system awarding a periodic bonus to clinicians or practices that reach particular quality goals. Quality goals are usually consistent with the National Committee for Quality Assurance's Health Plan Employer Data and Information Set (HEDIS) quality markers. There are three types of quality markers: structure (EMR), process (checking HbA1c every 3 months in type 2 diabetics), or outcome (HbA1c < 8.0%). Programs are currently free to choose the measures and rewards they see fit. The reward, or incentive, is typically a cash bonus ranging from program to program between 1% and 25%. Most P4P rewards are over and above traditional fee for service or capitated payments. However, some P4P programs are funded by withholding a percentage of the traditional payments. Apart from P4P proper, insurers and health systems are using incentives such as physician report cards and tiering to exert additional financial and social pressure for clinicians to achieve quality goals.  Historically P4P was conceived of as a quality improvement tool. More recently it has been described as a strategy for cost control or promotion of cost-effectiveness. From its inception P4P has been surrounded by controversy, which is discussed in detail throughout this website.

2)       Overview. Both journal articles (2, 25, 81, 117, 118, 142, 153, 163) and newspaper articles (9, 21, 28, 135, 290, 302) reflect a general entrenchment of P4P within American health care. Many articles provide a general overview of the principles of P4P (25, 152, 153, 198, 266, 303). Specifically, Chaix-Couturier (267) demonstrates that in all physician payment systems there are financial incentives which can cause perverse outcomes. Conrad (292) provides a general overview of the controversies surrounding P4P. Perhaps the most comprehensive overview of all the existing P4P is literature was written by Greene and Nash (326). As the acceptance of P4P expands, so does the influence of its programs, and the amount of patients it reaches. The Center for Medicare and Medicaid services (CMS) has contributed largely to the growth of P4P. A section on this website is devoted to the CMS National Program under "Programs." Other quality improvement organizations such as Bridges to Excellence, Leapfrog (67), AHRQ, and IHA, continue to contribute to the expansion of P4P.

3)        Expansion. The rapid expansion of P4P in the United States has produced a wide variety of 160+ programs. This heterogeneity has led many to question, "What does an effective P4P system look like?" Researchers (135, 178, 192, 203, 204, 308) continue to study this question and provide recommendations. Several sections of this website are devoted to answering various aspects of this general question such as, "Should P4P programs risk adjust by patient population?", "Should programs pay for achieving clinical outcomes or adhering to guidelines?", and "Should programs allow for exception reporting when a patient's medical condition conflicts with a suggested measure?"

       Despite much controversy and public criticism, physicians are increasingly accepting P4P (180, 190). This topic is also examined in the "Data" section. Furthermore, the concept of performance-based reimbursement has been incorporated into health care system designs such as medical homes (266), structural aspects of care (204), and accountable care organizations (266). These topics are discussed further in the section titled "other performance based incentive section. 

Key Articles: 326

Authors' Opinion: There are many good overviews of P4P in the literature. The biggest challenge to date has not been defining it, but rather putting forward a program that physicians, payers, and patients are all satisfied with. Until then, the world of P4P has a lot of potential as it can tie many aspects of care to incentives that can either pay for the care, or provide bonuses to provide that care well. 

Overview Literature

(2) Henley, E. Pay-for-performance: What can you expect? The Journal of Family Practice. 2005: 54(7) 609-612.

PMID: 16009089


  • Provides overview of P4P, and how prominent groups like CMS and Bridges to Excellence are using it.

  • Mentions difficulties in implementation.

Significance to Literature:

  • Overview of P4P through 2005.

(9) Seuiguer E. In Health Care, Do We Get What We Pay For? Focus at Harvard Medical School. June, 2004.


  • Summarizes P4P through 2004.

  • Lists criteria of P4P including: clinical, patient experience, and investment in information technology.

  • Questions if P4P will be enough to improve quality.

Significance to Literature:

  • P4P has similar issues today as it did in 2004.

(21) Casey BR. What is Pay for Performance? Kentucky Medical Association. 2006: 104(5): 177-178.

PMID: 16734040


  • This brief letter from Kentucky Medical Association president-elect summarizes P4P, why it exists, and who is using it in 2006.

Significance to Literature:

  • An overview of P4P in 2006.

(25) Wachter RM. Expected and Unanticipated Consequences of the Quality and Information Technology Revolution. JAMA commentary. 2006: 295(23) 2780-2783.

PMID: 16788133


  • Article warns that new technologies often bring unwanted consequences.

  • Author believes the same will happen with quality measures playing a large factor in healthcare.

  • The only way to find out some consequences is to test out the innovation.

Significance to Literature:

  • Advocates innovation, and warns of consequences.

(28) Endsley S, Baker G, Kershner BA, Curtin K. What Family Physicians Need to Know About Pay for Performance. Family Practice Management. July/August 2006.

PMID: 16909831  Link: http://www.aafp.org/fpm/20060700/69what.html


  • Outlines growth of P4P programs, and types of incentives.

  • CMS” will have a big influence.”

  • Lists 5 questions family physicians need to think about.

Significance to Literature:

  • Outlines the state of P4P in 2006.

(67) Dolan PL. Leapfrog updates P4P Web site. January 14,2008.

Link: http://www.leapgfroggroup.org/compendium2


  • List of P4P programs—Follow http://www.leapfroggroup.org/compendium2 to view a list of numerous P4P incentive programs currently in place. Database has 49 programs as of January, 2008.

  • Leapfrog is a consortium of large employers who want to improve health care delivery and lower costs.

Significance to Literature:

  • January 2008 news article about Leapfrog.

(81) Rowe, JW. Pay-for-Performance and Accountability: Related Themes in Improving Health Care. Annals of Internal Medicine. 2006: 145(9) 695-699.

PMID: 17088584


  • Reviews the critical design features of current P4P efforts.

  • Comments on the implications of emerging P4P programs.

  • Looks at the United Kingdom P4P model.

  • Details implications of who get the incentives for what measures.

Significance to Literature:

  • Assesses the implications of emerging P4P in the US in 2006.

(105) Tanne JH. US gets mediocre results despite high spending on health care. British Medical Journal. 2006: 333 672.

Link: http://www.bmj.com/cgi/content/full/333/7570/672-b


  • The US spends twice as much on healthcare as a percentage of GDP compared with other industrialized nations.

  • Quality of care is highly variable despite this.

Significance to literature:

  • Results from the Commonwealth Fund’s Commission on High Performance Health Systems from September 20th, 2006.

(117) Apodaca MD, Medicare and the Physicians’ Pay-for-Performance: Will it Create More Problems than is Can Solve? Journal of Health Care Compliance. 2007: 37-38, 76-77.

Link: http://www.brownmccarroll.com/articles_detail.asp?ArticleID=232


  • Outlines Medicare’s P4P program, its growth, and acceptance within the current healthcare model.

  • Lists attributes and objections to P4P.

Significance to Literature:

  • Short review of benefits and burdens of P4P in 2007.

(118) Young GJ, Conrad DA. Practical Issues in the Design and Implementation of Pay-for-Quality Programs. Journal of Healthcare Management. 2007: 52(1) 10-18.

PMID: 17288114


  • Gives an overview of the theory of P4P.

  • Lists six design and implementation factors that need consideration, including:

    • Type of condition to pay for

    • process vs. outcome

    • national vs. local standards

    • who gets paid

    • how much to pay

    • how to measure quality

  • Also discusses payout formula options.

Significance to Literature:

  • Offers an analysis of designing and implementing P4Q(quality) programs.

(133) Kronenfeld JJ. Access, Quality, and Satisfaction: Three Critical Concepts in Health Services and Health Care Delivery. Research in the Sociology of Health Care. 2007: 24 3-14.


  • Presents facts about current trends in insurance rates, and underinsured rates.

  • Defines patient satisfaction, and how it is usually measured.

  • Defines Quality of Care and what it contains.

Significance to Literature:

  • Offers definitions to P4P key concepts including quality, cost, access, and patient satisfaction.

(135) Satin DJ. Maximum-Strength Health Care May Cause Dangerous Side Effects. Minneapolis Observer. 2004.

Link: http://www.ahc.umn.edu/img/assets/23396/Maximum-Strength_Health_Care_David_Satin.pdf


  • Author describes the “American paradox” of spending more than all developed nations, but getting worse outcomes than most.

  • Reports on new Minnesota P4P model aimed at controlling costs and improving quality.

  • Describes how an effective P4P program might work, and suggests one P4P side-effect—“sick patients with little resources look like bad investments.”

Significance to Literature:

  • Describes Minnesota P4P proposal in 2004, and suggests area of concern.

(142) Spinelli RJ, Fromknecht JM. Pay for Performance: Improving Quality Care. The Health Care Manager. 2007: 26(2) 128-137.

PMID: 17464225


  • Overview and summary of P4P through 2007.

  • Outlines and compares key players in P4P like JCAHO and AMA.

  • Describes how physicians, patients, insurers, and payers are potentially affected by P4P.

Significance to Literature:

  • Overview of P4P as it relates to various players in the health care system in 2007.

(152) Wells DA, Ross JS, Detsky AS. What is Different About the Market for Health Care? JAMA commentary. 2007: 298(23) 2785-2787.

PMID: 18165673


  • Commentary outlines economics in health care, as well as three classic attempts to change market distortions in health care.

  • P4P aims at the asymmetry of information between patients and clinicians by offering reimbursement to clinicians and hospitals for appropriate health care services.

Significance to Literature:

  • P4P is another tool to limit the economic distortions in the health care market.

(153) Ralston Jr, JF. Achieving a High-Performance Health Care System with Universal Access: What the United States Can Learn from Other Countries. Annals of Internal Medicine Position Paper. 2008: 148(1) 55-75.

PMID: 18056654


  • First, article outlines the current structure of the United States health care system.

  • Second, article uses the Commonwealth Fund criteria to compare the United States to other countries health care systems.

  • Lastly, the paper provides recommendations to create a better functioning health care system.

  • P4P is Lesson 10, recommendation 5, page 70

    • Incentives should be used to stimulate efficient care.

Significance to Literature:

  • Achieving a well-functioning health care system that encourages quality improvement may require P4P programs.”

(163) Mannion R, Davies HT. Incentives in health systems: developing theory, investigating practice. Journal of Health Organization and Management, Guest editorial. 2008: 22(1).

PMID: 18488515 


  • Provides a definition and an overview of P4P.

  • Highlights recent findings/results in other countries.

  • Need to move beyond case accounts of on-the-surface-successful implementation of P4P schemes to more theoretically driven and analytic evaluations of such schemes in all their diversity.”

Significance to Literature:

  • Overview of P4P case results in many countries.

(178) Hazelwood A, Cook ED. Improving Quality of Health Care Through Pay-for-Performance Programs. The Health Care Manager. 2008: 27(2) 104-112.

PMID: 18475111


  • Federal programs are emerging to improve quality by increasing transparency and offering P4P programs.

  • The key element in P4P is designing measures that will cause quality improvement.

  • Article expands on cases from federal programs, and private sector programs.

Significance to Literature:

  • It is imperative to monitor successes and failures of various models and consider the possibilities of implementing P4P.

(180) Guglielmo WJ. This Doctor made P4P work—you can too. Medical Economics. July 18, 2008.


  • A growing number of physicians are accepting P4P, and using it to help guide care for their patients.

  • Outlines considerations clinics should use when deciding to implement P4P.

  • Outlines some of the advantages of successful participation in P4P.

Significance to Literature:

  • P4P is helping some small and large clinics perform better quality care.

(190) Mehrotra A, et al. The Response of Physician Groups to P4P Incentives. The American Journal of Managed Care. 2007: 13(5) 249-255.

PMID: 17488190


  • Authors interviewed 79 physician group leaders in Massachusetts regarding their physician group use of incentives and quality initiatives.

  • Overall, 77% of the leaders expressed support for P4P following HEDIS measures, and 79% said it would result in quality improvement.

  • The use of P4P incentives was highly associated with quality improvement initiatives.

Significance to Literature:

  • Although the magnitude of incentives was relatively low, physician groups support P4P, while most use P4P for quality improvement initiatives.

(192) Frolich A, Talavera JA, Broadhead P, Dudley RA. A behavioral model of clinician responses to incentives to improve quality. Health Policy. 2007: 80 179-193.

PMID: 16624440


  • The rationale for P4P and public reporting comes from experience in other industries and from incentive theories, however, now there are no conceptual models that pull theories from other disciplines and apply them to health care.

  • Report provides a brief conceptual model of P4P in health care.

  • Article reviews eight randomized control trials of incentive use, and highlights the weaknesses of these trials.

Significance to Literature:

  • Researchers must assess the complex behaviors and complex circumstances in future P4P research.

(198) Epstein AM, Lee TH, Hamel MB. Paying Physicians for High-Quality Care. NEJM. 2004: 350(4) 406-410.

PMID: 14736934


  • Overviews some core concepts of P4P, including using P4P to stimulate immediate and long-term performance improvements.

  • Discusses prototypical P4P systems including:

    • Bridges to Excellence

    • The Integrated Healthcare Association’s Physician Payment Program

    • Anthem Blue Cross and Blue Shield

  • States challenges ahead for purchasers and physicians

    • Coordination of programs

    • Right mix of criteria

    • Threats to professionalism

  • Continued investment in measuring systems and tracking quality in an affordable way remains important.

Significance to Literature:

  • Identifies key issues about P4P in January, 2004.

(203) Young GJ, et al. Conceptual Issues in the Design and Implementation of Pay-for-Quality Programs. American Journal of Medical Quality. 2005: 20 144-150.

PMID: 15951520


  • Article outlines 5 dimensions of P4P that must be taken into consideration in design and implementation.

    • Providers must be made aware of targets and understand programs

    • Size and structure of financial incentives

    • Quality targets must be studied, and chosen on relevance

    • Must recognize interdependencies of treatments among physicians

    • Scoring systems must take into account provider-level differences.

  • Authors also provide recommendations for further efforts to P4P.

Significance to Literature:

  • The diversity of P4P programs will provide natural experiments to analyze the best ways to provide financial incentives, and will provide a challenge to standardize P4P measures if necessary.

(204) Safavi K. Patient-Centered Pay for Performance. Are We Missing the Target? Journal of Healthcare Management. 2006: 51(4) 215-218.

PMID: 16916114


  • In multiple surveys assessing patients desire in healthcare, in general, patients want good communication skills, compassion, and competence in their physician.

  • Current metrics of P4P are based mainly on technical aspects, and are not what the patient thinks is the primary driver of a good hospital experience.

Significance to Literature:

  • In the future of P4P, more attention will be paid to the nontechnical aspects of care.

(266) Shortell SM, Casalino LP. Health Care Reform Requires Accountable Care Systems. JAMA. 2008: 300(1) 95-97.

PMID: 18594045 


  • Authors suggest implementing accountable care systems (ACS) for improving quality and controlling costs for patients.

  • As science and technology advance in the medical field, a co-evolution of incentives and the ability to respond to the incentives is necessary. This can be done through

    • Medical homes

    • Rewards for improving quality

    • Bundled payments

    • Tiered incentives


Significance to Literature:

  • ACS is an overarching concept that integrates P4P for 21st century medicine.


(267) Chaix-Couturier C, Durand-Zaleski I, Jolly D, Durieux P. Effects of financial incentives on the medical practice: results from a systematic review of the literature and methodological issues. International Journal for Quality in Health Care. 2000: 12(2) 133-142.

PMID: 10830670


  • Identifies existing financial incentives and their results on costs, process or outcomes of care.

  • Multiple confounding factors cause different results from similar incentives.

  • Analyzes 8 randomized control trials of financial incentives.

  • Results were often preliminary or shortly after follow-up, thus limiting analysis of long-term effects.


Significance to Literature:

  • How physicians are paid does influence their practice patterns.

(290)  Williams CH, Christianson JB. Paying for quality: Understanding and assessing physician pay-for-performance initiatives. The Synthesis Project, Policy Brief No. 13. The Robert Wood Johnson Foundation. December, 2007.

Link: http://www.rwjf.org/files/research/no13synthesisbrief.pdf


  • Offers highlights of issues that surround P4P, as well as policy implications P4P may have.

  • Summarizes key findings in the literature.


Significance to Literature:

  • Summary of P4P policy through 2007.

(292) Conrad DA, Perry L. Quality-Based Financial Incentives in Health Care: Can We Improve Quality by Paying for It? The Annual Review of Public Health. 2009: 30 357-371.

PMID: 19296779 


  • Review of P4P which incorporates microeconomic theory, behavioral economics, the theory of principal-agent behavior, cognitive psychology, and organizational theory.

  • Particularly discusses:

    • Use of rewards versus penalties

    • Nature of incented entity and focal quality behavior

    • Whether the incentive is general or selective

    • Extrinsic versus intrinsic motivation

    • Use of relative versus absolute performance measures

    • Size of the incentive

    • Certainty of the incentive

    • Frequency and duration of the incentive

  • Argues that group level incentives, continuous absolute performance incentives, and practice organizations able to maintain an EMR, are best suited P4P strategies.

  • Payments must also be timely in order to be effective.


Significance to Literature:

  • Overview of controversies of P4P in the literature in early 2009.

(302) Pay-for-Performance Special Section. AAFP. October, 2005.



  • Series of 6 articles in a special section of the regular periodical.
  • Topics include:
    • P4P is first used for quality improvement, then as a positive financial recognition.
    • A Question and Answer section from Bruce Bagley of the AAFP.
    • P4P as a means to reduce error, and improve care.
    • It is a necessity to get physician input when designing programs.
    • The commercial media is beginning to play a larger role in evaluating P4P programs.
    • Key P4P stakeholders.


Significance to Literature:

  • Provides an overview of the key ideas of P4P in 2005.

(303) Heading for the emergency room. The Economist. June 27th, 2009.


  • Quality of care provided does not correlate with the amount of money spent on care.
  • The real problem with the US healthcare system is the incentives used by payers to pay providers for their service.
  • A second big factor is the lack of competition amongst operators.
  • America is looking into P4P programs to help increase quality of care provided.
  • P4Pers should look at the Swedish incentives for hospitals to cut queues


Significance to Literature:

  • P4P is becoming a mainstream tool to improve quality, its benefits in the US are unknown.


(308) Outcomes-Based Compensation: Pay-for-Performance Design Principles. American Healthways. 2004.



  • 250 Physicians and medical managers consensus statement on outcome-based compensation could be developed to align health care toward evidence-based medicine.
  • Principles provided are meant as guidelines for organizations developing P4P programs.


Significance to Literature:

  • Influential document providing guidelines P4P must undertake to be successful in realigning physician compensation to increase the quality of healthcare.

(326)***Key Article***
Greene SE, Nash DB. Pay for Performance: An Overview of the Literature. American Journal of Medical Quality. 2009: 24(2) 140-163.

PMID: 18984907



  • Extensive overview of all literature regarding P4P
  • In depth summaries of key financial incentive trials throughout the world.
  • Reviews physician perception of P4P.
  • Touches on cost analysis of P4P, support for P4P, and arguments against P4P.


Significance to Literature:

  • Extensive and in-depth article covering most current literature available regarding P4P.