New evaluation results from pay-for-performance in health care
Health care in the United States is extremely costly: spending per capita is 50% to 200% greater than comparable countries. There is compelling evidence that much of this spending – particularly in Medicare – has little or no benefit to patient health. In response, numerous public and private payer initiatives have attempted to incentivize higher value through pay-for-performance programs, in which payment is tied to quality or efficiency of care. The Patient Protection and Affordable Care Act greatly expanded the use of pay-for-performance for hospitals, physicians, nursing homes, and Medicare Advantage plans. Although the effects of pay-for-performance on provider behavior have been extensively studied, evidence of the effectiveness of these programs is mixed. Much of the literature is from small-scale implementations, initiated either by a single payer within a health care market or for a select group of providers. The extent to which results from these programs generalize to national, mandatory implementations of pay-for-performance is unclear. In this session, we present evaluation results from three large-scale pay-for-performance programs: the Medicare Advantage Quality Bonus Program, the United Kingdom’s Quality and Outcomes Framework, and state-based nursing home pay-for-performance programs. Using rigorous econometric methods, including synthetic control methods and the regression discontinuity estimator, these papers offer important insights into how well pay-for-performance is working and the the conditions under which pay-for-performance programs can be most effective.