The Impact of Pay for Performance on Hospitals that Care for Minorities and the Poor

The researchers examined the impact of financial incentives to improve quality on hospitals that care for minority or other underserved populations. The Centers for Medicare and Medicaid Services have implemented pay for performance (P4P) demonstrations, and are considering implementing P4P nationally. However, the impact of P4P has not been widely evaluated. Hospitals that care for underserved populations may have greater potential for quality improvement; conversely these facilities lack the tools and resources to improve quality and compete for the additional resources. The researchers examined changes in quality for hospitals in the Medicare Premier P4P Demonstration that serve disadvantaged populations (minority and poor); these changes were compared with changes in hospitals in the demonstration that do not serve disadvantaged populations and with hospitals not in the demonstration (and not subject to P4P) that serve disadvantaged populations. The objective of the project was to provide more information about the impact of P4P on hospitals that serve disadvantaged populations, and help policymakers to design incentive systems that encourage higher quality care without disproportionately harming hospitals that care for these populations.