RWJF Content Alert--The Unintended Consequences of Paying for Performance

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Paper Finds That Pay-for-Performance Programs May Have Unintended Effects on Racial and Ethnic Disparities

Abstract

Pay-for-performance (P4P) programs may have unintended effects on racial/ethnic disparities. We used patient-level quality scores from Hospital Quality Alliance and ranked hospitals by overall quality and by racial/ethnic disparities. We then modeled the effects of different P4P designs on national disparity scores. The models using overall quality to rank hospitals resulted in modest reductions in national disparity scores, although these were smaller than the reductions that were found from programs using disparities to rank hospitals. These results suggest that many hospitals treat Whites and minorities equitably. Nevertheless, in order to maximize both improvements in quality and reductions in national disparities, P4P programs should consider an approach that considers both overall quality and reductions in disparities when setting incentives.