Effects of paying physicians based on their relative performance for quality.

Background: Studies examining the effectiveness of pay-for-performance programs to improve quality of care primarily have been confined to bonus-type arrangements that reward providers for performance above a predetermined threshold. No studies to date have evaluated programs placing providers at financial risk for performance relative to other participants in the program.
Objective: The objective of the study is to evaluate the impact of an incentive program conferring limited financial risk to primary care physicians.
Participants: There were 334 participating primary care physicians in Rochester, New York.
Design: The design of the study is a retrospective cohort study using pre/post analysis.
Measurements: The measurements adhere to 4 diabetes performance measures between 1999 and 2004.
Results: While absolute performance levels increased across all measures immediately following implementation, there was no difference between the post- and pre-intervention trends indicating that the overall increase in performance was largely a result of secular trends. However, there was evidence of a modest 1-time improvement in physician adherence for eye examination that appeared attributable to the incentive program. For this measure, physicians improved their adherence rate on average by 7 percentage points in the year after implementation of the program.
Conclusions: This study demonstrates a modest effect in improving provider adherence to quality standards for a single measure of diabetes care during the early phase of a pay-for-performance program that placed physicians under limited financial risk. Further research is needed to determine the most effective incentive structures for achieving substantial gains in quality of care.