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Are alternative payment models the answer to the failures of pay-for-performance?

BMJ 2024; 386 doi: https://doi.org/10.1136/bmj-2023-077941 (Published 28 August 2024) Cite this as: BMJ 2024;386:e077941
  1. Irene Papanicolas, professor of health services, policy, and practice1,
  2. Ricarda Milstein, health policy analyst2 3,
  3. Andrew M Ryan, professor of health services, policy, and practice1,
  4. Jose F Figueroa, associate professor4
  1. 1Department of Health Services, Policy and Practice, Brown University School of Public Health, Providence, RI, USA
  2. 2Faculty of Business Administration, Universität Hamburg, Hamburg, Germany
  3. 3Health Division, Organisation for Economic Cooperation and Development, Paris, France
  4. 4Department of Health Policy and Management, Harvard T H Chan School of Public Health, Boston MA, USA
  1. Correspondence to: I Papanicolas Irene_Papanicolas{at}brown.edu

Irene Papanicolas and colleagues consider the potential of alternatives to quality-based pay-for-performance systems and the remaining challenges

Over the past two decades most healthcare systems have modified the way they pay providers to attach financial incentives directly to quality of care. This type of payment, often referred to as pay for performance, gained momentum in the early 2000s, following several studies highlighting concerns about the quality and safety of healthcare systems.1 However, the evidence suggests they have been largely ineffective in improving quality. In response, health payers in various countries have introduced alternative payment models that encourage more effective, efficient, and integrated healthcare. We examine the early evidence on these alternative models and consider what they can realistically achieve.

Failures of pay-for-performance models

Pay-for-performance models were introduced to improve measurement of quality in health systems, and importantly, to counter the general lack of accountability among clinicians and healthcare institutions to meaningfully improve the care they deliver to patients. Many attributed poor quality to the lack of incentives for high quality care in the payment systems for providers.2 For example, in the United States, the dominant fee-for-service payment systems encouraged greater amounts of care delivery and not necessarily high quality, coordinated care. In contrast, many European systems were concerned that capitation and global budgets motivated restriction of healthcare services, skimping on quality, and risk selection.3 Tying payment to measures of quality delivered was seen as a good way to reduce these misaligned incentives.

Many different pay-for-performance models have since been implemented across countries.4 Unfortunately, their effectiveness in improving quality of care is disappointing.5 Although early reviews suggested a positive effect on processes of care, especially in primary care,6 later studies concluded that the few improvements observed were not sustained in the longer term.56

Concerns have also been …

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