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Commentary

Paying for Performance
Elliott S. Fisher, New England Journal of Medicine, 11-2-06

Fisher offers a thoughtful reflection on recent attempts to create "pay for performance" incentives for hospital systems and–eventually–individual physicians. He also reviews the hurdles that such systems must navigate, including their potential costs (in time and IT) and the potential for perverse incentives (i.e., emphasizing cost containment over quality care).

The past decade has brought compelling evidence of serious gaps in the quality of medical care. The increased availability of reliable measures of the technical quality of care in both hospital and ambulatory settings has proved that it is feasible to measure quality— and highlighted a remarkable variability in performance.

Rising costs are threatening budgets in both the public and private sectors and the affordability of health insurance. Both public and private payers are demanding increased accountability. And many observers believe that financial incentives provide the best leverage for modifying providers' behavior.

As a result, private payers (under pressure from purchasers) and the Medicare program (under pressure from Congress) have been experimenting with approaches to rewarding improved performance. Congress recently called on the Centers for Medicare and Medicaid Services (CMS) to implement a pay–for–performance system for hospitals, and there is strong interest in expanding such programs to individual physicians.



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