Case and Commentary
Jul 2013

Pay for Performance: What We Measure Matters

Laura A. Petersen, MD, MPH
Virtual Mentor. 2013;15(7):570-575. doi: 10.1001/virtualmentor.2013.15.7.ecas2-1307.


Mr. Ozonoff arrived at Dr. Mehta’s office for his annual checkup. His blood pressure had been in the normal range until a few months ago, when it had started to creep up, according to the blood pressure machine he sometimes used outside his workplace cafeteria. At Dr. Mehta’s office, it registered 145/90—just into the hypertensive range.

Dr. Mehta wanted to get Mr. Ozonoff’s blood pressure back into the normal range and thought the goal could be achieved by changes in his eating and exercising habits. At the same time she recognized that her practice received a financial bonus every quarter from several of the health plans they contracted with when a certain percentage of the patient panel maintained blood pressures within the normal range, and medication was the surest and simplest way to accomplish the goal quickly.

Because Mr. Ozonoff’s blood pressure was only slightly above the 140/90 cutoff for hypertension, Dr. Mehta began to discuss lifestyle changes—such as regular exercise and eating a healthier, lower-salt diet— with him, changes that would help not only with his blood pressure but with other health problems; his weight, for example, had been edging upward over the past few years.

Mr. Ozonoff seemed uninterested in Dr. Mehta’s suggestions that he alter his lifestyle in any way. “I’m too busy right now to change anything,” he said. “But I know I can’t continue with my blood pressure going up and up. Just write me a prescription and we’ll see how that works.”

Writing a prescription is a quick fix that’ll leave him dependent on medication and not change his poor eating habits for the better, Dr. Mehta reasoned to herself. Moreover, she thought, does having a certain percentage of blood pressures under 140/90 really indicate that we’re doing a good job clinically?


There is a growing realization that financial incentives are powerful influences on the amount and type of health care provided to patients. The fee-for-service payment model is associated with greater use of (well-reimbursed) services, which does not necessarily entail any attention to their indications or quality [1]. Capitated and salary payments are associated with use of fewer expensive services and therefore poorer access to those that are needed. Such observations about the relationship between financing methods and use of services have influenced approaches to the financing of health care under the Affordable Care Act (ACA). The provisions of the ACA seek to make health care more affordable for patients, control rising health care costs, and ensure high-quality care. Value-based payment systems, such as those being advocated by the Centers for Medicare and Medicaid Services (CMS) and other payers, are intended to align incentives with high-quality health care [2]. As one example, the New York City Health and Hospitals Corporation, the nation’s largest public health system, recently announced a performance-based pay plan for physicians [3].

Despite the face validity of pay-for-performance programs, evaluations of their effectiveness have shown contradictory results [4-6]. Furthermore, many questions have been raised about how they should be implemented. In particular, the way that the quality of care is measured can have profound influences upon how hospitals and clinicians are ranked, rated, and rewarded.

How We Measure

In general, many of the “first-generation” performance measures, such as the Healthcare Effectiveness Data and Information Set (HEDIS) [7], do not necessarily account for the complexity of patients’ conditions. So a single patient with multiple chronic diseases may be part of the denominator for a number of performance metrics (e.g., proportions of patients screened for colorectal cancer; proportion of patients receiving aspirin after acute myocardial infarction), with no consideration given to the relative benefit or relevance of those treatments to the specific patient. For example, risk factor control for a particular patient who is at risk for cardiovascular disease might be more urgent during a specific primary care visit than colorectal cancer screening. Yet, the patient is in the denominator when the percentage of patients who receive colorectal cancer screening is calculated.

Also, HEDIS-type measures incorporate only a “cross-sectional” approach; there is a yes-or-no answer to the question of whether a certain threshold is met or not. This approach does not account for patient preferences about trying lifestyle modifications, or even for patient visits following a lapse in medication adherence and when the patient merely returns for a repeat measurement. Measures that incorporate a follow-up assessment period would capture the results of treatment intensification (i.e., addition or dose titration of a medication) as well as the results of longitudinal chronic disease care [8-11].

What We Measure

What is measured also has a significant effect on how performance is rated. Process measures, such as ordering a test or providing tobacco cessation counseling, can be easily achieved in only a single encounter. Conversely, intermediate outcome measures (e.g., blood pressure or glucose control) may require many visits involving several medication adjustments and counseling regarding lifestyle modifications [8, 9, 12]. We have shown that diabetic patients with life-limiting chronic conditions are less likely to have standard “good” outcomes despite frequent monitoring [13]. For such patients, comfort control should take precedence over glucose control or retinal screening. However, patients with life-limiting conditions are rarely excluded from the denominator when glucose control and retinal screening are assessed [13]. Few measures, if any, reflect patient preferences or inform clinicians specifically about how they might improve their care.

Given these methodological problem, physician skepticism about the motivation for and accuracy of performance measurement programs is understandable [14, 15]. While physicians overwhelmingly believe that financial incentives should be given for high-quality care, fewer than one-third think that current performance measures are accurate, and only slightly more endorsed the statement that those responsible for designing quality measures will work to ensure their accuracy [16]. Those who are being profiled expect rigorous statistical methods and approaches for performance measurement that are reproducible and robust. Failure to design methodologically rigorous performance measurement programs may limit physician buy-in and hinder quality improvement.

Poorly designed measures may lead to unintended consequences, including erroneously identifying physicians as poor performers and the even more concerning possibility that physicians may avoid seriously ill patients to prevent negative impacts on their individual or hospital ratings. Professionalism is what keeps physicians from weighing their personal and practice financial welfare ahead of that of their patients, and these programs must be designed so that they do not overwhelm professionalism.

Why might financial incentives work to improve guideline adherence, above and beyond other interventions such as computerized reminders or audit and feedback? Of course, there are myriad reasons, including professionalism and intrinsic motivation, for physicians to do a good job. But financial incentives for individual effort and task performance might amplify the effects of educational interventions and performance feedback reports. According to Bandura’s self- efficacy theory, incentives work by piquing an individual’s interest in a task, leading to greater effort at performing the task and ultimately to an increased sense of self-efficacy [17]. The goal of the incentive is to ignite motivation rather than to coerce or to overcome professionalism.

This case illustrates some of the pitfalls of performance measures and pay-for-performance programs. In this hypothetical case, the practice is rewarded for the proportion of patients who have achieved an arbitrarily bounded threshold blood pressure goal. As clinicians, we know that there are multiple reasons that patients do not achieve a given blood pressure threshold, many having little to do with the clinician and more to do with the patient’s adherence or preferences and medication efficacy, side effects, affordability, and so on. Therefore, the best measures of quality of care should reward clinicians for “doing the right thing,” regardless of whether the patient meets a particular blood pressure goal.

As in this case, despite the best intentions of the clinician, the patient does not wish to pursue weight loss and lifestyle modifications. Ideally, there should be a way to reward the doctor for having the discussion and educating the patient about lifestyle modifications and then documenting that the care provided followed patient preferences. But it appears that Dr. Mehta feels she is left with a choice between prescribing medication or the practice’s forgoing the reward. The case raises the issue of whether the physicians in this practice can put the patient’s well-being ahead of personal or practice group financial implications of treatment decisions, suggesting that a different performance metric and reward system are needed to properly align incentives.

Ratings of the quality of care at the hospital level (e.g., Hospital Compare, Consumer Reports, and others), at the practice group level (by health plans such as UnitedHealth and others), and at the level of individual clinicians (on websites such as Angie’s List) are becoming ubiquitous. And changes in the way that clinicians are rated and reimbursed are inevitable under the ACA [18]. But as in anything else, what we measure matters. The challenge is to create measures and performance pay plans that enhance quality, support professionalism, and align incentives to promote delivery of high-quality care. Involving physicians in the design and execution of these programs may help achieve these goals.


  1. Kuhn M. Quality in Primary Care: Economic Approaches to Analysing Quality-Related Physician Behaviour. London, England: Office of Health Economics; 2003.

  2. Centers for Medicare and Medicaid Services. Roadmap for quality measurement in the traditional Medicare fee-for-service program. Accessed March 11, 2013.

  3. Hartocollis A. New York City ties doctors’ income to quality of care. New York Times. January 11, 2013. Accessed March 5, 2013.

  4. Petersen LA, Woodard LD, Urech T, Daw C, Sookanan S. Does pay-for-performance improve the quality of health care? Ann Intern Med. 2006;145(4):265-272.

  5. Scott A, Sivey P, Ait Ouakrim D, et al. The effect of financial incentives on the quality of health care provided by primary care physicians. Cochrane Database Syst Rev. 2011;(9):CD008451.

  6. Houle SK, McAlister FA, Jackevicius CA, Chuck AW, Tsuyuki RT. Does performance-based remuneration for individual health care practitioners affect patient care?: a systematic review. Ann Intern Med. 2012;157(12):889-899.
  7. National Committee for Quality Assurance. HEDIS 2013. Accessed March 4, 2013.

  8. Kerr EA, Smith DM, Hogan MM, et al. Building a better quality measure: are some patients with “poor quality” actually getting good care? Med Care. 2003;41(10):1173-1182.

  9. Selby JV, Uratsu CS, Fireman B, et al. Treatment intensification and risk factor control: toward more clinically relevant quality measures. Med Care. 2009;47(4):395-402.
  10. Rodondi N, Peng T, Karter A, et al. Therapy modifications in response to poorly controlled hypertension, dyslipidemia, and diabetes mellitus. Ann Intern Med. 2006;144(7):475-484.
  11. Woodard LD, Petersen LA. Improving the performance of performance measurement. J Gen Intern Med. 2010;25(2):100-101.
  12. Petersen LA, Woodard LD, Henderson LM, Urech TH, Pietz K. Will hypertension performance measures used for pay-for-performance programs penalize those who care for medically complex patients? Circulation. 2009;119(23):2978-2985.

  13. Woodard LD, Urech T, Robinson C, Kuebeler M, Pietz K, Petersen LA. Differences in therapy intensification for glycemic and lipid control in diabetic patients with and without limited life expectancy. J Gen Intern Med. 2009;24(S1):S55-S56.
  14. Draper DA. Commentary no. 3: physician performance measurement: a key to higher quality and lower cost growth or a lost opportunity? Center for Studying Health System Change. Accessed March 5, 2013.

  15. Hayward RA, Kent DM. 6 EZ steps to improving your performance: (or how to make P4P pay 4U!). JAMA. 2008;300(3):255-256.
  16. Casalino LP, Alexander GC, Jin L, Konetzka RT. General internists’ views on pay-for-performance and public reporting of quality scores: a national survey. Health Aff (Millwood). 2007;26(2):492-499.
  17. Bandura A. Self-Efficacy: The Exercise of Control. New York: Worth; 1997.

  18. Robert Wood Johnson Foundation. Payment matters: the ROI for payment reform. Accessed March 5, 2013.


Virtual Mentor. 2013;15(7):570-575.



The people and events in this case are fictional. Resemblance to real events or to names of people, living or dead, is entirely coincidental. The viewpoints expressed on this site are those of the authors and do not necessarily reflect the views and policies of the AMA.