Health Care Costs and Financing

"Piece-rate" performance incentives for physicians improve childhood immunization rates

A variety of pay-for-performance (P4P) incentives are used in health care to improve quality. Most programs pay physicians in an "all or nothing" fashion and may dissuade physicians from even trying to improve. "Piece rate" P4P programs—ones that reward physicians for each patient receiving proper care—are a promising alternative, but little is known about how effective they are.

A new study found that a health plan using "piece rate" P4P significantly improved immunization rates for 2-year-olds compared with health plans not using this approach. The study looked at the experiences of a not-for-profit Medicaid-focused managed care plan in New York. In 2003, the plan introduced a P4P program whereby physicians received a $200 bonus payment for each child fully immunized in a timely fashion by age 2. The researchers compared immunization rates from this plan with rates obtained from 16 other Medicaid plans that used non-P4P methods.

Immunization rates increased for all New York Medicaid health plans from approximately 60 percent in 2003 to approximately 80 percent in 2007. However, this rate increase was 11 percent greater for the plan offering the $200 bonus program. Patients most likely to be fully immunized included children with chronic conditions, those who were Hispanic, and children cared for in private practices. This was also true for patients in practices with a high number of patients enrolled in the P4P plan.

The researchers caution that P4P alone is not a panacea. A variety of patient and provider factors affect performance, including administrative support. Therefore, each health plan must decide the best, most cost-effective ways to encourage immunization based on their particular patient and provider characteristics. The study was supported in part by the Agency for Healthcare Research and Quality (HS17146).

See "Improving timely childhood immunizations through pay for performance in Medicaid-managed care," by Alyna T. Chien, M.D., M.S., Zhonghe Li, M.S., and Meredith B. Rosenthal, Ph.D., in the December 2010 HSR: Health Services Research 45(6) Part II, pp. 1934-1947.

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