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Pay for Performance

Under a "pay for performance" (PFP) approach, a health insurer or other payer compensates physicians according to an evaluation of physician performance, typically as a potential bonus on top of the physician’s fee-for-service compensation. The payer bases its evaluation on the data it has on that physician or physician group—most commonly, administrative or claims data which measures the quality and/or cost of care. Patient satisfaction data may also be a factor. Using these data, the payer then rates the physician or physician practice according to the payer’s own criteria. Those physicians who meet the payer’s targets may receive perks such as bonus payments.

Chapter three: Pay-for-performance

View the AMA-developed document "Physician pay for performance (PFP) initiatives" for a guide to the basics of PFP.

The AMA has also developed Principles and Guidelines for Pay-for-Performance Programs, which outline the AMA’s vision for fair and ethical PFP programs.

View the AMA resource, "Pay for Performance: A physician’s guide to evaluating incentive plans" for a guide to help physicians assess the reliability and the quality of a PFP program.

Examination of some payers’ PFP programs

The AMA has closely examined the PFP programs used by some of the major national payers, including the Centers for Medicare and Medicaid Services’ (CMS) Physician Quality Reporting Systems (formerly Physician Quality Reporting Initiative) and measured each of these programs’ compliance with the AMA’s Principles and Guidelines.

Although these programs sometimes provide additional compensation for physician practices, many physicians remain skeptical. Specifically, some believe that this additional compensation is funded by diminishing or withholding base compensation. Other arguments against the use of PFP pertain to the use of claims data to judge quality, and to the possibility of payers’ evaluation methods producing inaccurate ratings which can harm the patient/physician relationship.

Refer to the AMA document "Optimizing outcomes and pay for performance: Can patient registries help?" to consider another possible approach to PFP.


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