The Potential Impact of Performance Incentive Programs on Racial Disparities in Healthcare

  • Alyna T. Chien


Performance incentive programs—in the form of pay-for-performance and public reporting—are receiving national and international attention. This chapter defines these programs and describes their basic features. It then outlines potential mechanisms by which these programs may impact racial and ethnic disparities in healthcare in a neutral, narrowing, or widening manner. It goes on to review the small body of literature evaluating whether performance incentive programs work, and the even smaller literature regarding how they impact disparities. It finds that performance incentive programs do not necessarily work, and that they can negatively impact disparities. The chapter then considers how particular aspects of program design should be approached with disparity-reducing goals in mind and provides a list of recommendations. It advocates that programs and research evaluate incentive programs for their intended effect, as well as for their unintended effect on disparities. Performance incentive programs are in their infancy—testing whether and how they impact racial and ethnic minorities will promote the design and implementation of programs that eliminate disparities as a part of raising quality.


Racial Disparity Incentive Program Healthcare Organization Ethnic Disparity Minority Patient 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. 1.
    Committee on Quality of Health Care in America (2001). Crossing the Quality Chasm: A New Health System for the 21st Century. National Academy Press, Washington, DC.Google Scholar
  2. 2.
    Smedley, B. D., Stith, S. Y., and Nelson, A. R. (eds.) (2002) Committee on Understanding and Eliminating Racial and Ethnic Disparities in Health Care. Institute of Medicine. Unequal Treatment: Confronting Racial and Ethnic Disparities in Health Care. National Acadamics Press; Washington, DC.Google Scholar
  3. 3.
    Oliver, M. N., Goodwin, M. A., Gotler, R. S., et al. (2001) Time use in clinical encounters: are African-American patients treated differently? J. Natl. Med. Assoc. 93(10), 380–385.PubMedGoogle Scholar
  4. 4.
    O’Malley, M. S., Earp, J. A., Hawley, S. T., Schell, M. J., Mathews, H. F., and Mitchell, J. (2001) The association of race/ethnicity, socioeconomic status, and physician recommendation for mammography: who gets the message about breast cancer screening? Am. J. Public Health 91, 49–54.PubMedGoogle Scholar
  5. 5.
    Taira, D. A., Safran, D. G., Seto, T. B., et al. (1997) The relationship between patient income and physician discussion of health risk behaviors. JAMA 87, 782–786.Google Scholar
  6. 6.
    Hosler, A. S. and Melnik, T. A. (2005) Population-based assessment of diabetes care and self-management among Puerto Rican adults in New York City. Diabetes Educ. 31, 418–426.PubMedCrossRefGoogle Scholar
  7. 7.
    Thackeray, R., Merrill, R. M., and Neiger, B. L. (2004) Disparities in diabetes management practice between racial and ethnic groups in the United States. Diabetes Educ. 30(4), 665–675.PubMedGoogle Scholar
  8. 8.
    Hertz, R. P., Unger, A. N., and Ferrario, C. M. (2006) Diabetes, hypertension, and dyslipidemia in Mexican Americans and non-Hispanic whites. Am. J. Prev. Med. 30(2), 103–110.PubMedCrossRefGoogle Scholar
  9. 9.
    Massing, M. W., Henley, N. S., Carter-Edwards, L., Schenck, A. P., and Simpson, R. J., Jr. (2003) Lipid testing among patients with diabetes who receive diabetes care from primary care physicians. Diabetes Care 26(5), 1369–1373.PubMedCrossRefGoogle Scholar
  10. 10.
    Arday, D. R., Fleming, B. B., Keller, D. K., et al. (2002) Variation in diabetes care among states: do patient characteristics matter? Diabetes Care 25(12), 2230–2237.PubMedCrossRefGoogle Scholar
  11. 11.
    Skaer, T. L., Sclar, D. A., Robison, L. M., and Galin, R. S. (2000) Trends in the rate of depressive illness and use of antidepressant pharmacotherapy by ethnicity/race: An assessment of office-based visits in the United States, 1991–1997, 22, 1575–1589.Google Scholar
  12. 12.
    Ries, L. A. G., Eisner, M. P., Kosary, C. L., et al. (2005) SEER Cancer Statistics Review, 1975–2002. National Cancer Institute, Bethesda, MD.Google Scholar
  13. 13.
    Jemal, A., Clegg, L. X., Ward, E., et al. (2004) Annual report to the nation on the status of cancer, 1975–2001, with a special feature regarding survival. Cancer 101, 3–27.PubMedCrossRefGoogle Scholar
  14. 14.
    McWhorter, W. P. and Mayer, W. J. (1987) Black/White differences in type of initial breast cancer treatment and implications for survival. Am. J. Public Health 77, 1515–1517.PubMedGoogle Scholar
  15. 15.
    Bosworth, H. B., Dudley, T., Olsen, M. K., et al. (2006) Racial differences in blood pressure control: potential explanatory factors. Am. J. Med. 119(1), 70.E9–E15.CrossRefGoogle Scholar
  16. 16.
    Gadegbeku, C. A., Lea, J. P., and Jamerson, K. A. (2005) Update on disparities in the pathophysiology and management of hypertension: focus on African Americans. Med. Clin. North Am. 89(5), 921–933, 930.PubMedCrossRefGoogle Scholar
  17. 17.
    Chin, M. H. and Chien, A. T. (2006) Reducing racial and ethnic disparities in health care: an integral part of quality improvement scholarship. Qual. Saf. Health Care 15, 79–80.PubMedCrossRefGoogle Scholar
  18. 18.
    Lurie, N., Jung, M., and Lavizzo-Mourey, R. (2005) Disparities and quality improvement: federal policy levers. Health Aff. 24(2), 354–364.CrossRefGoogle Scholar
  19. 19.
    Williams, T. R. (2006) Practical design and implementation considerations in pay-for-performance programs. Am. J. Manag. Care 12(2), 77–80.PubMedGoogle Scholar
  20. 20.
    Dudley, R. A. and Rosenthal, M. B. (2006) Pay for performance: a decision guide for purchasers. AHRQ Pub. No. 06-0047. Agency for Healthcare Research and Quality, Rockville, MD.Google Scholar
  21. 21.
    Dudley, R. A. (2005) Pay-for-performance research: how to learn what clinicians and policy makers need to know. JAMA 294(14), 1821–1823.PubMedCrossRefGoogle Scholar
  22. 22.
    Epstein, A. M., Lee, T. H., and Hamel, M. B. (2004) Paying physicians for high-quality care. N. Engl. J. Med. 350, 406–410.PubMedCrossRefGoogle Scholar
  23. 23.
    McNamara, P. (2006) Foreward: payment matters? The next chapter. Med. Care Res. Rev. 63(1), 5S–10S.PubMedCrossRefGoogle Scholar
  24. 24.
    Pear, R. and Walsh, M. W. (2003) Medicare to pay bonuses for best of hospital care. New York Times, Health: Health Care Policy Section. 11 July 2003.Google Scholar
  25. 25.
    The Leapfrog Group (2005). The Leapfrog group fact sheet (dated November 2005). Available from:, accessed December 1, 2005.
  26. 26.
    Centers for Medicare and Medicaid Services (2005). Medicare pay-for-performance demonstration shows significant quality of care improvement at participating hospitals (dated May 3, 2005), accessed 06/27/06 from:
  27. 27.
    Centers for Medicare and Medicaid Services (2005). Pay for performance initiatives. Herb Kuhn Testimony for the Senate Committee on Finance (dated June 27, 2005), accessed 11/23/05 from: Counter-1537.
  28. 28.
    Bridges to Excellence (2006). Bridges to Excellence Overview (not dated). Available 05/24/06 from:
  29. 29.
    Center for Health Care Strategies, Inc. and Centers for Medicare and Medicaid Services (2005). Descriptions of selected performance incentives programs (dated November 4, 2005), accessed 03/27/06 from:
  30. 30.
    Integrated Healthcare Association (2006). Pay for performance overview (not dated), accessed 05/24/06 from:
  31. 31.
    Rosenthal, M. B., Fernandopulle, R., Song, H. R., and Landon, B. (2004) Paying for quality: providers’ incentives for quality improvement. Health Aff. 23(2), 127–141.CrossRefGoogle Scholar
  32. 32.
    The Leapfrog Group (2006). The Leapfrog compendium, accessed 02/22/06 from:, accessed.
  33. 33.
    Bokhour, B. G., Burgess, J. F., Hook, J. M., et al. (2006) Incentive implementation in physician practices: a qualitative study of practice executive perspectives on pay for performance. Med. Care Res. Rev. 63(1), 73S–95S.PubMedCrossRefGoogle Scholar
  34. 34.
    Dudley, R. A., Frolich, A., Robinowitz, D. L., Talavera, J. A., Broadhead, P., and Luft, H. S. (2004) Strategies to support quality-based purchasing: a review of the evidence, Summary, Technical Review 10. (Prepared by Stanford-University of California San Francisco Evidence-Based Practice Center under Contract No. 290-02-0017). AHRQ Pub. No. 04-P024. Agency for Healthcare Research and Quality, Rockville, MD.Google Scholar
  35. 35.
    American Medical Association. Principles for Pay-for-Performance, accessed 09/07/06 from:
  36. 36.
    Rosenthal, M. B., Fernandopulle, R., Song, H. R., and Landon, B. (2004) Paying for quality: providers’ incentives for quality improvement. Health Aff. 23(2), 127–141.CrossRefGoogle Scholar
  37. 37.
    Rosenthal, M. B. and Frank, R. G. (2005) What is the empirical basis for paying for quality in health care. Med. Care Res. Rev. 63(2), 135–157.CrossRefGoogle Scholar
  38. 38.
    Lee, T. H., Meyer, G. S., and Brennan, T. A. (2004) A middle ground on public accountability. N. Engl. J. Med. 350(23), 2409–2412.PubMedCrossRefGoogle Scholar
  39. 39.
    Marshall, M. N., Shekelle, P. G., Davies, H. T. O., and Smith, P. C. (2003) Public reporting on quality in the United States and the United Kingdom. Health Aff. 22(3), 134–148.CrossRefGoogle Scholar
  40. 40.
    Marshall, M. N., Shekelle, P. G., Leatherman, S., and Brooks, R. H. (2000) Public disclosure of performance data: learning from the US experience. QHR 9, 53–57.Google Scholar
  41. 41.
    Conrad, D. A. and Christianson, J. B. (2004) Penetrating the “black box:” financial incentives for enhancing the quality of physician services. Med. Care Res. Rev. 61(3), 37S–68S.PubMedCrossRefGoogle Scholar
  42. 42.
    Goddard, M., Mannion, R., and Smith, P. (2000) Enhancing performance in health care: a theoretical perspective on agency and the role of information. Health Econ. 9, 95–107.PubMedCrossRefGoogle Scholar
  43. 43.
    Hillman, A. L., Pauly, M. V., and Kerstein, J. J. (1989) How do financial incentives affect physicians’ clinical decisions and the financial performance of health maintenance organizations. N. Engl. J. Med. 321(2), 86–92.PubMedCrossRefGoogle Scholar
  44. 44.
    Landon, B. E. (2004) Commentary on “penetrating the ‘black box’”: financial incentives for enhancing the quality of physician services by Douglas A. Conrad and Jon B. Christiansen. Med. Care Res. Rev. 61(3), 69S–75S.PubMedCrossRefGoogle Scholar
  45. 45.
    Oliver, P. (1980) Rewards and punishments as selective incentives for collective action: theoretical investigations. AJS 85(6), 1356–1375.CrossRefGoogle Scholar
  46. 46.
    Robinson, J. C. (2001) Theory and practice in the design of physician payment incentives. Milbank Q. 79(2), 149–177.PubMedCrossRefGoogle Scholar
  47. 47.
    Watson, S. D. (2001) Race, ethnicity and quality of care: inequalities and incentives. Am. J. Law Med. 27, 203–224.PubMedGoogle Scholar
  48. 48.
    Casalino, L. P. (1999) The unintended consequences of measuring quality on the quality of medical care. N. Engl. J. Med. 341(15), 1147–1150.PubMedCrossRefGoogle Scholar
  49. 49.
    American Medical Association. Guidelines for the development of pay-for-performance programs, accessed 09/07/06 from:
  50. 50.
    American College of Physicians. Linking physician payment to quality care, accessed 03/15/06:
  51. 51.
    Watson, S. D. (2001) Race, ethnicity and quality of care: inequalities and incentives. Am. J. Law Med. 27, 203–224.PubMedGoogle Scholar
  52. 52.
    Fairbrother, G., Hanson, K. L., Friedman, S., and Butts, G. C. (1999) The impact of physician bonuses, enhanced fees, and feedback on childhood immunization coverage rates. Am. J. Public Health 89, 171–175.PubMedGoogle Scholar
  53. 53.
    Kouides, R. W., Bennett, N. M., Lewis, B., Cappuccio, J. D., Barker, W. H., and LaForce, F. M. (1998) Performance-based physician reimbursement and influenza immunization rates in the elderly. The Primary-Care Physicians of Monroe County. Am. J. Prev. Med. 14, 89–95.PubMedCrossRefGoogle Scholar
  54. 54.
    Norton, E. C. (1992) Incentive regulation of nursing homes. J. Health Econ. 11, 105–128.PubMedCrossRefGoogle Scholar
  55. 55.
    Sehgal, A. R. (2003) Impact of quality improvement efforts on race and sex disparities in hemodialysis. JAMA 289, 996–1000.PubMedCrossRefGoogle Scholar
  56. 56.
    Meltzer, A. and Bonito, A. J. Health disparities: measuring health care use and access for racial/ethnic populations. Final report part 1, accessed 10/30/06 from:
  57. 57.
    Fiscella, K., Franks, P., Gold, M. R., and Clancy, C. M. (2000) Inequality in quality: addressing socioeconomic, racial and ethnic disparities in health care. JAMA 283(19), 2579.PubMedCrossRefGoogle Scholar
  58. 58.
    Nerenz, D. R. (2005) Health care organizations’ use of race/ethnicity data to address quality disparities. Health Aff. 24(2), 409–416.CrossRefGoogle Scholar
  59. 59.
    Arean, P. A., Ayalon, L., Hunkeler, E., et al. (2005) Improving depression care for older, minority patients in primary care. Med. Care 43(4), 381–390.PubMedCrossRefGoogle Scholar
  60. 60.
    Hofer, T. P., Hayward, R. A., Greenfield, S., Wagner, E. H., Kaplan, S. H., and Manning, W. G. (1999) The unreliability of individual physician “report cards” for assessing the costs and quality of care of a chronic disease. JAMA 281(22), 2098–2105.PubMedCrossRefGoogle Scholar
  61. 61.
    Werner, R. M. and Asch, D. A. (2005) The unintended consequences of publicly reporting quality information. JAMA 293, 1239–1244.PubMedCrossRefGoogle Scholar
  62. 62.
    Bach, P. B., Pham, H. H., Schrag, D., Tate, R. C., and Hargraves, J. L. (2004) Primary care physicians who treat blacks and whites. N. Engl. J. Med. 351, 575–584.PubMedCrossRefGoogle Scholar
  63. 63.
    Committee on the Changing Market, Managed Care and the Future Viability of Safety Net Providers (2000). America’s Health Care Safety Net. National Academy Press, Washington, DC.Google Scholar
  64. 64.
    Grumbach, K., Hart, L. G., Mertz, E., Coffman, J., and Palazzo, L. (2003) Who is caring for the underserved? A comparison of primary care physicians and nonphysician clinicians in California and Washington. Ann. Fam. Med. 1, 97–104.PubMedCrossRefGoogle Scholar
  65. 65.
    Komaromy, M., Grumbach, K., Drake, M., et al. (1996) The role of black and Hispanic physicians in providing health care for underserved populations. N. Engl. J. Med. 334, 1305–1310.PubMedCrossRefGoogle Scholar
  66. 66.
    Rosenblatt, R. A., Andrilla, H. A., Curtin, T., and Hart, L. G. (2006) Shortages of medical personnel at Community Health Centers. JAMA 295, 1042–1049.PubMedCrossRefGoogle Scholar
  67. 67.
    Rosenthal, M. B., Frank, R. G., Li, Z., and Epstein, A. M. (2005) Early experience with pay-for-performance: from concept to practice. JAMA 294(14), 1788–1793.PubMedCrossRefGoogle Scholar
  68. 68.
    Kressin, N. R. (2005) Separate but not equal: the consequences of segregated health care. Circulation 112, 2582–2584.PubMedCrossRefGoogle Scholar
  69. 69.
    Pourat, N., Rice, T., Tai-Seale, M., Bolan, G., and Nihalani, J. (2005) Association between physician compensation methods and delivery of guideline-concordant STD care: is there a link? Am. J. Manag. Care 11, 426–432.PubMedGoogle Scholar
  70. 70.
    Commons, M. T., McGuire, G., and Riordan, M. H. (1997) Performance Contracting for Substance Abuse Treatment. Health Serv. Res. 32(5), 631–650.PubMedGoogle Scholar
  71. 71.
    Fairbrother, G., Siegel, M. J., Friedman, S., Kory, P. D., and Butts, G. C. (2001) Impact of financial incentives on documented immunization rates in the inner city: results of a randomized controlled trial. Ambul. Pediatr. 1, 206–212.PubMedCrossRefGoogle Scholar
  72. 72.
    Beaulieu, N. D. and Horrigan, D. R. (2005) Putting smart money to work for quality imprvement. Health Serv. Res. 40, 1318–1334.PubMedCrossRefGoogle Scholar
  73. 73.
    Roski, J., Jeddelog, R., An, L., Lando, H., Hannan, P., and Hall, C. (2003) The impact of financial incentives and a patient registry on preventive care quality: increasing provider adherence to evidence-based smoking cessation practice guidelines. Prev. Med. 36, 291–299.PubMedCrossRefGoogle Scholar
  74. 74.
    Grady, K. E., Lemkau, J. P., Lee, N. R., and Caddell, C. (1997) enhancing mammography referral in primary care. Prev. Med. 26, 791–800.PubMedCrossRefGoogle Scholar
  75. 75.
    Hillman, A. L., Ripley, K., Goldfarb, N., Nuamah, I., Weiner, J., and Lusk, E. (1998) Physician financial incentives and feedback: failure to increase cancer screening in Medicaid managed care. Am. J. Public Health 88, 1699–1701.PubMedCrossRefGoogle Scholar
  76. 76.
    Hillman, A. L., Ripley, K., Goldfarb, N., Nuamah, I., Weiner, J., and Lusk, E. (1999) The use of physician financial incentives and feedback to improve pediatric preventive care in Medicaid managed care. Pediatrics 104, 931–935.PubMedCrossRefGoogle Scholar
  77. 77.
    Petersen, L. A., Woodard, L. D., Urech, T., Daw, C., and Sookanan, S. (2006) Does pay-for-performance improve the quality of health care? Ann. Intern. Med. 145, 265–272.PubMedGoogle Scholar
  78. 78.
    Shen, Y. (2003) Selection incentives in a performance-based contracting system. Health Serv. Res. 38, 535–552.PubMedCrossRefGoogle Scholar

Copyright information

© Humana Press Inc. 2007

Authors and Affiliations

  • Alyna T. Chien
    • 1
  1. 1.Department of Pediatricsthe University of ChicagoChicago

Personalised recommendations