Strategies To Support Quality-based Purchasing : A Review of the Evidence

Deficiencies in quality have been widely documented in the U.S. health care system. A recent component of purchaser response to these data has been the pursuit of quality-based purchasing (QBP). However, purchasers have been uncertain both how to measure quality and what incentives to offer to stimulate performance improvement. Furthermore, there has been dispute in the literature about the validity of quality measures, especially outcomes indicators, and the potential for chance variation in outcomes to unduly influence reported performance. Therefore, despite the release of public reports of providers’ outcomes by several States, purchasers have been slow to use outcomes reports to drive QBP policies. Without more information about how to proceed with QBP, purchasers risk investing time, resources, and good will without a reasonable expectation of achieving a good return. In this report, we sought to describe and evaluate the evidence regarding the effectiveness and potential of QBP strategies to improve the quality of care provided in the U.S. health care system. For this report, QBP is defined as payment or reputational strategies aimed at providers that individual employers, employer coalitions, or government programs could plausibly adopt to stimulate the improvement of quality in health care. With respect to providers, the primary issue within the purchaser’s purview is the establishment of incentives—for individual providers or for provider organizations such as medical groups and hospitals—that either stimulate or inhibit provider behaviors to improve quality (strategies aimed at consumers, such as variable copayments, were not considered). Specifically, this report focuses on the two types of incentives in widespread use—performance-based payment and reputational incentives arising from the public release of performance data.