Health purchasers and Medicaid managed care plans across the country are developing innovative ways to reimburse physicians based on health care quality and outcomes. Although provider incentive strategies are not as prevalent in publicly financed care as in the commercial sector, many states are eager to adapt pay-for-performance approaches to support Medicaid providers in delivering higher quality care.

In response, the Center for Health Care Strategies (CHCS) developed the Pay-for-Performance Purchasing Institute to help states develop provider incentive programs. Through a competitive process, CHCS selected seven states that designed, implemented, and tested financial or non-financial incentives; different performance measures; and ways of engaging provider participation:

  • Arizona partnered with its managed care organizations to develop a statewide provider-level incentive program. The Medicaid agency’s goal was to determine what data the health plans currently collect in order to reduce redundant reporting at the physician level. 
  • Connecticut sought to institutionalize incentives for care coordination, preventive care, and other activities for children enrolled in its Medicaid program under a pay-for-performance program. The state’s goal was to have incentives built into the reimbursement process for health plans and their early periodic screening, diagnosis and treatment providers, and ultimately promote the use of medical homes.
  • Idaho incorporated pay-for-performance into its primary care case management Chronic Disease Management Program. The initial pilot focused on diabetes, using six evidence-based quality indicators. Providers received a $50 incentive payment for every person with diabetes who is enrolled, and $10 for each of the selected indicators that have been performed or competed.
  • Massachusetts designed a P4P project for the MassHealth PCC Plan, a primary care case management program. The project aimed to design a program that provides monetary reward to primary care clinicians (PCCs) for excelling in or improving the quality of care delivered to its PCC Plan members. The goals for pay-for-performance included improving the quality of preventive care and chronic care management for PCC Plan members, and encouraging the adoption of office-based infrastructure to support continuous improvement in the care delivered to PCC Plan members.
  • Missouri proposed to implement financial incentives for providers who actively participate in its disease management program. Clinical areas considered included asthma, cardiovascular disease, diabetes, chronic obstructive pulmonary disease, and gastroesophageal reflux disease.  As a part of its project, the state also piloted the use of web-based electronic care plans.
  • Ohio Medicaid coordinated provider pay-for-performance into a statewide managed care program. The state identified performance indicators for preventive care and for the most costly and prevalent chronic diseases. As a part of the planning process, the state contracted with the University of Cincinnati to assess the feasibility of, and stakeholder interest in, implementing a physician-level pay-for-performance program.
  • West Virginia developed a provider-level “pay-for-play” program to go hand-in-hand with its Medicaid Redesign goals. In the initial year, providers were reimbursed for time spent with patients explaining the state’s member agreement and establishing a self management plan. In the second year of the program, provider incentives were tied to performance measures.

Participating teams received technical assistance from CHCS staff and other leaders in the field. States also had the opportunity to collaborate with other states in areas such as developing incentive structure, choosing measures, and engaging providers.