States and health plans are increasingly developing provider incentive programs to drive quality at the point of care. By jointly implementing provider incentive strategies, purchasers and plans can replace well-meaning but redundant and often conflicting programs. The resulting standardization of provider incentive programs can dramatically improve physician response to quality improvement efforts and support investments in the systems needed at the practice level to improve care.

From 2006-2008, with funding from The Commonwealth Fund and additional support from the Robert Wood Johnson Foundation, the Center for Health Care Strategies (CHCS) engaged seven states in a Pay-for-Performance Purchasing Institute to develop provider incentive programs. Participating states worked with CHCS to develop and test physician-level financial and non-financial incentives, choose performance measures, engage providers effectively, and increase alignment across incentive programs.

This resource paper highlights provider-incentive approaches for states to consider based on the efforts of three Pay-for-Performance Purchasing Institute participants and two additional states that are seeking to improve alignment around Medicaid provider incentive programs. It outlines considerations for states for developing standardized incentive programs and details recent CMS policy around this topic. The paper was released last week at the Integrated Healthcare Association’s Fourth Annual Pay for Performance Summit.

While it is just one tool in the Medicaid quality improvement “arsenal,” provider incentive programs present an important opportunity to synchronize physician-level quality improvement efforts. In particular, these programs can help lay the groundwork to align quality and reimbursement at the practice site within broader payment reform discussions.