Technical Review

Quality-based Purchasing, Support Strategies

July 2004

Clinical Focus*

The key questions for which literature, ongoing research, or results from analyses were sought in preparation of this report are as follows:

Choosing provider incentive strategies

• What is the evidence on the extent to which health plans and employers use incentives to improve quality and efficiency?
• Does the use of financial incentives for quality and efficiency actually increase the probability that patients receive high quality, efficient care?
• Does the impact of financial incentives for quality and efficiency depend on:
  • The basis of the incentive (structure, process, outcome)?
  • The nature of the incentive (bonus, penalties or holdback, tiering or patient steerage/referral)?
  • To whom the incentive is targeted (plan vs. provider group vs. individual provider)?
  • The payer of the incentive (purchaser vs. plan vs. medical group)?
  • The magnitude of the incentive?
• Does the use of nonfinancial incentives for quality and efficiency actually increase the probability that patients receive high quality, efficient care?
• Does the impact of nonfinancial incentives for quality and efficiency depend on:
  • The basis of the incentive (structure, process, outcome)?
  • The nature of the incentive (public release of performance report vs. confidential performance report)?

Relationship between cost and quality

• Does greater spending result in higher quality?
• What are the cost savings for the health care provider and purchaser as a result of the quality improvement?
• What are the cost savings associated with different approaches to preventing medical errors or otherwise improving quality?
• What specific processes and structures result in quantifiable cost savings? Who realizes the savings? How should they be shared?

Policy and market context in which incentives are used

• What contextual variables (e.g., provider supply, employer number and market share, health plan competition, organizational system/infrastructure, employee demographics) positively or negatively influence the effectiveness of financial and nonfinancial incentives for providers?

*Addressed in the summary or technical review.

Strategies To Support Quality-based Purchasing: A Review of the Evidence
Summary (Publication No. 04-P024, July 2004)
Technical Review (Publication No. 04-0057, July 2004)
(PDF Files; File Download)

EPC: Stanford-University of California San Francisco
Topic Nominator: Employer Health Care Alliance Cooperative (The Alliance)

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