Physicians Respond to Pay-for-Performance Incentives: Larger Incentives Yield Greater Participation

Physician participation rates in a pay-for-performance program are related to the amount of rewards offered.

Published Online: May 07, 2009
Francois S. de Brantes, MS, MBA; and B. Guy D'Andrea, MBA

Objective: To determine the extent to which the size of the available financial incentive influences a physician's decision to participate in a pay-forperformance (P4P) program.

Study Design: Statistical analysis of historical data from Bridges to Excellence (BTE).

Methods: Setting available financial incentives as the independent variable and physician participation rates as the dependent variable, we applied regression analysis to BTE’s data from selected sites to explore the relationship of fixed bonu-sbased incentive programs to physician participation rates in those programs.

Results: The amount of incentives available to physicians strongly affected their rate of participation. Participation rates varied with the type of program, and overall physician participation rates might grow as more  purchasers/payers within a community offer similar incentives.

Conclusion: Our analysis suggests that all stakeholders—health plans, physicians, and patients—would benefit from health plans collaborating on their P4P efforts to maximize physician participation.

(Am J Manag Care. 2009;15(5):313-318)

Physician response rates to pay-for-performance (P4P) programs follow a predictable pattern: higher rewards lead to greater participation.

  •  Understanding the relationship between rewards and physician participation can help health plans and purchasers design more effective incentive programs.
  • Health plans with moderate to low market shares will be better off collaborating on a P4P effort.
  • Physician participation seems to vary depending on the nature of the program and the incentives offered.


Programs that create incentives and rewards for physicians are rapidly expanding in scope and reach.1 There were 160 pay-for-performance (P4P) programs active in November 2007 (up from 39 in November 2003).2 Of these 160 programs, physician programs outnumbered hospital programs 4 to 1. Despite such growth, there are still many unanswered questions about the effects of P4P, and in most markets around the United States, P4P incentives represent a very small percentage of physician income. A recent report shows that the average physician incentive was 2% or less and that the incentives offered did not seem to impact the quality of care delivered.3 Another report suggests that physicians participating in Bridges to Excellence (BTE) programs provided higher quality care at lower cost than nonparticipating physicians.4 However, neither of these studies examined the relationship between the size of the incentives offered to a physician or a practice and their active participation in the program. Yet for health plans or employers to optimize their investments in P4P programs, they must find a way to get physicians to actively participate and, therefore, to respond to the incentives offered.

Bridges to Excellence is a not-for-profit multi-stakeholder organization that has been implementing incentives and rewards programs for more than 5 years in different geographic sites across the United States.5 A key feature of BTE program implementations is the active collaboration of employers and health plans wherein all agree to focus on 1 or more of the programs for at least 3 years in order to encourage physicians to meet or exceed the programs’ performance criteria.

Each program has a recommended fixed bonus reward per eligible patient cared for by that physician. The bonus is paid to the physician or practice once the physician or practice has become recognized. Bridges to Excellence recognition is awarded after the physician’s or practice’s performance has been assessed by an independent performance assessment organization such as the National Committee for Quality Assurance. The BTE measurement criteria apply to all patients treated by a physician, not only those patients covered by a purchaser offering incentives. Therefore, the benefits of any quality improvements accrue to all of a physician’s patients, not just to patients covered by a BTE sponsor.4

Bridges to Excellence has 2 different types of programs. One is a practice-based program called Physician Office Link (POL), which assesses the “systemness” of a practice, focusing mainly on the ability of the practice to actively identify and manage patients with chronic conditions and to adopt systems that reduce medical errors. The second type of BTE program focuses on an individual physician’s results in managing the care of patients with certain chronic conditions: diabetes (the Diabetes Care Link [DCL]), cardiac disease (the Cardiac Care Link), low back pain (the Spine Care Link), and depression (the Depression Management Care Link). The 2 categories of BTE programs require different levels and types of effort. The POL program requires significant investment by the practice as a whole (similar to what is required in today’s Medical Home pilots6), while the chronic condition–specific programs require a focused effort by individual physicians regarding 1 condition.


To assess physician response rates to BTE rewards, we used BTE’s Master Physician Lists from each of its 4 initial pilot sites—Louisville, Kentucky; Cincinnati, Ohio; Albany, New York; and Boston, Massachusetts. For each physician in those markets, the Master Physician Lists provide the number of rewards-eligible patients treated by the physician and indicate whether the physician achieved BTE recognition. The attribution of patients to physicians was done using a methodology created by BTE,7 and the same method was applied to all BTE programs across all sites (see the Table for a summary). For example, the Master Physician List for Louisville contained 582 physicians, each with a patient count ranging from 1 to 91.

Because BTE’s programs and the pilot implementations assigned a specific bonus for each patient attributed to a physician, the Master Physician List also provides a simple and effective way to calculate the bonus potential for each physician. For example, if the bonus per patient was $80 and a physician treated 15 rewards-eligible patients, then that physician’s total reward potential was $1200. According to BTE’s program evaluation submitted to the Robert Wood Johnson Foundation,8 each physician received several communications from BTE during the pilot implementations about the specific amount of the bonus for which they were eligible, the program associated with that bonus, and the specific requirements needed to achieve recognition and receive the bonus. In our analysis, we examined the total bonus potential for all physicians for the DCL program (which was implemented in all 4 areas) and for the POL program (which was implemented only in Albany and Boston). Because POL is a practice-based assessment, we grouped physicians by practice based on their address. This grouping resulted in a list of 917 and 3521 practices in Albany and Boston, respectively, with bonus potentials ranging from $0 to about $50,000. The overall numbers of physicians, practices, patients, and bonuses for the 4 markets are listed in the Table.

Using these Master Physician Lists, we calculated for each reward level the percentage of physicians and practices that achieved recognition in the DCL and POL programs through the end of 2005, which represented the second full year of program implementation. For example, of all the physicians eligible for about $2500 in DCL rewards, 17.2% achieved BTE recognition. Based on these data, we created regression models for the participation rate of any physician or practice in the DCL or POL programs. We conducted 3 separate regression analyses: 1 for DCL and 2 for POL. In 1 of the POL analyses, potential rewards were aggregated at the practice level; the other analysis used the average reward per physician (ie, total practice reward potential divided by number of physicians in the practice). In all 3 analyses, reward potential is the independent variable and the percentage of physicians at that reward potential who achieved BTE recognition is the dependent variable. For example, if there were 100 physicians with $1000 in reward potential, and 8 of these physicians achieved BTE recognition, then the independent variable is $1000 and the dependent variable is 8%. By looking at these values over a range of data, we could estimate how the participation rate varied as a function of the reward potential. Because the physician reward and participation rate variables had a skewed distribution, in our regression analysis we applied a log transformation to both variables to improve the normality of the data.

We also performed an analysis of covariance (ANCOVA) test to determine whether the regression relationships between the DCL and POL data were statistically different, not merely the product of random variation in the data.


Patients and Reward Potential Are Not Evenly Distributed Among Physicians

The distribution of patients (and reward dollars) across physicians is asymmetric, following a Pareto-like distribution, as illustrated in Figure 1. The scale on the y-axis is dependent on the total size of the market, and the area under the curve represents the total number of local physicians. The scale on the x-axis is dependent on the number of purchasers/payers engaged in the BTE program and the size of rewards offered. In Figure 1, the distribution is highest at the left margin, meaning that most of the physicians had very few rewardseligible patients, and, therefore, very limited reward potential. However, a few physicians— those toward the right tail of the distribution—had a large number of rewards-eligible patients and received correspondingly greater rewards for achieving BTE recognition.

The causes of the unevenness of the patient allocation cannot be precisely determined from the data. However, one possible explanation is that the patients themselves are not evenly distributed within a market; the rewards-eligible patients tend to cluster near the work sites of employers that sponsor the program. Simple random variation is another possible explanation. Regardless of the cause, the asymmetric distribution of patients has important implications. If the distribution of reward potential were symmetric (eg, a normal distribution), then we would expect most physicians to cluster near the average. However, the asymmetric distribution we observed suggests that the average reward potential for physicians in a market is not very meaningful, because most physicians will have reward potential well above or below the average.

Note that the data illustrated in Figure 1 are based on the experience in early-stage BTE pilots, in which purchasers offering the incentives covered a small percentage of all patients. If all the health plans and employers in the pilot communities had participated in BTE’s programs, then each individual physician would have had roughly equal reward potential (assuming the physicians each treat about the same number of patients). As overall payer/purchaser participation in an incentive program increases in a community, the distribution of reward potential will change. This influences physician adoption rates because physician participation is highly correlated with reward levels.

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