The Effect of Performance-Based Financial Incentives on Improving Patient Care Experiences: A Statewide Evaluation

Patient experience measures are central to many pay-for-performance (P4P) programs nationally, but the effect of performance-based financial incentives on improving patient care experiences has not been assessed. The study uses Clinician & Group CAHPS data from commercially insured adult patients (n = 124,021) who had visits with 1,444 primary care physicians from 25 California medical groups between 2003 and 2006. Medical directors were interviewed to assess the magnitude and nature of financial incentives directed at individual physicians and the patient experience improvement activities adopted by groups. Multilevel regression models were used to assess the relationship between performance change on patient care experience measures and medical group characteristics, financial incentives, and performance improvement activities. Over the course of the study period, physicians improved performance on the physician-patient communication (0.62 point annual increase, p < 0.001), care coordination (0.48 point annual increase, p < 0.001), and office staff interaction (0.22 point annual increase, p = 0.02) measures. Physicians with lower baseline performance on patient experience measures experienced larger improvements (p < 0.001). Greater emphasis on clinical quality and patient experience criteria in individual physician incentive formulas was associated with larger improvements on the care coordination (p < 0.01) and office staff interaction (p < 0.01) measures. By contrast, greater emphasis on productivity and efficiency criteria was associated with declines in performance on the physician communication (p < 0.01) and office staff interaction (p < 0.001) composites. In the context of statewide measurement, reporting, and performance-based financial incentives, patient care experiences significantly improved. In order to promote patient-centered care in pay for performance and public reporting programs, the mechanisms by which program features influence performance improvement should be clarified.