21 Feb 2023


The Pay-For-Performance (P4P) Principle In Healthcare

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Academic level: Master’s

Paper type: Coursework

Words: 368

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The pay-for-performance (P4P) is a central idea in the healthcare dialogue as it proposes that patient should base their payments based on the quality of services they receive. There are four measurements that one ought to gauge this quality on and they include patient satisfaction and engagement, health outcomes, and care coordination. The Patient Protection Affordable Care Act encompasses the P4P principle in its Value-Based Modifier (VBM) Program which applies to Medicare reimbursements penalties that are based on various measures for quality. Roberts et al. (2018) note that these penalties that are outlined in the VBM program have already been applied to hospitals that are yet to meet the expected rates for patient satisfaction, engagement, re-admissions as well as other measures for quality. In as much as pay-for-performance focuses on improving patient outcomes, it has become a controversial issue in the healthcare community. Opponents of this principle establish that the measures that have been put in place to assess the quality of services are not fair, considering that they are based on patients’ experience.

The pay-for-performance aspect aimed at improving patients outcomes policy-makers did not factor in its adverse implications on the part of service providers. McIntyre & Zong (2019) note that under the Patient Protection and Affordable Care Act the healthcare sector is under immense pressure to reduce expenses and at the same time provide high-quality services. The insistence on quality without considering the financial implications of implementing P4P such as the high cost of medications points to various oversights. There have been numerous studies directed at establishing the effectiveness of P4P in terms of quality and cost of care. According to Kyeremanteng et al. (2019), so far no evidence supports that P4P translates to reduced costs although there is a modest improvement in the quality of care. The reason for this assertion is because under the PP4P model healthcare providers receive their bonuses long after providing patient care meaning that they may not connect rewards to quality or effectiveness. These oversights indicate that in as much as P4P has the potential for improving quality of care it does not guarantee it and may instead worse patient outcomes.

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Kyeremanteng, K., Robidoux, R., D'Egidio, G., Fernando, S. M., & Neilipovitz, D. (2019). An analysis of pay-for-performance schemes and their potential impacts on health systems and outcomes for patients. Critical Care Research and Practice, 43(3), 23-41. https://doi.org/10.1155/2019/8943972

McIntyre A, Song Z (2019) The US Affordable Care Act: Reflections and directions at the close of a decade. PLoS Medicine, 16 (2), 27-38. https://doi.org/10.1371/journal.pmed.1002752

Roberts, E. T., Zaslavsky, A. M., & McWilliams, J. M. (2018). The Value-Based Payment Modifier: Program outcomes and implications for disparities. Annals of Internal Medicine, 168 (4), 255–265. https://doi.org/10.7326/M17-1740

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StudyBounty. (2023, September 17). The Pay-For-Performance (P4P) Principle In Healthcare.


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