US healthcare cost is constantly rising. There are several factors that contribute to the rise. One is the uninsured. Individuals that don’t have insurance cost the hospitals more money, therefore the government assists the hospital with those costs. Another factor is that a great deal of the population is diagnosed with preventable diseases. These preventable diseases such as diabetes, hypertension, and other chronic conditions have high maintenance costs that attribute to the overall health care cost (AMA healthcare$$). According to the American Medical Association (AMA) data from the 2008 National Health Expenditure Account states that the US spends two trillion dollars per year, in health care cost. An average person health care cost estimates to be $7,681.
Not only has the cost increased, but the quality has descended. The goals of the US health system are to improve quality of care, reduce cost, and reduce health disparities. To motivate health providers to increase their quality, and reduce socioeconomic disparities, performance reporting has discovered to be of common use for motivation (Friedberg). Policy makers, private, and public health insures such as Medicare and Medicaid have adopted a program that they believe to reduce the cost, and improve the quality of health care. This program is Pay for performance. Pay for performance (P4P) programs promise to improve quality, reduce cost, and higher income for health providers. Pay for performance is about rewarding incentives to physicians, hospitals, and other healthcare providers for quality of care. These programs are developed by health plans such as commercial insurances, government insurances, and private insurances that will be evaluating healthcare providers: physicians and hospitals. Health industries and policy makers came together for the implementation of paying healthcare providers as incentives for achieving health care performance measures to help improve quality (Hahn, 2006).
In order for the program to be successful in any health care setting provider participation is needed and that the objects of the program are obtainable and fair. Without participation from the providers the success of the program will be unattainable. Therefore the hypothesis is that Pay for Performance (P4P) incentives will motivate providers to provide better quality of care, and participate in the program. Another hypothesis is that P4P programs will provide an unintended result for providers that provide care in lower socioeconomic areas, therefore increasing ethnic and racial disparities in health care.
Pay for performance programs are structured in many different ways. Incentives, bonuses, and performance requirements can be based on any number of components. The elements that are common to all P4P programs are (1) sets of targets/objectives that define what will be evaluated, (2) measures and performance standards for establishing the target requirements, and (3) rewards, mostly...