In a continuing Health Affairs series, Catalyst for Payment Reform Executive Director Suzanne Delbanco digs into the evidence for Pay-for-Performance (often called P4P) as a payment system that may potentially reduce overall health care costs.

According to Delbanco, pay-for-performance may indeed be useful in shifting providers toward new payment systems because it only has an upside. You get a bonus if you improve certain quality measures and you earn the same if you don't.

However, she warns that the lack of financial risk in P4P may limit its usefulness. Research also has not shown that it can lower costs, a key purpose of new payment systems. Finally, it may encourage physicians to focus on a narrow band of measurable quality measures to the detriment of the overall quality of the care the patient receives.

Delbanco theorizes that the true value of P4P may be as a stepping stone to shared-risk arrangements with payors.

This is her second article in a series about payment reform. Her first post provided an overview of payment reform in the United States.