From local business coalitions to regional health plans to the federal government, sponsors across the country are experimenting with new ways to drive quality improvement through incentives.

Pay-for-performance (P4P) programs are designed to improve the effectiveness and safety of patient care. They offer incentives to physicians to practice evidence-based standards, linking reimbursement bonuses to performance on a variety of measurements. Additional P4P program motivations are reducing errors, clinical practice variations and acute treatment episodes; publishing quality and cost data; improving the efficiency of care delivery; and implementing new information technologies.

The number of P4P programs has increased significantly in the past few years. It is estimated that between 100 and 120 operate across the country. Approximately one third of commercial plans now use some P4P methods.

P4P is a good idea. However, we all know that good ideas can sometimes go wrong. Physicians should be very careful and proceed with cautious optimism when assessing P4P programs. It is important that all entities--health plans, purchasers and the government--offering P4P programs adopt the same standardized measure sets, an effort that the American Academy of Family Physicians, the National Quality Forum and others are pursuing.

Most programs have been in effect less than five years, so there is little significant data. However, preliminary results show that P4P stimulates better patient care. In one study comparing test data from 2002 and 2003, nearly 15,000 more women received cervical cancer screenings, 35,000 more women received breast cancer screenings and 18,000 more people received diabetes tests.

Still, performance data collection and integration present enormous and ongoing problems and opportunities. Collecting and reporting data must be reliable and easy for physicians and should not create financial or other burdens on physicians and their practices. Program incentives should include reimbursement for any added administrative costs, including software purchase, installation and training.

Physician involvement is critical. The Centers for Medicare and Medicaid Services has unveiled the Physician Voluntary Reporting Program, a program that falls so short of physician expectations that the American Medical Association sent a letter to Mark McClellan expressing strong objections. The timeline CMS set was not favorable--too much, too soon and too fast.

The California Medical Association is asking CMS to take a step back, sit with physicians at the table and formulate guidelines on how to implement a good P4P program that physicians can support, with measurements that make sense. Association officials are hopeful this meeting will take place early this year.

The CMA, AAFP and the AMA have physician-written guidelines for shaping P4P plans. Generally, the groups agree a good P4P program ensures quality of care; fosters the patient-physician relationship; offers voluntary physician participation; uses accurate data and fair reporting; appropriately evaluates physician performance; and provides equitable incentives.

As CMA Past President Ron Bangasser, MD, says during his presentations to groups nationwide: "P4P is here, it's going to stay, and it's going to change the way we practice."