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Did MassHealth’s P4P Program improve outcomes

Written By: Jason Shafrin - Mar• 10•11

The MassHealth P4P program was implemented in 2008.  The program began with a P4P incentive for pneumonia treatment and a pay-for-reporting incentive for surgical infection prevention.  In 2009, hospitals were eligible for P4P payments for both measures. Nevertheless, the effect of the MassHealth on P4P was practically non-existent. What happened? Today we review an article by Ryan and Blumstein (2011) to find out.

MassHealth P4P Background

The measures were determined as follows:

  • Pneumonia care was determined by: oxygenation assessment, blood culture performance in ER department, adult smoking cessation advice, providing antibiotics with 6 hours of arrival, and appropriate antibiotic selection in immunocompetent patients.
  • Surgical infection prevention was measured by: prophylactic antibiotic within 1 hour of surgical incision, appropriate antibiotic selection for surgical prophylaxis, and prophylactic antibiotic discontinued within 24 hours after surgery end time.

Payments for these measures were sizable. In 2008, $4.5 was available for incentive payments although only $2.6 million was ultimately disbursed. Average payments were $40,000 per hospital.


Using a fixed effects model with a quadratic time trend, the authors find that MassHealth P4P has no effect on quality. The researchers measure quality across all payers even though the MassHealth incentivizes hospitals based solely on their performance for Medicaid patients. The Hospital Compare website provided the quality measures.

Explanations for the failure to find an effect could be due to:

  1. Incentive levels were insufficient,
  2. There may have been confusion over the payment rules,
  3. Measures may have been ‘topped up’ as many were near 90% compliance. However, hospitals in the PHQID started with a higher compliance level than the MassHealth hospitals and they were able to improve, and
  4. Massachusetts’ health reform was enacted at the same time and thus the P4P may have been a low priority for hospitals.

Hospital P4P in other settings

Evidence from other hospital P4P programs is also mixed.  The largest and most studied hospital P4P is the Premier Quality Incentive Demonstration (PHQID).  When examining this nationwide Medicare demonstation, studies such as Grossbart 2006 and Lindenauer et al. 2007 found evidence that PHQID was effective.  Subsequent analysis found limited evidence of PHQID on process quality.  Studies such as Glickman et al. 2007, Bhattacharya et al. 2009, and Ryan 2009 all cast doubt on the effect of PHQID on quality and cost outcomes.



  • Timothy Bhattacharyya, Andrew A. Freiberg, Priyesh Mehta, Jeffrey Neil Katz and Timothy Ferris. “Measuring The Report Card: The Validity Of Pay-For-Performance Metrics In Orthopedic Surgery” Health Aff March 2009 vol. 28 no. 2 526-532
  • Seth W. Glickman, MD, MBA; Fang-Shu Ou, MS; Elizabeth R. DeLong, PhD; Matthew T. Roe, MD, MHS; Barbara L. Lytle, MS; Jyotsna Mulgund, MS; John S. Rumsfeld, MD, PhD; W. Brian Gibler, MD; E. Magnus Ohman, MD; Kevin A. Schulman, MD; Eric D. Peterson, MD, MPH. “Pay for Performance, Quality of Care, and Outcomes in Acute Myocardial Infarction” 2007;297(21):2373-2380. doi: 10.1001/jama.297.21.2373
  • Stephen R. Grossbart “What’s the Return? Assessing the Effect of “Pay-for-Performance” Initiatives on the Quality of Care Delivery” Med Care Res Rev February 2006 vol. 63 no. 1 suppl 29S-48S
  • Lindenauer PK, Remus D, Roman S, et al. Public reporting and pay for performance in hospital quality improvement. N Engl J Med., 2007;356:486-496
  • Ryan, A. M. (2009), Effects of the Premier Hospital Quality Incentive Demonstration on Medicare Patient Mortality and Cost. Health Services Research, 44: 821–842. doi: 10.1111/j.1475-6773.2009.00956.x
  • Ryan, Andrew M. and Blustein, Jan. The Effect of the MassHealth Hospital Pay-for-Performance Program on Quality. Health Services Research, no. doi: 10.1111/j.1475-6773.2010.01224.x

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  1. Chris says:

    I’m beginning to wonder if an effective P4P program doesn’t pay you for “low quality” process/outcomes

  2. See also http://www.bmj.com/content/342/bmj.d108.full for a large scale look at hypertension outcomes in a PFP effort. Nothing on cost, all about quality care. No benefit. JD

  3. […] The Closers (Quality and Safety) There is limited evidence to support claims that pay for performance programs improve quality and reduce the costs of health care, according to Jason Shafrin, who posts on The Healthcare Economist. Shafrin reviews Massachusetts’ pioneering P4P program and several other ones that failed to improve care. […]

  4. […] Another blow to ObamaCare: Pay-for-performance not working in Massachusetts. […]

  5. Noreen Castillo says:

    Globally, pneumonia affects approximately 450 million people per year, seven percent of population, and results in about 4 million deaths, mostly in third world countries. Although pneumonia was regarded by William Osler in the 19th century as “the captain of the men of death”,**:*

    See you in a bit <http://healthmedicinejournal.com/index.php/

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