Using the lessons of behavioral economics to design more effective pay-for-performance programs.
OBJECTIVE
To describe improvements in the design of pay-for-performance (P4P) programs that reflect the psychology of how people respond to incentives.


METHODS
Investigation of the behavioral economics literature.


METHODS
We describe 7 ways to improve P4P program design in terms of frequency and types of incentive payments. After discussing why P4P incentives can have unintended adverse consequences, we outline potential ways to mitigate these.


RESULTS
Although P4P incentives are increasingly popular, the healthcare literature shows that these have had minimal effect. Design improvements in P4P programs can enhance their effectiveness.


CONCLUSIONS
Lessons from behavioral economics may greatly enhance the design and effectiveness of P4P programs in healthcare, but future work is needed to demonstrate this empirically.
Mehrotra
Ateev
A
RAND Health, 4570 Fifth Ave, Ste 600, Pittsburgh, PA 15213-2665, USA. mehrotra@rand.org
Sorbero
Melony E S
ME
Damberg
Cheryl L
CL
D001519:Behavior; D006278:Medicare; D018803:Models, Economic; D011785:Quality Assurance, Health Care / Q000191:economics*; D012052:Reimbursement, Incentive; D014481:United States