• Physician incentives;
  • quality improvement;
  • pay for performance

Objective. To investigate the effects of paying physicians for performance on quality measures of diabetes care when combined with other care management tools.

Data Sources/Study Setting. In 2001, a managed care organization in upstate New York designed and implemented a pilot program to financially reward doctors for the quality of care delivered to diabetic patients. In addition to paying a performance bonus, physicians were also supplied with a diabetic registry and met in groups to discuss progress in meeting goals for diabetic care. Primary data on diabetes care at the patient level were collected from each physician during the 8-month period, April 2001–January 2002.

Study Design. Physicians were scored on individual process and outcome measures of diabetes care on three separate occasions; these individual scores were combined into a composite score on which the financial reward was allocated. The study design is pre/post for the patients whose physicians participated in the performance pay program. The control group is a large sample of the health plan's diabetic members.

Data Collection. Data on patient outcomes were self-reported by physicians participating in the study. These data were audited with spot checks of medical charts. Data for the control group were collected as part of the health plan's annual HEDIS data collection.

Principal Findings. Physicians and patients achieved significant improvement on five out of six process measures, and on two out of three outcome measures (HbA1c control and LDL control). Thirteen out of 21 physicians improved their average composite score enough to earn some level of financial reward. Of the eight physicians not receiving any of the three levels of reward, six improved their composite scores.

Conclusions. Financial incentives for physicians, bundled with other care management tools, led to improvement on objectively measured quality of care for diabetic patients. Self-selection by physicians into the pay pilot and the small sample size of participating physicians limit the generalizability of the results.