Pay for performance is an idea whose time has come. A recent editorial in the New England Journal of Medicine notes nearly universal agreement among policy-makers that amplification and extension of the use of financial incentives in health care will promote a higher quality of care. Recognizing the efficacy of pay for performance (PFP), many new PFP programs are being adopted across the country and around the globe. Nevertheless, there are skeptics. For example, in his new book, Redefining Healthcare: Creating Value-Based Competition on Results, Michael Porter argues that PFP initiatives only address process compliance, rather than the quality of results achieved.

The goal of the second annual National Pay for Performance Summit is to provide a forum for the exchange of content and ideas, and thus to continue discussion and debate about the direction PFP should take. The Summit offers keynote presentations, panels, and debates, as well as concurrent sessions from regional, national, and international experts in the field. The plenary sessions and tracks will cover timely topics including efficiency measurement in PFP, government PFP programs, PFP and information technology, PFP financial incentives and gainsharing, quality performance measurement, legal issues in PFP, how PFP affects physician and nurse engagement, and advanced PFP case studies. This year's Summit also features four Mini-Summits on new models for rewarding performance, the state of the evidence, measuring efficiency, and IT-enabled performance measurement. Additionally, the Summit will offer three pre-conference sessions sponsored by the Leapfrog Group, Bridges to Excellence, and the Integrated Healthcare Association (IHA), targeted toward purchasers, plans, physician groups, and community leaders.

On the state level, IHA recently announced continued across-the-board quality improvements in clinical care and increased adoption of health information technology in physician groups participating in the third year of its California PFP program. Other influential organizations continue to promote PFP programs with similar quality improvement goals. For example, the Leapfrog Group recognizes and rewards hospitals for their performance in both the quality and efficiency of in-patient care with their Leapfrog Hospital Rewards PFP program. Bridges to Excellence, a multi-state, multiple employer initiative, encourages advances in quality across the healthcare system through measurement, reporting, rewards, and education. In addition, the recently passed health coverage bill in Massachusetts outlines a PFP system in which health care providers must show that they are meeting certain quality standards in order to receive hundreds of millions of additional Medicaid dollars.

Nationally, the Centers for Medicare and Medicaid Services' (CMS) demonstration project evaluating PFP measures tying Medicare hospital payments to quality of care measures has shown dramatic potential reductions in the program's hospital costs for the care of certain conditions. Last year CMS also established a voluntary reporting system in which physicians report on 16 quality indicators for ambulatory care. Internationally, the PFP program introduced by the National Health Service of the United Kingdom, basing individual primary care physicians' salary increases on their success in meeting 146 criteria for high-quality performance, paid out on average an additional $40,000 per physician in the program's initial year.

As PFP programs develop and mature, several key features emerge as focal points. First, collaboration among all the stakeholders is essential. IHA's report on the first five years of its PFP program, "Advancing Quality through Collaboration," emphasizes the critical cooperation among health plans and physician groups that led to the program's success. Second, transparency through wide-scale public reporting on the quality of performance is important to motivate a higher quality of care. Third, government programs such as Medicare and Medicaid will likely adopt and influence the development of PFP programs. Fourth, measurement in PFP is likely to extend beyond quality indicators and measures of patient satisfaction and adoption of information technology to include efficiency measurement. The wide variations in the cost of care with no apparent relation to the quality of care have driven purchasers, health plans, and policy-makers to look for ways to get more value from the health care dollar, and to consider how well physicians are controlling costs while still maintaining quality. Finally, we can expect PFP in this country eventually to extend beyond the ambulatory care setting to include the participation of hospitals, specialists, and surgeons, as well as primary care doctors.