apply, such as the importance of rewarding multiple domains of care and the need to reward both improvement and excellence. The design characteristics described in this chapter are general examples that can be adapted to fit the needs of the program with respect to its overarching goals, as defined by CMS.

The next chapter discusses several practical issues to be considered when developing and implementing pay for performance. The committee was able to make firm recommendations on some of these issues, whereas for others, the evidence base supports only careful presentation of options. These issues include the following:

• The timing of pay for performance and its precursors: what steps need to occur before rewards can be provided on the basis of measures of performance.

• The overall timing of implementation: when pay for performance can begin in each care setting.

• The nature of participation: what providers will be eligible for pay for performance in Medicare and whether the program should be voluntary or mandatory.

• The unit of analysis: to whom rewards will be distributed (i.e., the individual physician, medical groups, hospitals, skilled nursing facilities).

• The role of health information technology: how new technologies can influence the implementation of pay for performance.

• Statistical issues: sample size, problems surrounding risk adjustment, and precision.

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